New technologies have allowed oil and natural gas exploration and production companies to significantly increase energy output. However, this new production is coming from rural areas like North Dakota and west Texas. Getting the oil and gas that is being produced in these areas to refineries and population centers requires pipelines and other infrastructure. Energy infrastructure companies have stepped up to build the required pipelines and terminals. Many of these companies are using master limited partnerships (MLPs) as a tax-advantaged vehicle to hold the pipeline assets. MLPs have received increased scrutiny after Kinder Morgan, Inc. (NYSE:KMI) announced it would buy its MLP entities Kinder Morgan Management LLC (NYSE:KMR), Kinder Morgan Energy Partners LP (NYSE:KMP) and El Paso Pipeline Partners LP (NYSE:EPB). The Kinder Morgan family of companies was a pioneer in the MLP space, and KMI's purchase has caused analysts to question the longevity of the MLP structure. However,
By Maria Halmo
Everyone seems intent on continuing to ask about the Kinder Morgan transaction. We love that you keep sending in questions, but we said everything we had to say last week. One other interesting point was brought up, which I'll answer, but then we're getting back to business as usual.
I'm concerned that, given the Kinder Morgan (NYSE:KMI) transaction, the U.S. Treasury and IRS are conducting a more intensive review of MLPs, with a view toward initiating tax reform.
We do not believe that MLPs are being specifically targeted. There's a lot of buzz around inversions and corporate tax reform right now. When the Treasury and the IRS review their very long list of potential tax reform issues, MLPs will likely be included, as has been the case in the past. The quotes in the article were taken from a Treasury public affairs email response to the reporter's