Top 10 Issues Facing the Midstream Industry in 2023

The Center for Midstream Management and Science (CMMS or Center) conducted the second annual CMMS survey of its Industry Advisory Board and friends of the Center. This survey drew on opinions from senior industry people in midstream management, engineering, operations, consulting, and academia.

The top ten issues facing the midstream industry in 2023, forced ranked, are:

Attracting New Talent
Retiring Expertise
Aging Infrastructure
Regulatory/Permitting Burdens and Compliance
Supply Chain
Lack of Political Support for Project Investment
Capital Markets/Investment
Energy Transition
Cyber Security
Mega Rule Part 2

In last year’s Top Ten midstream issues survey, a consistent theme was the integral nature of critical issues and a popular anti-carbon narrative significantly impacting all aspects of society, government, and industry. Last year’s survey reflected much agreement among the top five issues in the forced ranking with much divergence in topics ranking #6 through #10. This year’s survey was dominated by human capital issues facing the midstream sector and what might be considered day-to-day operating concerns. Identified issues other than human capital, however, did not find a lot of agreement in the forced rankings.

Attracting New Talent (Moved up from #2)
Many young people are not interested in working in a vilified industry seen as “dirty” and undesirable and low tech where long-term employment prospects are uncertain.
Retiring Expertise (New)
A knowledge and experience shortage is a strategic fear as a wave of baby boomers retire coincidentally with the challenge of attracting new talent.
Aging Infrastructure (Moved down from #1)
Many of the major pipelines that are relied on to move product across the country are substantially over their original 25-year design life. All operators are having to improve the way they manage these older energy assets to further extend asset life while enhancing safety and environmental attributes and meeting new regulations.
Overbearing/Unhelpful Regulations, Permitting, and Compliance (Moved up from #10)
Considerations around public safety continue to be a focus for all regulatory agencies. That said, billions of dollars in investments have been lost or cancelled due to political and governmental activism relating to existing and new regulations and permitting at the federal and state levels.
Supply Chain (New)
Delayed delivery and increased costs of everything are making simple maintenance, much less new project development, difficult to manage.
Lack of Political Support for Project Investment (New)
A significant part of the electorate and public officials are not supportive of carbon energy infrastructure, which impacts regulations, permitting, compliance, and capital markets.
Capital Markets/Investment (Moved down from #6)
Political activism related to carbon energy has bled into many federal and state agencies, adversely impacting capital markets, lending institutions, and costs of investment in carbon energy projects.
Energy Transition (Moved down from #3)
It appears that while energy transition issues remain important, the challenges of day-to-day operations have become dominant.
Cyber Security (Same ranking)
The midstream industry’s cyber security concerns remain important, but a general view exists that this concern is being adequately addressed by industry and governmental agencies.
Mega Rule Part 2 (New)
Many operators are now trying to understand this new PHMSA regulation and meet the requirements, two of which seem to be problematic. The first troublesome requirement is the risk assessment definition of all ‘Moderate Consequence Areas’ (MCA) and the second is maximum allowable operating pressure (MAOP) verification. Under prior regulations, pipeline operators focused the majority of their integrity management activities and related expenditures on ‘High Consequence Areas’ (HCAs) per regulations. Overall, HCAs represented 12% to 15% of total pipeline mileage. Initial findings are that the new MCAs could represent 30% additional mileage that operators will have to pull into their Integrity Management Plans. The second piece requires that operators revalidate the MAOP of their pipelines, which can be problematic with older assets and acquired assets. Missing data or supporting documents may require an operator to conduct field work such as exploratory excavation and then wall thickness verification with UT and chemical composition of pipe with XRF to establish facts before a new MAOP can be set - or the pipeline must be derated, limiting pressure, flow, and revenue.

Missing from last year’s Top Ten were Technology Development, Emissions, ESG, and Curtailed Investment. Technology Development and Curtailed Investment were subsumed by Aging Infrastructure and Capital Markets/Investment concerns. Regarding ESG and Emissions, while industry remains focused on these important issues, it seems that the issues currently impacting the ability to do business today have become most important in 2023.

CMMS was established and funded by the Texas legislature in late 2019 and serves as a bridge between Lamar University and the midstream industry. The Center is the only academic organization focused solely on the midstream industry. Its general mission is to work in partnership with the midstream industry with the objective of identifying and solving industry operational problems and advancing technologies impacting the midstream sector.

Contact:
Thomas Kalb
Director
Center for Midstream Management and Science
Lamar University, Beaumont TX
tkalb@lamar.edu
(203) 803.7677