The Fund will target investment opportunities within the estimated $25 billion midstream sector of the North American energy market. Midstream assets serve to gather, store, transport and process oil, natural gas and natural gas liquids from their production source within the upstream market to end users such as utilities, industrial businesses and residential homes that constitute the downstream market. The midstream sector in North America includes 90 interstate and 70 intrastate pipelines (aggregating roughly 1.2 million miles of pipeline), 525 processing facilities, 120 different storage operators and 28 market centers. Given their function, midstream services are regarded as mission-critical or “must-run” components of the energy market. Disruptions to midstream energy services can generate supply shortages and service interruptions, thereby inconveniencing and increasing prices to consumers. The Principals believe midstream assets generally have favorable investment characteristics, including a lower risk profile versus upstream assets, high barriers to entry, attractive cash flow from operations, and a relatively low level of commodity price exposure.
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