The primary growth prospects in the energy infrastructure space are in the logistics related to the handling of crude oil and natural gas liquids and are providing opportunities for most entities, says Brian Watson, Director of Research at SteelPath Fund Advisors, a money manager with a focus on energy infrastructure primarily through master limited partnerships.
“We’ve had declining crude oil, declining natural gas, declining natural gas liquids production in the U.S. for a generation practically, and now it’s actually reversed,” Watson said. “I think that seismic shift, which maybe hasn’t totally been recognized by most of the market, creates a really interesting opportunity set for these infrastructure providers.”
Watson says Buckeye Partners L.P. (BPL), a refined products transporter primarily moving gasoline, diesel and jet fuel from refining centers to consuming centers, is the firm’s largest holding across its funds.
“It’s a very attractive base business that benefits from annual tariff escalators and things like that. It’s a very secure low-risk business with some growth to it,” he said. “It trades attractively on a valuation basis, and we think it’s got an opportunity to have some multiples expansion as we go forward.”
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