New York Times
A Pipeline Merger Meets a Need, and Perhaps Resistance

Monday, October 17, 2011

Kinder Morgan’s planned $21.1 billion takeover of the El Paso Corporation is seen as a potential catalyst for consolidation in an unheralded but increasingly important part of the energy industry: the companies whose pipes carry the oil and gas.

Kinder Morgan’s deal is based on the belief that natural gas will become an increasingly important fuel for the nation, and that its growth is hampered by a lack of adequate pipeline networks.

“It’s a bet that hydrocarbons are going to be the most significant component of our energy mix for a long, long time,” E. Russell Braziel, a managing director of the consulting firm Bentek Energy, said.

Energy companies have been racing to gain bigger positions in shale formations throughout the country. Beyond oil and natural gas, they are also hoping to tap into vast reservoirs of natural gas liquids like butane and propane, which are in high demand from chemical manufacturers.

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