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Geography

In recent years, much of the new natural resource supply (oil, natural gas and natural gas liquids) in the United States has been tied to emerging shale plays.  While supply had already been, it wasn’t until recent years that technological advances made it cost effective to drill in these “unconventional” plays.  Some of the major areas include the Bakken, Marcellus, Haynesville and Eagle Ford Shales.  Some of the discoveries that more recently have been explored include the Utica, New Albany and Niobrara shale plays.

As you can see on the map below, the proximity of the shale plays requires energy infrastructure to be put in place to move the resources to end markets.  Master Limited Partnerships play a very critical role in the build-out of this infrastructure by providing exploration and production companies with the means to gather, process, fractionate, store and deliver the natural resources to their destinations.  

According to the Interstate Natural Gas Association of America (INGAA), which highlights the long term expansion in energy demand and infrastructure spending, they estimate that the energy industry will spend approximately $447Bn-$597Bn from 2016 through 2035.  Of those amounts, about 60% is expected to be spent on natural gas related infrastructure, 31% on oil-related infrastructure and 9% on NGL-related infrastructure.  This data takes into account the recent declines in energy prices that we have witnessed in 2015-16.