This Week in Midstream

Midstream assets, specifically pipelines and processing centers, play a crucial role in America's energy future. The industry is growing rapidly, and it may play a crucial role in the future of your portfolio. There are many companies to keep an eye on, and it's an industry worth watching. Here's a recap of this week's highlights and lowlights.

Marcellus continues to boom
Analysts at Fitch Ratings are predicting production in the Marcellus Shale to grow from 4 billion cubic feet per day to 10 bcfd over the next five years, which means nothing but good times for midstream companies.

Natural gas liquids in particular will drive midstream infrastructure growth. Two companies to keep an eye on are Royal Dutch Shell (NYSE: RDS-B  ) , which plans to build a petrochemical facility in the Marcellus, and Enterprise Products Partners (NYSE: EPD  ) , which expects to complete its ATEX Express ethane pipeline by the first quarter of 2014.

Private equity looks to cash in
On Wednesday, The Wall Street Journal reported on the growing trend of private-equity investment in midstream projects. Over the past four months, private-equity firms have committed at least $1.7 billion to the development of midstream infrastructure.

Penn Virginia Resources (NYSE: PVR  ) is one company that's benefiting from the trend. Riverstone Holdings invested $400 million in April, partially financing PVR's $1 billion acquisition of Chief Gathering LLC.

A tough second quarter
Kinder Morgan
(NYSE: KMI  ) released its second-quarter results on Thursday, and the news was mixed. The company was forced to sell certain assets to secure government approval of its El Paso acquisition, and it did so below value. The result was a $327 million writedown and a $217 million loss for the quarter.

On the upside, second-quarter revenue increased 11% year over year to $2.17 billion, and the company announced a 9% dividend increase. Its quarterly payout now stands at $0.35.

Foolish takeaway
Midstream is where it's at, folks. The energy industry will spend an estimated $130 billion to $210 billion expanding natural gas infrastructure over the next 20 years. After all, the more oil and gas that flows through those pipelines and processing centers, the more cash there is to flow into your pockets. Stay on top of all the midstream action by adding the companies in this article to My Watchlist.

Fool contributor Aimee Duffy doesn't own shares of the companies mentioned in this article. If you have the energy, check out what she's keeping an eye on by following her on Twitter, where she goes by @TMFDuffy. Motley Fool newsletter services have recommended buying shares of Enterprise Products Partners. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.


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