When we talk about the energy revolution, we always seem to stop at the production flow of the oil and gas. We care tremendously about which companies have found and are pumping the most oil, and I mention them all consistently -- outfits such as EOG (EOG), Continental (CLR), WPX (WPX), Concho (CXO), Cimarex (XEC), Anadarko (APC) and Apache (APA). These are the new high-hitters, and they show no sign of letting up. That makes a ton of sense. Other than a handful of biotechs and a bunch of cloud companies, there's no real competition for growth.
We also talk about how there are companies that are going to be beneficiaries of low-cost natural gas production -- mainly outfits such as Dow (DOW) primarily, along with Nucor (NUE) and Lyondell Basel (LYB). And who can forget the amazing move we've seen in Cheniere (LNG)? This company hasn't even begun to sell liquefied natural gas overseas, yet it already has billions of dollars in commitments overseas for its 2016 scheduled production.
But one of the most powerful stories out there is the endless need to bring the oil and gas out of the current bottlenecks to where it is needed. These huge infrastructure products get announced pretty much every week, and we just yawn. That's a mistake, as the impact can be great.
First, remember, Rich Kinder, the visionary pipeline exec, said one of the reasons why he wants to consolidate all of his divisions into one high-dividend paying company -- Kinder Morgan (KMI), a core position of my Action Alerts PLUS charitable trust -- is the $600 billion in projects needed to get the fuels to where they are needed. These amount to being the biggest public-works projects of the era. We just don't hear about them much. That's because, for one thing, they are about transporting the hated "fossil fuels," and President Obama has made his view known on fossil fuels by stalling on the Keystone Pipeline basically for the next president.
But the industry isn't waiting. Just last month, for example, Plains All American Pipeline (PAA), a terrific company with a 4.31% dividend yield, announced a $500 million bridge pipeline that will take Bakken fuel and sell it to a Valero Energy (VLO) refinery in Memphis. That's important, because right now that Bakken fuel's all backed up in Cushing, Okla. That's a hub that is increasingly the problem in so much of the U.S. energy infrastructure -- infrastructure that was designed when we were importing ever-increasing amounts of crude oil. This pipe will cut out Cushing as a destination and bring needed oil right to the Midwest instead of first sending it to the Gulf and then sending it back up to the Midwest as part of our current antiquated system.
Then this morning, Dominion (D), one of my absolute favorite utilities, announced a monster of a pipe project -- a $4.5 billion-to-$5 billion project to bring natural gas from the Marcellus and Utica shale basins to Virginia and North Carolina. We have so little pipe coming out of the Marcellus, which we are now learning is the second-largest natural gas field on earth, and this deal will make instant sense for Dominion and its partners.
An injection like that into the U.S. economy is monumental. Remember, these jobs do not require college degrees, but they pay very well, just the kind of jobs that Washington should be praying for. But, again, because it connects natural gas to natural-gas-starved utilities instead of say, solar, the jobs are somehow viewed as second-class -- except for all of those that have them.
This pipeline is a reminder that Kinder remains in the driver's seat. But it's also a reminder that shares of MarkWest (MWE), which has the most viable pipe projects out of the Marcellus, remain a terrific buy when the company announces one of its frequent secondary offerings to raise money to build out facilities.
I wouldn't focus on all of these companies just to cheerlead about the new jobs they create, although that's a pretty darned fantastic collateral plus. I do so because the companies that are profiting from the energy revolution remain among the best investments out there, especially at a time of low interest rates on U.S. Treasuries and the need to play defense against an international world gone tense at every turn.
