Magnum Hunter Resources Corp (MHR), Markwest Energy Partners LP (MWE), Kinder Morgan Energy Partners LP (KMP): The $250 Billion Problem That’s Holding Back American Energy Independence

While the issues in Appalachia have led to lost revenue and have crimped profits, it’s not the only region that has been plagued by infrastructure problems. Producers in the Bakken have really had a rough time getting natural gas production into pipes. In fact, Magnum Hunter Resources Corp (NYSE:MHR) noted that it was forced to flare 12 million-15 million cubic feet of natural gas per day last quarter. Its midstream partner, Oneok Partners LP (NYSE:OKS), has encountered significant problems in the process of connecting all of its wells. It’s so bad that Glenn Dawson, the president of Magnum Hunter Resources Corp (NYSE:MHR)’s Williston Basin unit, has called the process “very slow and painful”. The plan is to have the gathering system complete by the third quarter of this year.

Clearly, lack of infrastructure is holding back the production of oil and gas. Midstream companies aren’t the ones to blame — they are investing billions to move these projects forward. In fact, Oneok Partners LP (NYSE:OKS) has already announced more than $5 billion in growth projects through 2015 and has another couple of billion dollars in projects that it has yet to announce. Meanwhile, Markwest Energy Partners LP (NYSE:MWE) is planning to invest up to $1.8 billion this year alone, while Kinder Morgan Energy Partners LP (NYSE:KMP) has more than $13 billion in growth opportunities over the next five years.

While some blame can be levied on a slow permitting process, the real obstacle is that production is moving faster than the infrastructure to handle it can be built. This could spell opportunity for investors because midstream operators will need access to capital to move these future projects forward.

The article The $250 Billion Problem That’s Holding Back American Energy Independence originally appeared on Fool.com and is written by Matt DiLallo.

Fool contributor Matt DiLallo owns shares of Enterprise Products (NYSE:EPD) Partners L.P. The Motley Fool recommends Enterprise Products Partners L.P. and ONEOK Partners, L.P.

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