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Tuesday March 20, 2012
Natural gas: Remaking the future?
by Jim Powell, editor Global Changes & Opportunities Report It will take several years for significant new supplies of oil to come online. However, the natural gas bonanza is already here, and it is remaking America’s energy future. The energy in natural gas is priced at the equivalent of $25 per barrel of oil. That’s more than a 75% energy savings from oil’s recent market price. Not surprisingly, energy-intensive companies are converting from oil to natural gas as fast as they can. Many manufacturers are also returning to the U.S. to take advantage of the cheap energy, and the competitive advantage it gives them. Many electric utilities are also switching from oil to nat gas. Another big plus for natural gas is its future as a transportation fuel. United Parcel Service already uses compressed NG in its delivery trucks. Chesapeake Energy plans to spend $1 billion over the next 10 years to convert its vehicles and drilling rigs to NG. U.S. Steel and ConocoPhillips are making similar moves. As manufacturers have found, converting from petroleum to NG slashes operating costs. With the huge price advantage natural gas has over oil, the conversion plants owned by Sasol (SSL) will be kept very busy. Longer-term ,when natural gas prices start to rise, EnCana (ECA) should perform very well. A new investment opportunity is now opening up in the promising natural gas export market. Europeans are especially anxious to get our gas. To transport natural gas economically by ship, it must be liquefied and kept very cold to reduce its volume. The process has been used very little in the U.S. because it has been more convenient to service customers using pipelines. With the worldwide market for natural gas expanding so rapidly, Cheniere Energy (LNG) is building America’s first liquefaction plant in Louisiana. Seven more are planned. Cheniere is more speculative than others in the natural gas sector, but it has the potential to become a very important energy company. Learn more about this financial newsletter at Jim Powell's Global Changes & Opportunities Report. Related articles: 
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