Transportation and storage of hazardous liquids has not been a hyper-competitive industry historically. Competition has increased in the past 30 years as industry views towards transportation and storage services have evolved into a business unto itself rather than primarily a cost of doing business for the company’s upstream exploration and production and/or downstream refining businesses. When pure midstream companies proliferated in the late 1990s and early 2000s, integrated oil supermajors followed suit by divesting midstream operations into master limited partnerships. One outcome of the new companies and corporate realignments was more midstream operators seeking additional customers beyond just their affiliates in the marketing, upstream and downstream business sectors. Despite this market dynamic, competition within midstream companies still lags most industries.
Moreover, the industry outlook is cloudy. As a direct result of demand destruction caused by the coronavirus pandemic, the US Energy Information Agency reports that crude oil production is falling in 2020 and forecasts further crude production reductions during 2021. Even if volumes recover to pre-pandemic business levels as soon as 2021, public sentiment to lower carbon emissions and the prospect of greater regulation stemming from a potential change in the US political landscape combine to a less than rosy outlook for midstream operators.