Most midstream pipeline companies are master limited partnerships, a structure Robert and I cover thoroughly in another newsletter, MLP Profits, that we believe makes a perfect complement to The Energy Strategist. But we do recommend MLPs in The Energy Strategist portfolios, and this week are taking advantage of the research published in MLP Profits earlier this week to update our stance on several portfolio holdings.

Specifically, we’re raising the buy below target on Conservative Portfolio holding Teekay LNG Partners LP (NYSE: TGP) to $46, from the prior $41. This should allow subscribers to continue building positions ahead of a big jump in revenue after 2016 as US LNG exports ramp up.

TGP has already chartered two of its newest vessels to first-mover Cheniere Energy (NYSE: LNG) for LNG exports from its Gulf Coast terminal starting that year. And it’s in excellent position to profit from more such deals with low cost of capital, a solid book of near-term business and options on additional efficient new carriers to be delivered in 2016-2017. In the meantime, a joint venture to transport liquefied petroleum gas is performing well. The recently steady distribution provides a 6.3 percent yield with a healthy 1.18 coverage ratio.

We are also raising the buy below target on Conservative Portfolio holding Sunoco Logistics Partners (NYSE: SXL) to $67 from the prior $32. To have a position outpace one’s risk appetite by so much is, of course, a nice problem to have. But it’s a problem we’re eager to fix nevertheless, because our six-fold return on the position in seven years should keep heading higher as the partnership transports much more shale crude from Texas and more shale natural gas and liquids from the Northeast in the coming years.

The latter will be the product of the booming output in the Marcellus Shale, and EQT Midstream (EQM) is a leading gas gatherer in that region, thanks to sponsorship from one of the leading producers. We’re adding EQM to the Conservative Portfolio with a buy below target of $51. For more and SXL and EQM, read on.

Booming US oil production has reached another milestone, averaging 7.5 million barrels a day in July, according to the US Energy Information Administration. The agency noted this was the highest monthly level since 1991, and it expects domestic crude output to jump 14 percent this year. Next year, another 11 percent increase is in the cards, which may push imports as a share of US consumption to the lowest level since 1985.

In contrast, US natural gas production is expected to tick up just 1 percent this year, as the same boom in shale drilling that’s boosted crude production is offset by declining gas output in the Gulf of Mexico and some of the older, costlier land basins. But that estimate might turn out to be low thanks to the Marcellus shale in Pennsylvania and West Virginia, where output this year is up some 45 percent. It was a recent drastic spot discount on surplus Marcellus gas that led the normally measured Financial Times to proclaim this week that “Frantic fracking sends US natural gas prices into freefall.”

The main problem in the Marcellus is an infrastructure shortage that’s left some producers without a profitable outlet for their burgeoning output. Gathering systems and pipelines are still being built double-time. And in the meantime the less far-sighted drillers are getting squeezed.

In oil shale basins too, high crude prices are only helpful if producers can get their output to market. And someone has to build a pipeline to the well or send around a tanker truck before that happens.

SXL and EQM don’t have particularly high yields to offer at the moment – neither currently yields even as much as 4 percent. But they more than make up for it with excellent prospects for near-term and long-term growth by providing the gathering services that the shale drillers so badly need. They also enjoy solid corporate sponsorship and boast relatively low leverage..

Sunoco Logistics Partners (NYSE: SXL) was acquired last year by Energy Transfer Partners (NYSE: ETP) as part of its $5.3 billion buyout of SXL parent Sunoco, which had by that time shed the last of its refinery operations but retained SXL as well as thousands of East Coast filling stations.

Sunoco Logistics Partners is a crude and refined fuels transporter on an increasingly continental scale. It operates 4,900 miles of trunk oil pipeline and 500 miles of gathering feeder lines primarily across Texas and Oklahoma but reaching into the upper Midwest. Feeding into this system is a fleet of some 200 crude transport trucks that load product at wells not reached by pipelines and offload it at one of 120 offloading facilities with pipeline access.

The crude oil pipeline system and the truck-centered crude oil acquisition and marketing business lines together accounted for 65 percent of adjusted EBITDA (earnings excluding items) in the most recent quarter.

Terminals contributed 29 percent, as the partnership saw very strong demand for crude storage at its massive 22 million barrel Nederland facility on the east Texas Gulf Coast. SXL also controls a 5 million barrel crude and refined fuels Eagle Point terminal in Westville, New Jersey 40 refined products terminals with an aggregate capacity of 8 million barrels and the recently acquired property of the closed Marcus Hook refinery just south of Philadelphia, which the partnership plans to convert into a   natural gas liquids storage hub and export terminal.

The balance of the earnings came from 2,500 miles of refined products pipelines and equity stakes in four joint-venture pipelines, including the Explorer line carrying fuel from the Gulf Coast to Chicago.

Although Sunoco Logistics has increased distributions on a quarterly basis for eight years running, including three consecutive sequential hikes of 5 percent, it has also set cash aside for investment in a growing number of new projects. These include the Permian Express pipeline linking booming West Texas crude output to the Nederland terminal, the Allegheny Access pipeline that will move refined products out of Midwest eastward into Ohio and Pennsylvania and the Mariner East and West lines moving NGLs from the Marcellus to its terminals to the east and west.

Because SXL retained more earnings than it paid out last year, and more than twice as much as it’s paid out so far this year, all these projects are proceeding without piling up excessive debt – which currently stands at a relatively modest $2.3 billion, or 2.5 times EBITDA.  Management plans to increase distributions 5 percent for the next two quarters as well, for an annualized growth rate of 22 percent.  In turn, this year’s heavy capital spending rate should produce lots of additional cash flow in future years, even as the pace of investing slackens, perhaps.

At the current unit price and the current payout level, SXL yields 3.8 percent, but of course the payouts are headed higher in a hurry.

EQT Midstream performs the same service for Marcellus gas producers that Sunoco Logistics offers Texas oil drillers – it gathers their output and helps bring it to market. EQM was spun off in June 2012 via an IPO by prominent Marcellus producer EQT (NYSE: EQT).

EQM gathers gas from the Marcellus (primarily from wells drilled by EQT, which accounted for 78 percent of EQM’s revenue last year) and transports it to one of five interstate pipelines reaching the region. Its fixed-fee, long-term contracts (averaging a decade in length) limit EQM’s commodity exposure. But its exposure to the surging production growth in the Marcellus and the desperate need for more infrastructure in the region is very high.

EQM is targeting a 31 percent year-over-year gain in the fourth-quarter distribution this year and another 26 percent increase by next year’s fourth quarter. Should it succeed, its current 3.5 percent yield will move up to 5 per cent within 18 months, in the unlikely even the unit price fails to budge.

As is, units have rallied nearly 48 percent this year. And there’s more to come as parent EQT drops down additional assets to finance its own aggressive investment plans. EQM currently carries no debt, and could eventually become a choice acquisition target for a larger midstream operator eager to capitalize on the Marcellus.