During September, the Alerian MLP Infrastructure Index (AMZI) fell 3% on a total-return basis, versus the S&P 500 Index, which was down 7% on a total-return basis. With 10-year treasury yields sinking below 2%, investors continue to turn towards MLPs as a stable yield component to their portfolios. That said, broader equity market weakness continues to plague all asset classes, and MLPs were no exception.

Despite turbulent equity markets, several projects have been announced to address current pipeline transportation bottlenecks. In September, Enterprise Products Partners LP, Anadarko Petroleum Corp., and Enbridge Energy Partners LP announced plans to construct a 580-mile natural gas liquid (NGL) pipeline from the Texas Panhandle to Mont Belvieu, Texas, which will help alleviate NGL transportation constraints to Mont Belvieu, the destination for most NGLs.

To address the ethane takeaway issue in the Marcellus, Enterprise began a binding open season to gauge interest in a 1,230-mile pipeline transporting 125,000 barrels (bbl.) per day of ethane from the Marcellus to the Gulf Coast.

Finally, to add to the many other proposed projects to address a crude oil back-up at Cushing, Oklahoma, Magellan Midstream Partners LP announced plans to move forward with reversing and converting its refined product pipeline to transport crude from El Paso to Houston, which will allow Permian crude to bypass Cushing. Additionally, Enbridge Inc. and Enterprise announced plans to construct an 800,000 bbl. per day crude oil pipeline from Cushing to the Texas Gulf Coast.

Two giants of the midstream and exploration and production worlds made headlines in October when Kinder Morgan Inc. announced an agreement to purchase El Paso Corp. for $38 billion. The combined enterprise will be the largest midstream company in North America with 80,000 miles of pipelines and a $94 billion enterprise value. The associated MLPs, Kinder Morgan Energy Partners (KMP) and El Paso Pipeline Partners (EPB), will benefit as Kinder Morgan intends to drop down El Paso's natural gas pipelines to KMP and EPB during the next four years. By 2015, Kinder Morgan plans to have an asset base consisting primarily of general partner interests in KMP and EPB (along with units) and shares of Kinder Morgan Management.

MLP-to-MLP transactions occur fairly infrequently, as MLPs have a cost-of-capital advantage when purchasing from non-MLPs. However, in October, Enterprise agreed to sell its Mississippi natural gas storage facilities to Boardwalk Pipeline Partners LP for $550 million. These seven salt-dome caverns have some 29 billion cubic feet of total capacity and are currently fully subscribed under long-term contracts with an average remaining contract life of seven years.

While general market weakness continues to affect equity prices, investors should focus on the long-term growth outlook of the asset class, both from organic construction projects that address take-away needs and from third-party acquisitions, as MLPs benefit from a lower cost of capital than C-corporations.

Maria Halmo and Emily Wang are directors for Alerian, an independent indexing company that provides objective market information. Over $4.5 billion is directly tied to Alerian's indices, which include the leading benchmark of MLP infrastructure equities: the Alerian MLP Infrastructure Index (AMZI). For more information, please visit www.alerian.com

Year-to-date through September, the Alerian MLP Infrastructure Total Return Index has outperformed the S&P 500 Total Return Index by 4.4%.

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