AUSTIN, Texas—Like the song, everything old is new again for oil and gas. The business is re-entering an age of energy abundance much like the 1950s and 1960s and that’s good news for the midstream, according to the chief economist of Houston-based Phillips 66 Co. (NYSE: PSX).

Horace Hobbs, speaking April 16 at the 97th annual convention of the GPA Midstream Association, said energy executives “need to change the way they think” as production swells from unconventional shale plays. He said the switch “is a whole new phenomenon” for nearly everyone in oil and gas because for 45 years the industry has been focused on supply following the OPEC embargo during the 1973 Yom Kippur War. That spans the careers of nearly everyone in the business today.

Now, the question is finding demand.

“We have been exploring for oil in the Arctic and deepwater offshore, we don’t need to do that anymore,” Hobbs said. “It’s a substantial change in the way we think.” Development of the shale plays has become predictable “mining” in comparatively easy-to-reach, land-based plays, he noted. The shales’ abundance means swelling proved reserves that go out 30 to 40 years, even with no additions.

The economist was one of many speakers to present at the sector’s largest annual conference. The event drew more than 2,200 attendees, its largest crowd in several years.

Hobbs admitted he and other energy economists have struggled to understand how a demand-based energy business works since their careers, too, have focused on supply. His research meant multiple trips to dingy warehouses full of yellowing records in Bartlesville, Okla., the headquarters of Phillips 66’s predecessor, Phillips Petroleum Co. In the 1950s and 1960s, Phillips was one of the nation’s premier refining and marketing firms.

“I hated going to Bartlesville,” Hobs quipped, since his trips meant hours of work digging through dusty files in old boxes, studying the time when Phillips was an integrated major and one of only two firms to market petroleum products in all 50 states. The other firm to accomplish that remarkable feat was Texaco.

Energy companies were different then, he has concluded. The U.S. had ramped up production during World War II to support the Allied war effort. But after the war, the supply was still there—but what to do with it?

“All of their efforts in the 1950s, into the 1960s and even the early 1970s were not to find resources, it was to find customers,” he said. That’s why producers, such as Phillips invested in extensive midstream and downstream operations to move their production.

A similar time has come again “and that’s good news for the midstream,” Hobbs predicted. There will be a renewed emphasis on the downstream end of the midstream value chain, including refining, storage, transportation and exports. “And we get to extract a premium for connecting producers to new customers,” he added.

Domestic retail motor fuel sales may not have the emphasis that there was in the car-crazy decades of the past, but there are still plenty of new opportunities for growth. He covered statistics that show U.S. motor fuel will be flat, at best, as the public buys more efficient cars and drives less. But Hobbs added the nation’s swelling NGL production will back out other petrochemical feedstocks, typically naphtha. And petrochemicals are a big and rapidly growing market.

But for gasoline and diesel, there will be markets U.S. refiners can enter abroad.

“The Gulf [Coast] refineries are the most powerful in the world” and are far more efficient. He said China now has 100 cities with populations of 1 million or more. “Think about that, that’s 100 Houstons,” he added, and all those people will want more gasoline, diesel and LPG as the Asian nation’s economy continues to grow.

Tempering that potential fuels market is the fact that many foreign nations want to keep refining capacity—however inefficient it may be—for strategic, military reasons.

Hobbs described his meetings with officials in the Central American nation of Belize “that now has two oil wells and one refinery” with a miniscule capacity of 4,000 barrels per day. “Why?” Hobbs asked, since that refinery cannot possibly compete on price with American refineries that are just a few days by tanker across the Gulf of Mexico from the most efficient refineries in the world.

Oh, was the reply, when Guatemala attacks we want to be able to fuel our tanks, he was told. Belize, the former colony of British Honduras, has had strained relations with its neighbors for years and the U.K. maintains troops there. Similar situations exist in Africa and elsewhere, Hobbs noted.

“We will need to invest hundreds of billions of dollars globally, starting in the U.S., to add the midstream assets to find those new customers,” Hobbs concluded.

Paul Hart can be reached at pdhart@hartenergy.com.