Midstream companies reap the benefits of US shale gas boom
The midstream sector has long been in the shadow of the large oil and gas industry players but the shale boom in the United States has had a domino effect, boosting other industries as well, including operators of pipelines and storage facilities, according to consultancy group Deloitte.
Capital spending in the midstream sector has been going up in line with oil and gas production. While in 2006 the total capital spending of companies in the sector stood at $7 billion, the figure more than tripled in 2012, reaching $26 billion, Deloitte analysts said.
RELATED: Texas drillers turn to water recycling
But that's not all. Midstream sector market value has shot up in the past few years. Over the next two decades, Deloitte expects that the total value of oil and gas industry infrastructure will break the $200 billion mark. As a result of the increasing importance of the sector, about $3.6 billion was invested in start-up pipeline and storage businesses at energy initial public offerings in 2013.
The present situation is in stark contrast to the reality prior to the U.S. shale revolution. Back in that era, midstream companies accounted for a modest part of the oil and gas industry market, with just seven companies, worth over $5 billion. Deloitte claims that the number of companies has now risen to 25 and will continue to go up.