The ongoing rush of the midstream sector to keep up with growing natural gas and crude production has created a second wave—the need for additional financing to maintain investments, whether from debt or equity. And that demand for additional capital continues to grow year over year, showing a significant increase in capital financed in the first half of the year, compared with the same period one year earlier.

A survey of Hart Energy's database of energy and debt financing shows that during the first six months of 2011 midstream companies conducted about 22 equity offerings that totaled about $8.6 billion. The average size of each issue was about $390 million.

In the first six months of 2012, the market saw 24 midstream equity offerings for a total of $15.2 billion. The average size of each issue was about $632 million. When comparing the first half of 2011 with the same period this year, 2012 was clearly more active by every measure: There were more deals announced and the size of each deal was clearly larger. In aggregate, equity issues rose nearly 77% when comparing one year with the next.

This year-on-year increase occurs despite the recent setback in world equity markets, which are weighed down by a financial crisis in Europe, lower commodities prices and growing fears that the U.S. economic recovery may have stalled.

This year also saw a significant increase in debt financing as well. In the first six months of 2011, midstream companies announced a total of $11 billion in financing, compared with $17.3 billion in financing during the same period this year. The increase from one year to the next is more than 57%.

The growing value of mergers and acquisitions in the sector is also a reflection of the growth in the level of midstream activity. During the first six months of 2011, midstream operators announced a total of 47 mergers and acquisitions worth some $21.3 billion. In the same timeframe for 2012, the industry announced 48 deals worth a total of $40.6 billion.

The data match the results from a recent report from SNL Financial LC, which reported a similar increase in midstream capital. During the first 19 weeks of 2012, debt and equity offerings rose to $19.7 billion, a 33% increase over the same period last year. SNL Financial's data show that midstream loans increased even as they decreased in the gas, coal and power industries.

These statistics clearly reflect the expansion of midstream activities and their ongoing need for capital. Industry analysts have repeatedly stated that, under the current prices for crude and natural gas, operators have a preference for oil and liquids that are priced closely to oil. The value for natural gas is at historic lows and the amount of activity in those areas reflects this reality. Meanwhile, upstream operations reflect this pricing reality and, to a large extent, mergers in the midstream sector follow activity by their upstream counterparts.