The upstream MLPs will eventually have a negative impact on upstream asset flow in the U.S., according to Ken Olive, president and chief executive of The Oil & Gas Asset Clearinghouse. Olive spoke recently to more than 250 business-development professionals at A&D-The Workshop, presented by A&D Watch and Oil and Gas Investor.

The lower cost of capital available to MLPs for acquisitions, due to the advantage of the tax flow-through structure to investors, is "very compelling," he said. Sale metrics are destined to increase further because of this and rising commodity prices.

This friendly acquisition environment will, he said, result in MLPs "aggregating assets" to commit to distributions-in essence, hoarding the best producers.

"MLPs are dominating your low-risk, long-life purchases," he said. "Its tough to sell assets whenever you're struggling to meet your distribution demands."

But there is hope that some assets will be left for non-MLP purchases. "Certainly, there are a lot of assets that don't fit into that type of a structure."

Even so, sellers in today's heated market are expecting MLP metrics on non-MLP reserves, Olive said. "Anyone who has reserves that even resemble long-life reserves is trying to make them into that to attract the MLPs and the metrics they are paying."

Tax-law changes could create a different kind of negative impact regarding MLPs. Such changes resulted in the death of upstream MLPs in the U.S. in the early 1980s. Changes in Canadian law are resulting in the similarly structured royalty trusts divesting their assets or changing their structure to a traditional E&P corporation.

"We'll see if the federal government decides to get involved and how that may play out," he said.

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