Midstream Oil: Gathering, Transporting, Storing, and Refining

Tank batteries at a well site

Once oil is produced and separated from the water and gas, it’s ready to be moved. This is usually done by a midstream company.

Oil is a little easier for a company to move because they don’t have to continually process, dehydrate, and compress it (like gas) or find space to inject or recycle it (like water).

The main goal is to get it from well to refinery.

The midstream oil market can be broken down into four stages:

  • Gathering
  • Transporting
  • Storing
  • Refining

Oil Gathering

An oil gathering site is typically located near the wellhead. There the oil is collected in a tank battery.

Trucks come by daily and to pipe in and pick up oil from the bottom of the tank. They then drive it to a local unloading station, which is often within ten miles of a given site. 

There the oil is pumped to a large tank for temporary storage until it is ready to be transported.

Trucker visiting a well site to pick up oil

Photo by Kurt Cruse

Oil Transporting

Your can transport oil four ways: 

  • Pipeline
  • Truck
  • Railcar
  • Boat

Pipeline is the most ideal as it can get the most oil where it’s going. However, in areas where pipelines are not available, companies use trucks and/or railcars.

If the oil is going overseas, it will be sent first to the Gulf of Mexico, and then a large tanker will deliver it.

Oil Storage

If the oil is being transported via pipeline, it often goes to a large storage site, like the one in Cushing, Oklahoma.

Cushing hosts the single largest storage of oil reserves in the United States, and it’s where price for U.S. crude is based (West Texas Intermediate or W.T.I.).

Out of the 570 million barrels of oil storage in the U.S., 90 million is in Cushing.

Tank Farm in Cushing, Oklahoma

Photo by Roy Luck

Oil Refineries

After being pulled up at the wellhead, put into a gathering system, transported via truck, railcar, pipeline, or boat to a storage site, the oil will eventually make its way to a refinery. 

Refining is where the oil is processed and blended for use as energy in final products like LPG, gasoline, diesel, and jet fuel.

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