15 Biggest Natural Gas Pipeline Companies in the World
In this article, we will take a look at the 15 biggest natural gas pipeline companies in the world. If you want to see more companies in this selection, go to the 5 Biggest Natural Gas Pipeline Companies in the World.
In the past five decades, the consumption of energy globally has increased by over 2.5 times from 68,792 terawatt-hours (TWh) in 1971 to 176,431 TWh by 2021. Previously, crude oil and coal were the primary sources of energy as they fulfilled 40.7% and 24.6% of the global energy needs, respectively, 50 years ago. Meanwhile, natural gas was only responsible for fulfilling 15% of the global energy needs. Fast forward five decades, there has been a significant change in the usage of different energy sources due to environmental concerns and a move towards net zero carbon emissions. The contribution of natural gas as a source of energy has increased to 22.9% as of 2021. The change in the energy mix has been due to the swift progression in the sourcing and transporting of natural gas around the globe through pipelines. The contribution of natural gas in the overall energy mix is soon expected to surpass coal usage to become the second biggest energy source in the coming years, with crude oil being the biggest source of energy in the world.
The increase in the demand and supply of natural gas around the world has resulted in the expansion of operations of multiple natural gas pipeline companies such as PetroChina, Chevron Corporation (NYSE:CVX), and Saudi Arabian Oil Company (TADAWUL:2222.SR). The top 10 countries of the world have a natural gas pipeline infrastructure of 701,000 kilometers (km) as of 2020. This is nearly equivalent to circling the earth 17 times. North and South America are key hubs for natural gas pipeline infrastructure, with four of the top 10 countries located in this region. The US has the biggest natural gas pipeline infrastructure in the world, covering a distance of 333,000 km. The outlook of pipelines under construction and pre-construction is also bright as China is working on increasing its natural pipeline coverage by nearly 30,000 km. This makes China the biggest builder of natural gas pipelines globally. The expansion of pre-construction and under-construction natural gas and crude oil pipelines is estimated to cost $1 trillion.
We picked the 15 biggest natural gas pipeline companies in the world based on their revenue. We also analyzed their pipeline coverage, the scale of operations and growth plans. The companies have been ranked in ascending order of their 2021 revenue. The list includes both public limited companies and some distinguished state and privately owned entities.
Biggest Natural Gas Pipeline Companies in the World
15. The Williams Companies, Inc. (NYSE:WMB)
Revenue 2021: $10.63B
Number of Hedge Fund Holders: 35
The Williams Companies, Inc. (NYSE:WMB) is a Tulsa, Oklahoma-based natural gas processing and transportation company. The Fortune 500 company claims that it is responsible for handling 30% of the natural gas in the US.
On December 16, Gabriel Moreen at Mizuho assigned The Williams Companies, Inc. (NYSE:WMB) a target price of $39 and maintained a Buy rating on the stock after the company announced the takeover of legacy Questar natural gas pipelines operator Southwest Gas for $1.5 billion. The analyst saw the development as a net positive for The Williams Companies, Inc. (NYSE:WMB) as it is acquiring assets that may provide lower growth but offer high quality in the long run.
ClearBridge Investments shared its stance on The Williams Companies, Inc. (NYSE:WMB) in its Q4 2021 investor letter. Here’s what the firm said:
“On a regional level, the Strategy’s largest exposure is in the U.S. and Canada (58%) consisting of regulated and contracted utilities (31%) and economically sensitive user-pays infrastructure (27%). During the quarter we initiated new positions in U.S. energy infrastructure company Williams Companies. With supply chain issues, higher housing costs, higher commodity prices and producer price inflation remaining square in the sights for 2022, we think higher inflation is a risk for global markets. We expect growth to slow to trend or below by mid-2022 and U.S. Treasury yields to rise, which will mean a continuation of negative real bond yields. Additional forecast volatility and therefore market uncertainty will arise as new COVID-19 variants appear and circulate. However, with high levels of vaccination across the developed world and less propensity for mobility restrictions and lockdowns, we expect the economic implications to be limited.
14. DCP Midstream, LP (NYSE:DCP)
Revenue 2021: $10.70B
Number of Hedge Fund Holders: 3
DCP Midstream, LP (NYSE:DCP) is a Denver, Colorado-based Fortune 500 provider of midstream petroleum and natural gas services.
DCP Midstream, LP (NYSE:DCP) claims to process over five billion cubic feet of gas and generate over 400,000 barrels of natural gas liquids (NGLs) on a daily basis. The company’s natural gas infrastructure has the capacity to supply gas to multiple markets and pipelines for downstream transportation. Numerous DCP Midstream LP’s (NYSE:DCP) outlets deliver gas to upscale markets in the east of the United States, substantially boosting the viability of the company’s business endeavors in and near its natural gas collection systems. The most sought-after, liquids-rich basins, including the Eagle Ford, Permian Basin, and DJ Basin, are home to the company’s asset base, which consists of 36 operational facilities and around 51,000 miles of pipeline. The company’s extensive operations make it one of the biggest natural gas pipeline companies in the world.
