DALLAS—Much like legendary author Mark Twain, reports of the death of MLPs have been an exaggeration. The partnership organizational structure is strong and continues to work well for both the energy industry and investors, the chief of the MLP trade association told attendees at Hart Energy’s Midstream Finance conference on Oct. 23.

Master limited partnerships “are the very backbone of the U.S. energy industry,” emphasized Lori Ziebart, the executive director of the Master Limited Partnership Association (MLPA). “I realize I’m speaking to the choir at this conference, but I believe it is important for all of us to be reminded of the critical role we play in the energy value chain.

“MLPs provide individual investors with a vehicle to invest and participate directly in the development of U.S. energy infrastructure, natural resources and real estate,” Ziebart added. MLPs’ ability to provide operators with a lower cost of capital “lowers energy costs to consumers,” she said, noting she has held her job for office 20 months “and the space has undergone, and continues to undergo, significant changes.”

Click to watch the video interview of Lori Ziebart.

She reminded the audience that MLPs, as they are known today, owe their existence to the Reagan-era, 1987 tax code that allows firms in the natural-resource sector to organize as pass-through entities.

Ziebart said that MLPs attract older investors, most of which are 50-plus, “and are particularly attractive to fixed-income investors because they distribute a significant portion of their distributable cash flow by quarter, thereby providing a regular income stream.”

“I’ve been in and around Washington for most of my career and I can say that few laws works as originally intended, let along for three decades, but that is exactly what [the 1987] law has done,” Ziebart said. “It has allowed public companies to attract lower-cost capital to build our nation’s energy infrastructure.”

Congress reaffirmed its commitment to MLPs last year in the 2017 rewrite of the tax code “and if fact, doubled down” by allowing MLP unit holders to take pass-through deductions without limitations.

Given that strong congressional support and the nation’s need for additional energy infrastructure, “one would think MLPs would be the darling of Wall Street,” she said. “But as it has been discussed here… and as we all know too well, that is not the case.”

MLPA has a major role in preserving the structure, she added. “For more than three decades, the association has been highly successful in promoting and protecting the interests of MLPs in Washington, D.C., and in the states. She noted that the organization has a broad cross section of operators, investment firms, law firms “and C corps that were formerly MLPs.” Some 70% of its operating members are in the midstream with a combined market cap of more than $320 billion.

Ziebart said industry as a whole should do more to help the public learn the importance of the energy sector.

“In this age of social media, where the person with the most followers wins, we can no longer just keep our heads down and do our job,” Ziebart cautioned. “We need to stand up and tell our story—often and loudly. The American people need to know that the lifestyles they enjoy, and the benefits from living in a strong and prosperous nation, would not exist” without a strong and robust energy sector.

She said the MLP structure has a bright future “despite the headlines about MLP-to-conventional corporation conversions, “it’s easy to lose sight of the fact that the structure has, and continues, to work.”

There have been challenges to MLPs in the past and each time the sector has risen to the challenges, becoming “stronger to meet our nation’s energy needs.”

“So before we say good-bye to MLPs, let’s put things in context: From 1987 to the 2008 economic downturn, we saw a tremendous growth in the sector.” She noted that from 2000 to 2008, the number of MLPS grew from 20 to 60. But MLPs, like other investments “were not immune” to the downturn 10 years ago.

“But coming out, MLPs experienced another significant wave of growth,” she added and the number of MLPs more than doubled to more than 120.

But during the energy-related downturn that began in late 2014, MLPs once again often cut distributions and reorganized. “And lessons were learned, and today we are seeing MLPs adopt a more conservative approach to business. Also, institutional MLP ownership has increased to around 40% from 25%.”

That more conservative approach will service MLPs well as the midstream buildout continues, she added.

Paul Hart Can be reached at pdhart@hartenergy.com or @twopdhart.