First to observe royals in portable shelter finding stream (7)
I believe the answer is:
torrent
'stream' is the definition.
(I know that torrent is a type of stream)
'first to observe royals in portable shelter' is the wordplay.
'first to' indicates taking the first letters.
'royals' becomes 'rr' (an abbreviation for royal written twice).
'in' means one lot of letters goes inside another.
'portable shelter' becomes 'tent' (I've seen this before).
The first letter of 'observe' is 'o'.
'o'+'rr'='orr'
'orr' inserted inside 'tent' is 'TORRENT'.
'finding' acts as a link.
(Other definitions for torrent that I've seen before include "Rushing stream, flood" , "A rushing stream of water" , "Overwhelming flow" , "Violently fast stream of water" , "Overwhelming outpouring" .)