A Natural Gas Infrastructure Play

Over the past year companies have also expanded their pipelines. Regency Energy Partners LP(RGNC) was the latest firm to complete a pipeline expansion.

Chesapeake Energy(CHK) recently sold part of Chesapeake Midstream Partners(CHKM) to the public, using the capital to buy more infrastructure assets. Dan Dicker covered this deal and one by Anadarko Petroleum(APC) in a recent article on TheStreet.

For now, the MLPs have the momentum. With healthy yields and steady price appreciation, these companies are benefiting from the low-yield environment while avoiding harm associated with the low price of natural gas.

Looking at the long-term development of the industry, the building of natural gas infrastructure is not a make-work stimulus project spending federal dollars. It is the private capital of energy companies that anticipate increased demand for natural gas.

Low prices alone will eventually lead to greater demand by business and consumers, with or without any help from the government. Should the government make it easier to switch to natural gas fuels for transportation, for example, demand will increase even more.

Eventually, that increase in demand will push prices up, and with it, the shares of companies involved in the exploration and production of natural gas because right now, these firms are priced based on the low price of natural gas. When the stock market or natural gas prices drag an ETF such as FCG downward, long-term investors should take the opportunity to pick up shares.

-- Written by Don Dion in Williamstown, Mass.

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