Midstream & Pipelines covers the companies that gather, process, transport, store and export oil, natural gas and natural gas liquids. MoatScope covers 36 companies here. Four have a wide moat, 24 a narrow moat and only eight none. More than three quarters of the industry is moat-rated, one of the highest shares in the market.
How the industry makes money
Most midstream revenue comes from fees for moving and storing volumes, often under long-term contracts, rather than from the price of the commodity itself. Liquefied natural gas exporters work the same way on a larger scale: Cheniere's terminals cost tens of billions of dollars, take years to permit and build, and commit their capacity to customers under long contracts before they operate.
Where the moats are
Efficient scale is the defining source, present in 22 of the 28 moat-rated companies: once a pipeline serves a route, building a competing one rarely makes economic sense. Switching costs appear in 14, because producers and customers are physically connected to the systems they use.
- Enbridge: a mainline crude system and gas-transmission network that occupy positions no rival can duplicate.
- Enterprise Products Partners: an integrated natural gas liquids franchise unmatched in scale and connectivity.
- Energy Transfer: a large interconnected network of essential infrastructure.
- Cheniere Energy: built and contracted LNG export capacity that new entrants need years and huge sums to replicate.
The narrow-moat group includes Williams, Kinder Morgan, TC Energy, Targa Resources, MPLX, ONEOK, Cheniere Energy Partners, Venture Global and Pembina Pipeline. Companies without a moat are mostly smaller or earlier-stage operators, such as New Fortress Energy, NextDecade, Summit Midstream and Clean Energy Fuels.
What wears moats down
Pipelines lose value when the basins they serve decline or when volumes move to newer routes. Contracts that are not purely fee-based leave some exposure to commodity prices, and heavy debt makes the industry sensitive to interest rates. Permitting rules cut both ways: they protect existing systems from competition but can also block expansions.
What the quality scores say
The four wide-moat companies score between 47 and 62 on MoatScope's quality scale, against an industry average of 43. Strong market positions paired with moderate scores are typical of businesses that need heavy capital spending and carry significant debt.
What to watch
- Production volumes in the basins each system serves.
- Contract renewals and the share of fee-based revenue.
- LNG export approvals, construction schedules and long-term contract signings.
- Leverage and the cost of refinancing debt.
Moat ratings and quality scores on this page update as companies report. Price versus fair value for every company in the industry is in the screener.