13. ONEOK, Inc. (NYSE:OKE)
Revenue 2021: $16.54B
Number of Hedge Fund Holders: 29
ONEOK, Inc. (NYSE:OKE) is a Tulsa, Oklahoma-based midstream service provider with an extensive presence in the transportation of natural gas and natural gas liquids (NGL) segments.
In the past eight years, ONEOK, Inc. (NYSE:OKE) has observed consistent growth in EBITDA. On December 21, Neal Dingmann at Truist increased the price target on ONEOK, Inc. (NYSE:OKE) from $69 to $73 and reiterated a Buy rating on the stock. Despite the continued downward pressure on commodity prices due to the uncertain macroeconomic outlook, the analyst sees stable operations of ONEOK, Inc. (NYSE:OKE) to aid the company’s growth. The analyst added that compared to its peer in the midstream segment, ONEOK, Inc. (NYSE:OKE) should see its earnings and cash flow remain more stable.
12. Kinder Morgan, Inc. (NYSE:KMI)
Revenue 2021: $16.61B
Number of Hedge Fund Holders: 38
Kinder Morgan, Inc. (NYSE:KMI) is a Houston, Texas-based energy infrastructure solutions provider. The company has 133,500 km of pipelines in its portfolio, making it one of the biggest energy infrastructure companies in North America.
Kinder Morgan, Inc. (NYSE:KMI) also has the distinction of having the biggest natural gas network globally and transports 40% of the natural gas produced in the US. The stock was one of the new buys for Soros Fund Management during Q3 2022. Kinder Morgan, Inc. (NYSE:KMI) stock offers a stellar forward dividend yield of 6.1% as of January 13. The company is increasingly working on ramping up its natural gas transportation volume and has a defensive nature of business.
11. Targa Resources Corp. (NYSE:TRGP)
Revenue 2021: $16.95B
Number of Hedge Fund Holders: 30
Targa Resources Corp. (NYSE:TRGP) is a Houston, Texas-based midstream infrastructure company that has the distinction of being one of the largest natural gas and NGL delivery companies in the US.
On November 29, Neal Dingmann at Truist increased the price target on Targa Resources Corp. (NYSE:TRGP) from $85 to $90 and reiterated a Buy rating on the stock. The target price reflects a potential upside of over 27.3% from the closing price as of January 13. The analyst believes that the strong growth outlook of the entity is expected to remain stable, with more positive results expected in the second half of 2023 and 2024.
Targa Resources Corp. (NYSE:TRGP) was held by 30 hedge funds as of Q3 2022.
10. Berkshire Hathaway Energy
Revenue 2021: $25.1 billion
Berkshire Hathaway Energy is a subsidiary of Omaha, Nebraska-based diversified conglomerate holding company Berkshire Hathaway Inc (NYSE:BRK-A) with a portfolio of over $85 billion.
The subsidiary is 92% owned by the Warren Buffett-led Corporation and led by Greg Abel as the President, Chairman, and CEO. Mr. Abel has been chosen to take over from Warren Buffett once he retires. This would mean that the interests of the subsidiary could play an important role in formulating the group’s future growth strategy. Berkshire Hathaway Energy has a pipeline network of over 34,000 kilometers that is responsible for supplying 15% of the natural gas used across the US. The company made a foray into the natural gas pipeline business through the $9.7 billion investment in July 2020.
Here' s what Berkshire Hathaway said about Berkshire Hathaway Inc. (NYSE:BRK-B) in its Q4 2021 investor letter:
“BERKSHIRE HATHAWAY INC.
To the Shareholders of Berkshire Hathaway Inc.:
Charlie Munger, my long-time partner, and I have the job of managing a portion of your savings. We are honored by your trust.
Our position carries with it the responsibility to report to you what we would like to know if we were the absentee owner and you were the manager. We enjoy communicating directly with you through this annual letter, and through the annual meeting as well.
Our policy is to treat all shareholders equally. Therefore, we do not hold discussions with analysts nor large institutions. Whenever possible, also, we release important communications on Saturday mornings in order to maximize the time for shareholders and the media to absorb the news before markets open on Monday.
A wealth of Berkshire facts and figures are set forth in the annual 10-K that the company regularly files with the S.E.C. and that we reproduce on pages K-1 – K-119. Some shareholders will find this detail engrossing; others will simply prefer to learn what Charlie and I believe is new or interesting at Berkshire.
Alas, there was little action of that sort in 2021. We did, though, make reasonable progress in increasing the intrinsic value of your shares. That task has been my primary duty for 57 years. And it will continue to be.
What You Own
Berkshire owns a wide variety of businesses, some in their entirety, some only in part. The second group largely consists of marketable common stocks of major American companies. Additionally, we own a few non-U.S. equities and participate in several joint ventures or other collaborative activities.
