I’m back from NAPE, always a great opportunity to visit with a wide array of people in the industry. I found the conversations there much like those I had with attendees at our recent Marcellus-Utica Midstream conference. Midstream operators exhibited modest optimism as we spoke, both in Pitts-burgh and Houston, but most realize that the energy industry is having tough times—tough times that may spill over into the nation’s economy overall.

A lot of responses to my standard question of “What’s going on?” began with “Well…” and a shrug.

There are bright spots—most mentioned the Permian first off—then followed acknowledgement that other plays, such as the Bakken, face tough times right now.

Midstream analysts have been flashing a yellow light to investors for some time. Wells Fargo Securities’ February MLP report noted 2016 began with a “thud” for MLPs and added, “We expect H1’16 to remain volatile as lower prices and volumes pressure earnings, and E&P bankruptcies place additional focus on midstream counterparty risk. Accordingly, we expect high-quality, defensive names to outperform on a relative basis, while commodity-volume-exposed names could see further pressure this year.”

Oppenheimer & Co. observed in a recent report that “We believe the large, burdened LPs [limited partners]… where LP yields are dislocated and where a large percentage of total cash flow is garnered by the GP [general partner] illustrate the long-term challenges of the LP/GP structure. Short of a rapid and significant recovery in underlying fundamentals, we believe these golden geese may be dead. This may necessitate additional distribution cuts and restructuring (to eliminate burdensome IDRs) [incentive distribution rights] as a step in preparation for an eventual recovery.”

However, our conversations typically mentioned bright spots out there that lead to optimism.

A Stifel report in February pointed to positives coming out of Bentek’s recent conference. For example: Mexico.

“In 2010, Mexico’s natural [gas] demand was approximately 6 Bcf/d [billion cubic feet per day] while production was close to 5 Bcf/d, whereas during 2015 demand was closer to 8 Bcf/d with production falling to 4 Bcf/d. In turn, Mexican production is down nearly 20% since 2010 and U.S. imports account for nearly 40% of total supply. Following U.S. natural gas exports growing 45% to 2.9 Bcf/d in 2015, Bentek believes exports will nearly double to 5.6 Bcf/d by 2020,” the report said. That’s a lot of gas that will be going under the Rio Grande.

And don’t forget the growing market for product exports to Mexico. Note discussion of this angle in our story in this issue. Then there’s the prospect of LNG exports—the first LNG tanker weighed anchor at Cheniere’s Sabine Pass plant just before we went to press. Stifel pointed to “ethane tailwinds on the horizon” as domestic petrochemical demand picks up.