In a mad March filled with natural disasters in Japan and geopolitical unrest in Libya, the Alerian MLP Infrastructure Index (AMZI) fell 1.6% on a total return basis, versus the S&P 500 Index, which remained flat.

Despite the slight pullback in unit prices, from a capital-markets standpoint MLPs still fared well, raising $2.2 billion in public equity and $1.1 billion in public and private debt. A few MLPs, including Linn Energy LLC, Atlas Pipeline Partners LP, MarkWest Energy Partners LP and Copano Energy LLC, solicited tender offers of their publicly traded debt. Some were able to refinance their debt at lower interest rates and for longer terms.

MarkWest successfully tendered $166 million of 8.75% notes due 2018 and closed on a public offering of $200 million of 6.5% notes due 2021. Likewise, Copano was able to tender $333 million of 8.125% notes due 2016, and closed a public offering of $360 million of 7.125% notes due 2021.

Activity in the Permian Basin in West Texas and southeast New Mexico has picked up significantly among the E&P and midstream companies. After years of steady production declines, producers are now targeting new formations by applying horizontal-drilling technologies to oil zones such as the Avalon shale and Bone Spring plays.

Alerian MLP Infrastructure Index (AMZI) Monthly Price Performance (Trailing 12 Months).

From a midstream standpoint, crude oil from the Permian that previously flowed north to Cushing, Oklahoma, now must compete against Bakken and Canadian crude for storage and pipeline take-away capacity to Gulf Coast refineries. Consequently, MLPs have stepped up to the plate and proposed potential alternatives to get Permian product directly to the Gulf Coast without having to go through Cushing.

Through its 60.3% ownership interest in West Texas Gulf Pipe Line Co., Sunoco Logistics Partners LP has announced plans to expand capacity out of the Permian by a minimum of 100,000 barrels per day to various refining centers in Texas, the Midcontinent and the Gulf Coast. Magellan Midstream Partners LP is proceeding with permitting and final engineering for the potential reversal of its Houston-to-El Paso, 200,000-barrels-per-day pipeline and will make a definitive decision on the reversal within the next two months, if sufficient binding agreements are executed.

Similarly, in the quickly ramping-up South Texas Eagle Ford shale, NuStar Energy LP has partnered with TexStar Midstream Services LP to develop a pipeline system to transport crude and condensate to refineries in Corpus Christi.

The multiple proposed projects to address Permian and Eagle Ford take-away capacity give further evidence that MLPs will continue to play an integral role in meeting new infrastructure demands. But more importantly, whether MLPs are building new pipelines, expanding pipeline capacity or reversing pipeline flows, it is clear that while these hard-asset pipelines may be firmly placed in the ground, such assets can easily be adapted to meet changing supply and demand conditions.

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