Whatever our form of ownership, our goal is to have meaningful investments in businesses with both durable economic advantages and a first-class CEO. Please note particularly that we own stocks based upon our expectations about their long-term business performance and not because we view them as vehicles for timely market moves. That point is crucial: Charlie and I are not stock-pickers; we are business-pickers…” (Click here to see the full text)
9. Enterprise Products Partners L.P. (NYSE:EPD)
Revenue 2021: $40.81B
Number of Hedge Fund Holders: 21
Enterprise Products Partners L.P. (NYSE:EPD) is a Houston, Texas-based midstream natural gas pipeline corporation. The company owns over 80,000 km of pipelines.
Along with 23 other midstream companies, Spiro Dounis at Citi initiated coverage on Enterprise Products Partners L.P. (NYSE:EPD) stock with a Buy rating and a target price of $31 on December 8. The analyst chose the company as one of the top three picks in the midstream infrastructure industry. Enterprise Products Partners L.P. (NYSE:EPD) stock also offers an attractive forward dividend yield of 7.8% as of January 13 and has increased its annual dividend for the past 24 years. The company operates as a master limited partnership (MLP), which requires it to distribute 90% of its taxable income to shareholders to receive tax benefits.
Fairholme Capital Management discussed its outlook on Enterprise Products Partners L.P. (NYSE:EPD) in its Q2 2022 investor letter. Here’s what the firm said:
“Enterprise Products Partners L.P. (NYSE:EPD) is the largest position in the Fund. Enterprise provides processing and transportation services to producers and consumers of natural gas, natural gas liquids, and oil. These hydrocarbons are critical for modern life and have few, if any, ready substitutes. Commodity prices do not greatly affect the company’s toll road fees. Enterprise is priced at less than nine times distributable cash flows and pays a 7.5% cash distribution.”
8. Enbridge Inc. (NYSE:ENB)
Revenue 2021: $41.05B
Number of Hedge Fund Holders: 24
Enbridge Inc. (NYSE:ENB) is a Calgary, Canada-based diversified energy company that transports 20% of the natural gas used in the US. Furthermore, the company has the distinction of being the third biggest natural gas utility corporation in the North American region based on consumer count as of 2023.
In December 2022, Enbridge Inc. (NYSE:ENB) announced that it plans to invest $4 billion to boost its natural gas pipeline infrastructure in British Columbia, Canada. The company intends to leverage the power of the British Columbia natural gas system to fulfill regional and global needs. Furthermore, Enbridge Inc. (NYSE:ENB) aims to invest $2.7 billion to boost the production from the T-South pipeline. The company is working to obtain regulatory approval to build and operate new natural gas pipelines in 2024.
Here's what ClearBridge Investments said about Enbridge Inc. (NYSE:ENB) in its Q3 2021 investor letter:
“We are meaningfully overweight energy, particularly within North American energy infrastructure. Enbridge and Williams, our two infrastructure holdings, possess crown jewel infrastructure assets. They each deliver meaningful proportions of the overall energy produced and consumed in North America. Their revenues are backed by long-term contracts with high-quality counterparties and have little direct commodity price exposure. Their growth has been driven by the increasing production of North American energy. The advent of unconventional oil and gas production (oil sand and shale) has made North America a low-cost competitor on a global basis. We expect strong North American production to be an enduring feature of global energy supply for decades to come.”
7. Plains All American Pipeline, L.P. (NASDAQ:PAA)
Revenue 2021: $42.08B
Number of Hedge Fund Holders: 6
Plains All American Pipeline, L.P. (NASDAQ:PAA) is a Houston, Texas-based company that is a provider of natural gas and other conventional energy sources. The company has over 2,600 km of active natural gas liquid (NGL) transportation pipelines.
On December 8, Spiro Dounis at Citi initiated coverage on Plains All American Pipeline, L.P. (NASDAQ:PAA) stock with a Buy rating and a target price of $14. The company started coverage on 23 midstream companies and highlighted that the midstream industry has a positive cash flow outlook, but investors need to be selective in picking the right stocks in the industry. Dounis added that the companies have been prudent in their capital spending and have kept leverage under control.
6. Energy Transfer LP (NYSE:ET)
Revenue 2021: $67.42B
Number of Hedge Fund Holders: 33
Energy Transfer LP (NYSE:ET) is a Dallas, Texas-based transporter of natural gas and propane through a pipeline coverage of 144,500 km.
Energy Transfer LP (NYSE:ET) offers an attractive forward dividend yield of 8.9% as of January 20. The company has a presence in 41 states across the US and an international office located in Beijing. Analysts think Energy Transfer LP (NYSE:ET) stock is currently trading at a discount to its five-year average EV/EBITDA ratio of 8.85x. According to the Bank of America global quantitative strategy team, Energy Transfer LP (NYSE:ET) was also one of the top overweight stocks amongst long-only funds in the US in November 2022.
In addition to Energy Transfer LP (NYSE:ET), PetroChina, Chevron Corporation (NYSE:CVX), and Saudi Arabian Oil Company (TADAWUL:2222.SR) are also some of the biggest natural gas pipeline companies in the world.
Click to continue reading and see the 5 Biggest Natural Gas Pipeline Companies in the World.
Disclosure: None. 15 Biggest Natural Gas Pipeline Companies in the World is originally published on Insider Monkey.