The US Needs To Use Their Natural Gas Before They
Lose It
The Dynamic Wealth Report
October 28, 2011
by Corey Williams, Editor
Over the last few years, the rules of the natural gas game have
changed.
Less than a decade ago, the US was importing natural gas in order to
meet the growing demand. You see, everyone thought the US was running
out of natural gas.
As demand outpaced supply, the price of natural gas reached new heights. You can see the peaks in 2005 and 2008 in the chart below.
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Today, however, the US supply and demand picture is flipped on its head.
The US has discovered massive stores of natural gas. In fact, we’ve
found enough gas to supply the US for at least the next 100 years!
With so much supply, natural gas prices in the US have plunged. And the
US no longer needs to import natural gas from abroad.
Obviously, having a cheap and plentiful energy source right under our
feet is great news. It’s a valuable resource for our heavy energy
consuming economy.
Unfortunately, we haven’t yet figured out how to put it to good use.
Sure, we’re building a few new gas powered power plants. And we’re
tinkering around with natural gas as an alternative transportation fuel.
But the sad truth is… we’ve dropped the ball when it comes to natural
gas. And if we’re not going to use it, somebody else will.
Simply put, future demand for natural gas isn’t going to come from the
US.
The real growth opportunities for natural gas are overseas. Demand for
natural gas in Asia and Europe is accelerating faster than they can
increase production. As a result, the price of natural gas is
skyrocketing in many parts of the world.
As a result, the global balance of supply and demand is out of whack.
And it’s creating an opportunity for US companies to profit by exporting
our natural gas overseas.
As longtime readers know, I recommended jumping on this trend more than
a year ago. At the time,
Cheniere Energy (LNG) was just laying out their
plans to build a liquefied natural gas exporting terminal in Louisiana.
It was a ground floor opportunity with huge upside potential.
Since then, Cheniere’s stock shot up from around $2.50 to as high as
$12.81. And then it fell to as low as $3.12 recently. That’s just how it
goes with speculative investments… there are bound to be ups and downs.
The good news is LNG just took a big step toward elevating itself from
speculative stock to growth stock.
Let me explain…
On Wednesday, Cheniere inked a 20 year, $8 billion deal with
London-based
BG Group (BG.L) to export natural gas from the US.
They’ll sell 3.5 million tons per year of liquefied natural gas to BG
for 20 years. The deal is expected to net LNG $410 million annually.
More importantly, the deal paves the way for Cheniere to secure
financing needed to build the exporting terminal. Once it’s completed,
the terminal will have the capacity to export nine million tons per
year!
Clearly, Cheniere is on the right path.
The announcement of the deal with BG Group sent LNG soaring. The stock
jumped from around $6 to more than $10. And it’s up more than 70% in the
last week!
Over the next year, we should see many more landmark developments. And
they’ll likely send the stock soaring just like this one.
By the time Cheniere has their liquefied natural gas exporting terminal
operating in 2015, I think their stock will be pushing $40 a share.
Take a look at adding LNG to your portfolio. This little company is on
the verge of becoming a juggernaut in the global liquefied natural gas
market.
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