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February 04, 2013 at 07:06 AM
Here’s a bit of good news that didn’t get the attention it probably should have—2012 saw the greatest increase in domestic crude production ever.
Even better? 2013 is already on track to beat it.
It’s one reason Brian Watson is so bullish on master limited partnerships that deal in the space, especially those that invest in the “midstream” sector of oil and gas pipelines.
“We’ve been told for so long, and have been preparing for so long, for diminishing crude in this country,” Watson, director of research and portfolio manager for the MLP firm SteelPath, told attendees at TD Ameritrade Institutional’s annual conference in San Diego on Friday. “In the past three years we’ve had a turnaround in this assumption.”
This turnaround is creating huge demand for midstream products and services, he said. It might also be a reason MLP firms like SteelPath are getting noticed. The mutual fund behemoth OppenheimerFunds acquired SteelPath last year.
“We’ve seen capital expenditures in the midstream space of around $40 billion over the past few years,” Watson adds. “We’ll see that grow to around $60 billion over the next few years.”
