198 www. bus- ex. com JANUARY 10 standard Setting service the

PSI Midstream JANUARY 10 www. bus- ex. com 199 S ome in the natural gas production industry suggested that Lee Powell was going over to the " dark side" when he made the decision to leave the gas production side of the industry and build a company in the midstream service sector. However, with in- depth knowledge of the needs of gas producers and more than 20 years' experience, he understood exactly what the producers wanted from a service partner, and he knew how to deliver it. During 2005 he gathered together a management team of highly experienced partners, secured the backing of private equity company Natural Gas Partners, and launched PSI Midstream on January 1, 2006. " Our aim was to pursue midstream opportunities primarily located along the Gulf Coast of both Texas and Louisiana, in support of offshore drilling activities," Powell says. " We began scouring the countryside for either acquisitions or greenfield opportunities to build an asset base." The company's first move was to invest $ 20 million in the construction of the Kaplan Gas Plant, which straddles the Transco Central Louisiana gas pipeline system- an interstate pipeline transporting raw natural gas, 90 percent of which originated from the offshore fields in the Gulf of Mexico. " Gas in its natural state is essentially too rich to be used in the retail environment," Powell explains. " So it has to be processed and conditioned to remove the heavier liquids and water from the gas stream to make it merchantable." Gas flowing through the Transco pipeline was untreated- installing the necessary plant on the offshore gas platforms is prohibitively expensive- and there were no treatment plants on Transco's pipeline. This made it an attractive opportunity for PSI. The economics were sound. From the gas producer's viewpoint, it would be highly cost- effective to employ PSI to process the gas in transit on the Transco pipeline, as this would increase its value considerably. From Transco's perspective, having a processing plant on the pipeline removed a lot of extra expense while making the pipeline more attractive to the gas producers. " So it was a win- win- win situation for the producers, the pipeline and us," Powell says. standard Setting In just four years, PSI Midstream has developed a vibrant portfolio of assets in the gas midstream service industry. President Lee Powell talks to Gay Sutton about the growth of the company and the ethos of service