VettaFi Head of Energy Research Stacey Morris joined Steve Darling from Proactive to discuss how Middle East energy supply disruptions could create long-term opportunities for North American energy producers and midstream infrastructure companies.
Morris explained that the US and Canada could become increasingly important energy suppliers as global buyers seek more reliable sources of crude oil, liquefied natural gas (LNG) and natural gas liquids, including ethane, propane and butane.
She highlighted the growth potential for pipelines, processing facilities and export infrastructure as demand for North American energy increases.
Morris said North American natural gas demand could grow approximately 40% over the next decade, driven primarily by expanding LNG export capacity. US projects currently under construction are expected to double the country's LNG export capacity by 2031. Canadian LNG developments, power generation, industrial reshoring and growing electricity needs from AI data centres could provide additional demand.
These trends could require further investment in natural gas production, processing, transportation and export infrastructure, creating potential opportunities for midstream companies.
Morris also highlighted the sector's potential appeal during inflationary periods. Midstream companies operate physical infrastructure assets and often have contracts with inflation adjustments. She cited Enbridge as an example, noting that approximately 80% of its EBITDA is inflation protected.
The sector may also appeal to income-focused investors through dividends, free cash flow generation and potential dividend growth. Morris added that midstream companies have historically demonstrated relatively modest correlations with other asset classes, potentially providing portfolio diversification benefits.
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