Tailwater Capital, a private equity firm focused on the energy sector, said on Tuesday it raised $1 billion for its latest fund in a bet on the demand for oil pipelines in North America.

The fundraising underscores how private equity firms are looking to invest in pipeline assets amid undercapacity that has stranded crude oil in areas like the Permian basin in Texas and New Mexico. Unconventional drilling techniques have allowed oil companies to tap previously inaccessible shale reservoirs.

The likes of Blackstone Group LP and BlackRock Inc have also invested in oil pipelines in recent years.

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