The natural gas delivery chain comprises three sectors: upstream (generally associated with the production aspect of the industry), midstream (generally associated with the transmission aspect of the industry), and downstream (generally associated with the distribution aspect of the industry. The upstream sector is often considered to consist of facilities used in the production and processing of natural gas. However, some consider upstream to include only production and define gathering and processing as part of the midstream sector.
The graphic below shows parts of the gas delivery system that are considered to be upstream.
Following is a description of each market participant in the upstream sector:
Gas well
Gas wells are holes drilled from the surface down to the gas resource, which may be one-half to several miles below the surface, then lined with casing steel pipe to allow the gas to flow to the surface wellhead. The casing pipe is topped by the gas wellhead that includes various components to control pressure and the flow of gas.
Lease facility
Lease facilities, sometimes called treatment facilities, are located at or near the wellhead. At the lease facility water and condensate are separated from the gas stream. If the well is an associated well, then oil and gas are also separated. The gas stream is then metered before entering the gathering system.
Gathering system
A gathering system is a pipeline that connects to lease facilities and carries the production gas to a processing facility. Gathering systems often connect multiple wells owned by multiple producers.
Gas processing facility
Gas processing facilities take raw gas from gathering systems and process the gas to produce pipeline-quality natural gas as well as other valuable natural gas liquids (NGLs). The processing facilities also remove contaminants. Some consider gas processors to be part of the upstream production sector; others consider them to be part of the midstream sector.
Owners of the various upstream facilities typically include gas producers, midstream companies, and/or gas pipeline companies.