Understanding Risk for Midstream Transport


Moving over dimensional machinery, hazardous products, and required equipment to natural gas processing plants and compressor stations on- or off-highway can present safety problems. Every shipment is a large risk for midstream oil companies because the penalty for an accident or non-compliance is enormous.

Oil and gas companies, especially midstream companies, face more risks as transportation becomes more competitive. In order to maintain high safety standards, companies vet and choose reliable carriers, create routing guides and track work activity. However, these activities become harder as capacity dwindles and reliable carriers are less available.

A temporary lull in oil production has loosened capacity for the time being, but truck capacity is generally trending tighter. The price of oil will not stay below $50 a barrel forever, and when prices begin to rise and production picks up again, capacity will be extremely tight.

Midstream companies do not have time to continuously search for and assess new carriers to find the most reliable companies. Focusing on daily operations, optimizing productivity and concentrating on gas flow rates are the top priorities for midstream companies. As transportation has become more costly and time-consuming, risk management is disregarded.

Risk management refers to the analyses and reaction to any potential risk in the supply chain process. Mitigating risk is usually a concern for high-level executives, but those in the field are more concerned with operations and shipping cargo as quickly as possible. This misalignment of goals adds to the difficulty of ensuring safe shipment of goods.

Many midstream companies rely on third-party logistics (3PL) providers to minimize risk. In order to avoid great loss, a 3PL pre-qualifies carrier checks carrier CSA scores and vets drivers. 3PLs can actively track movement and request that historically high-performing carriers move more loads. A 3PL also saves a lot of unnecessary time spent on transportation. When a midstream company works with a 3PL, there are more benefits than risks.

A 3PL provides value through management programs such as MRO, inventory and inbound. These programs create visibility and data to a supply chain that’s typically impulsive and manual.

Other than 3PLs, a good resource for safety instruction and data is the Federal Motor Carrier Safety Administration (FMCSA). The FMCSA is dedicated to improving the safety of commercial motor vehicles and saving lives by developing, educating and enforcing regulations to drivers, carriers and the public. For more information on regulations, safety resources and technology for safety, visit its website.

For the complex supply chain of midstream companies, compliance and safety have to be managed effectively in order to generate accountable transportation schedules and a controlled supply chain.

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