As the oil and gas industry continues to excel, the U.S. needs a better energy infrastructure. This is an indisputable fact – there’s more oil and gas to refine and transport, and not enough facilities for doing so. This is an ideal moment for investors to take advantage of the growth in infrastructure through investing in pipelines.
The U.S. needs pipelines and other infrastructure to transport its wealth of natural resources to where its needed. Many companies have planned infrastructure investments across the country, and investors should be paying attention.
The oil and gas industry is divided into three major components:
The midstream sector involves the gathering, transportation, storage, treating and processing of natural gas, condensate and crude oil.
There are reasons beyond the consistent demand that make pipelines a smart investment decision. Pipelines are hard, tangible assets that provide long-term, reliable cash flow. Midstream oil and gas companies – those that own infrastructure like pipelines – make a steady profit because they charge fees for using their pipelines, as well as fees for gathering, transporting, processing treating and blending. In addition to the fees, midstream contracts are long-term which ensures higher yields over a longer period of time.
Midstream is in high demand, and the supply is much lower than the industry needs it to be. In this situation, any midstream company that can complete a useful pipeline stands to make a tidy profit. Investors who find these companies, naturally, will also benefit from the steady cash flow pipelines bring and the demand for them.
To meet the needs of an increasingly energy-independent nation, the U.S. will need more and more infrastructure as the natural gas and oil booms continue – and the companies completing these projects will need investments.
Investors interested in adding midstream to their investment portfolio should work with a firm with extensive industry knowledge and experience to benefit from this exciting and prosperous industry.