This is a great time to invest in midstream,said William R.Lemmons Jr.,a managing partner and founder of EnCap Flatrock Midstream."That is both in mergers and acquisitions activity as well as in new construction.There are a lot of both in our portfolio."Taking a slightly more circumspect view,Amol Joshi,vice president and senior credit officer for energy at Moody's,said that"E&P capital discipline has generally been a drag on midstream volume growth.However,it is certainly getting harder to maintain that discipline at high oil and gas prices.And while public companies are more focused on free cash flow,some private companies without a public shareholder base are significantly growing volumes."We are seeing meaningful volume growth,"Joshi continued,"but not enough to spur significant midstream investment yet.We will not be at pre-pan-demic oil production levels until sometime next year,and existing infrastructure should generally suffice.For natural gas,we see volume growth led by exports,spurring new LNG investments."That capital discipline may be one manifestation of a wider structural change.
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