Midstream's Important Role in the Energy Transition

Companies are actively evaluating ways to participate in this evolution, and some are partnering with other energy firms to pursue opportunities around hydrogen, carbon capture, and renewable fuels. The ability to safely move and store energy — whether it is oil, natural gas, renewable fuels, hydrogen, or byproducts like captured carbon dioxide — will be needed for decades to come, Stacey Morris, CFA, director of research at Alerian, wrote in an insight.

“The world is focused on reducing carbon emissions, but I think what investors need to know is that midstream has an important role to play in this,” Morris said last month during a livecast hosted by ETF Trends and ETF Database. “The ability to store new energy and do that safely is going to be an asset through this energy transition. What we’ve seen is that a number of companies are looking to partner with midstream players and take advantage of that expertise as we move through the energy transition.”

Paul Baiocchi, chief ETF strategist at SS&C ALPS Advisors, said that the expertise that midstream companies have in building networks of pipelines and storage and processing facilities is fungible to emerging renewable energy and climate change-oriented initiatives. 

“You’ve got the implementation of hydrogen that’ll take place at scale once it’s proven to be economical, and a pipeline that currently moves natural gas or crude oil could, in theory, move hydrogen around the country. Companies have talked about how they can do that with minimal blending but also at a high level,” Baiocchi said.

“If your expertise is infrastructure designed to move to transport and process molecules, it doesn’t have to be crude oil or natural gas. It can be applied in any number of ways, and the reality is, is there’s companies out there who are looking for partners with expertise in this category, and these companies are stepping up to the plate to provide it,” Baiocchi continued. 

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