Natural gas is the underdog right now in U.S. energy, with most investors giving it a wide berth.
And who can blame them?
After all, we’re staring at rock-bottom prices for a number of reasons, the most prevalent of which is the supply glut that has plagued us for years.
Even today, our working gas storage is far above the five-year range…
That’s what happens when you add shale gas into the mix.
In 2007, about 1.6 Tcf of natural gas was produced from the various shale plays in the United States.
Last year, that production grew to 7.2 Tcf — 350% higher in just four years.
Everyone should have seen this shift coming…
Back in 2008, more than 75% of the rigs drilling in the U.S. were targeting natural gas. Today the situation is nearly juxtaposed, with gas-drilling rigs only accounting for one-third of the total.
The formula is simple enough: record production and low prices.
It was certainly enough to push the United States to the head of the class in 2009. That’s when we overtook Russia as the world’s leading gas producer:
Russia’s fears boil down to LNG exports, because shipping our future natural gas supply to both Asia and Europe would weaken Russia’s control…
This is a country used to wielding their natural gas supplies like a weapon.
If European countries don’t want to pay up, Putin and friends have no reservations over cutting them off.
When U.S. LNG enters the scene, Russia’s share in the Western European gas market may fall to less than 13% over the next few decades.
But are their fears over U.S. LNG warranted?
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Mounting Opposition Leads to Profitable Options
Truth is the LNG export issue hasn’t hit the media’s main stage yet. Between the Keystone XL Pipeline and hydraulic fracturing, news of shipping our cheap natural gas to Asia is still in queue.
When it does break, we can fully expect a knock-down, drag-out fight before the first LNG cargo ships leave U.S. ports…
In fact, we got a hint of this during a round of budget hearings last month.
The concern is exporting our cheap gas will result in higher domestic prices and negatively affect our manufacturing industry, not to mention homeowners would see their electric bills rise.
More recently, we have to look at what’s happening in Alaska…
When Big Oil decided it was time to tap into Alaska’s own shale gas on the North Slope, they ran headfirst into a governmental brick wall.
The 35 Tcf of natural gas reserves in the Last Frontier provided ExxonMobil, ConocoPhillips, and BP with the opportunity to reach into the Asian LNG market.
But in order for that to happen, the three companies needed to find a way to pipe that gas supply to Alaskan LNG terminals.
Unfortunately, that will require a $40 billion pipeline spanning the entire north-south length of the state… and they might not even get that far.
That’s all thanks to two bills introduced by Rep. Edward Markey.
If passed, H.R. 4024 and H.R. 4025 will throw a wrench into future LNG exports:
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H.R. 4024 – To suspend approval of liquefied natural gas export terminals, and for other purposes.
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H.R. 4025 – To provide that the Secretary of the Interior may accept bids on any new oil and gas leases of Federal lands (including submerged lands) only from bidders certifying that all natural gas produced pursuant to such leases shall be offered for sale only in the United States, and for other purposes.
His goal is loud and clear: Keep U.S. energy here in the United States.
What’s more, if the drastic cut in natural gas drilling fails to significantly curtail our domestic gas production, we’ll be riding low natural gas prices for decades to come.
Of course, if LNG exports are effectively blocked through legislation, investors can say farewell to their U.S. LNG investments:
But there’s a catch…
The opportunity for investors to tap the profitable Asian LNG market won’t come from U.S. exporters.
While we’re tripping over our own feet, a few select Canadian gas players are a stone’s throw away from shipping their first LNG cargoes across the Pacific, where prices are four times higher than in North America.
And not only are they about to ship the LNG…
They’re controlling nearly every aspect of the process.
Let the government create more red tape. We’re already one step ahead of them.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
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