With the exception of the last week, natural gas has been in a funk.
And yet liquefied natural gas is already shaping up to be a huge global market for U.S. companies to tap into.
It’s certainly a break from tradition. It’s an odd situation because, as you may have realized, natural gas is set to overtake coal as the world’s second-largest source for fuel within the next 20 years.
Last year, global gas consumption grew by 63 billion cubic metres. Although that is slightly lower than the 10-year average, LNG exports increased 6.2%.
You and I both know most of this growth was due to just two countries: Australia and the United States.
If it wasn’t official before, it certainly is now: gas has gone global.
Up until recently, U.S. natural gas was fated for local consumption due to the fact that it was transported through a huge network of pipelines.
These networks can run hundreds of miles across state and country lines and can even be built to cross reasonable amounts of water.
All that changed with LNG.
You see, LNG is designed specifically to reach global markets.
These shipments are actually considered much safer than shipping crude oil by tanker. Understand that the same environmental issues that plague oil spills just don’t exist for LNG tankers.
In fact, companies have been shipping LNG by tanker for the better part of 60 years!
Throughout that period, there has never been an example of a spill. It turns out that only the LNG vapors are flammable, yet still non-toxic.
You could pour it into a glass of water and be perfectly fine, due to the fact that the LNG doesn’t mix with water and would simply dissipate.
Natural gas has clearly emerged as the bridge between dirty coal energy and intermittent renewables like wind and solar.
But there’s a catch…
Not only do many countries not have a viable domestic supply of natural gas, but they’re cut off from pipeline supplies as well for one reason or another.
In some cases (Europe) they have access to a vast network of pipelines, but their supplier (Russia) has a history of turning off the taps in the dead of winter.
It would be like your barista dumping your drink on you if you didn’t tip enough.
You’d definitely start looking for another coffee shop.
That’s exactly what these countries are doing.
Look, you can’t blame them for trying to find a cheaper supply. And with the emergence of U.S. LNG exports, these customers don’t need to look far.
In 2016, U.S. LNG exports surged more than 550% over the previous year.
Click Chart to Enlarge
And we’re just getting started…
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After years of being plagued by oversupply, U.S. producers finally found a market desperate for their gas.
All I can tell you is to get used to seeing this kind of growth.
By 2035, LNG is expected to account for over half of the natural gas traded every day.
So it’s a good thing that shale gas will help keep the U.S. in the spotlight.
As you can see below, shale is expected to be the dominant source for natural gas supply growth over the next 18 years:
This is how the United States will become the second largest LNG exporter within the next five years.
Only Australia will export more LNG at that point, but the gap will have narrowed considerably by then.
It might happen much sooner, too, if the current situation in Qatar worsens. That would put a damper on Qatar’s plans to boost its LNG output by nearly one-third, to roughly 100 million tonnes per year over the next few years.
Still surprised?
The IEA has reported that the U.S. will be responsible for 40% of global natural gas production growth between now and 2022.
It’s not hard to go long on natural gas, especially if you’ve weathered the last seven years as best you could.
The catalysts are simply too perfect right now not to.
And next week I’ll show you one market threatening to tip the balance completely.
You’ll never guess where this new demand will come from.
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.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
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