Midstream oil and gas project managers occupy a critical position in the energy supply chain, overseeing the transportation, storage, and wholesale marketing of petroleum products. A skill set that involves emerging technologies, lifecycle emissions, and carbon intensity metrics.

Renewable energy sources are increasingly complementing and competing with traditional hydrocarbons. This article examines both offering strategic insights for midstream organizations.

Key Differences

Origin and Replenishment   

Hydrocarbons: Hydrocarbon is an organic chemical compound composed of the elements carbon and hydrogen, which are the principal constituents of petroleum and natural gas.

Renewables: Derived from naturally replenishing sources such as sunlight, wind, water, and geothermal heat. These energy sources are continuously available or regenerate quickly.

Infrastructure Requirements

Hydrocarbons: Benefit from established, extensive infrastructure networks including pipelines, storage facilities, refineries, and distribution systems representing trillions in global investment.

Renewables: Often require new, specialized infrastructure development. Solar and wind farms need different transmission systems, while biofuels may leverage some existing midstream infrastructure with modifications.

Energy Density and Storage

Hydrocarbons: High energy density and inherent storability provide significant advantages for transportation and on-demand energy needs.

Renewables: Lower energy density and storage challenges, particularly for intermittent sources like wind and solar. Battery technology and other storage solutions are improving but remain costlier than hydrocarbon storage.

Production Consistency

Hydrocarbons: Offer controllable, consistent energy production that can be adjusted to meet demand fluctuations.

Renewables: Many renewable sources produce intermittent energy dependent on weather conditions, time of day, or seasonal factors, creating challenges for grid reliability.

Key Similarities

Project Management Fundamentals

Despite technological differences, midstream project management for both hydrocarbons and renewables require similar core competencies: stakeholder management, regulatory compliance, risk assessment, and supply chain optimization.

Regulatory Complexity

Both sectors face complex, evolving regulatory environments requiring careful navigation and compliance strategies.

Scale Economics

Both industries benefit significantly from economies of scale, with larger projects yielding better returns on investment.

Technological Evolution

Both sectors are experiencing rapid technological development aimed at improving efficiency, reducing costs, and minimizing environmental impacts.

Pros and Cons from a Midstream Perspective

Oil refinery

Hydrocarbons

Pros:
  • Established infrastructure and business models
  • High energy density and transportability
  • Flexible production to meet variable demand
  • Well-understood regulatory frameworks
  • Continued global demand growth in many markets
  • Compatibility with existing equipment and vehicles
Cons:
  • Increasing regulatory pressure and carbon pricing
  • Market volatility and geopolitical risks
  • Growing public and investor environmental concerns
  • Long-term demand uncertainties due to energy transition
  • Aging infrastructure requiring significant reinvestment
  • Higher emissions leading to potential regulatory penalties
Renewable Energy Sources

Renewables

Pros:
  • Rapidly declining costs making many technologies competitive
  • Long-term growth projections and investment trends
  • Favorable regulatory treatment and incentives
  • Lower operational risks once infrastructure is built
  • Growing corporate demand through PPAs and carbon goals
  • Potential for integrated energy systems with hydrocarbons
Cons:
  • Intermittency challenges requiring backup systems
  • Higher initial capital costs for infrastructure development
  • Underdeveloped midstream infrastructure in many regions
  • Less established business models and revenue certainty
  • Storage limitations affecting reliability
  • Geographic constraints on project siting

Midstream Strategic Considerations

Hybrid Energy Systems

The most practical near-term approach for many midstream operators involves developing hybrid systems that leverage the strengths of both hydrocarbons and renewables. For example:

  • Natural gas paired with solar for power generation
  • Hydrogen blending in existing natural gas pipelines
  • Biofuel integration into traditional liquid fuel infrastructure
  • Using renewable power for midstream operations while transporting hydrocarbons

Infrastructure Adaptation

Existing midstream assets can often be modified or repurposed to accommodate renewable or lower-carbon energy sources:

  • Converting pipelines for biodiesel or renewable natural gas transport
  • Utilizing storage facilities for biofuels or synthetic fuels
  • Adapting terminals to handle hydrogen or ammonia as energy carriers
  • Exploring carbon capture utilization and storage (CCUS) opportunities along hydrocarbon infrastructure

Midstream Case Studies

Enbridge Inc.

Enbridge, North America’s largest midstream operator, has committed to net-zero emissions by 2050 while maintaining its extensive pipeline network.

Hydrocarbon Strategy:
  • Continues operating and expanding its liquids pipeline network while improving efficiency
  • Investing in natural gas infrastructure as a transition fuel
  • Implementing comprehensive leak detection and prevention technologies
Renewable Integration:
  • Has invested over $8 billion in renewable energy projects including offshore wind
  • Operates 23 wind farms and 4 solar energy facilities
  • Exploring renewable natural gas (RNG) transport through existing pipeline infrastructure
  • Developing low-carbon hydrogen projects that can utilize modified natural gas pipelines

Kinder Morgan

Takes a measured approach to the energy transition, focusing on incremental adaptation of existing assets.

Hydrocarbon Strategy:
  • Maintains focus on natural gas as a lower-carbon transition fuel
  • Enhancing infrastructure efficiency to reduce emissions intensity
  • Expanding CO₂ transportation capabilities for enhanced oil recovery and potential carbon capture
Renewable Integration:
  • Acquired Kinetrex Energy to enter the renewable natural gas market
  • Repurposing select terminal assets for renewable fuels handling
  • Exploring biodiesel blending at existing terminal facilities
  • Evaluating potential for hydrogen blending in natural gas pipelines

Williams Companies

Williams has positioned its natural gas infrastructure as complementary to renewable energy growth while exploring direct renewable opportunities.

Hydrocarbon Strategy:
  • Emphasizing the role of natural gas in supporting renewable energy intermittency
  • Implementing a comprehensive methane reduction program across assets
  • Optimizing existing gathering, processing, and transportation infrastructure
Renewable Integration:
  • Developing solar installations to power compression stations
  • Investing in RNG projects that connect to existing pipeline networks
  • Exploring green hydrogen production possibilities
  • Partnering with Microsoft on developing a clean energy hub in Wyoming

Rather than viewing renewable and hydrocarbons as entirely separate domains, the most successful will be those who can efficiently manage traditional hydrocarbon infrastructure while strategically incorporating renewable elements to meet evolving market demands and regulatory requirements.

About KBCm

Construction Management (CM) representation is critically important for all construction, especially energy sector projects, as these are complex, high-risk, and require precise coordination across multiple disciplines. KBCm has the boots on the ground experience needed – from conceptual design to project close out. For more information contact Skyler at (940) 366-2231.