The Global Energy
Mega-Shift:
Double Your Profits in the
American Energy Boom
by Dr. Kent Moors, Editor, Oil & Energy Investor
Dear Reader,
For decades, the United States and much of the world has turned to coal in order to power their
economies.
But that is changing - quickly.
The U.S. market is moving.
It's set to replace more than 100 gigawatts (that's 1 billion megawatts) of electric capacity sourced by
coal. And one fuel will cover most of this lost capacity: Natural gas.
That's why you should buy the one company best positioned to make it all happen… and give you a
life-changing profit opportunity, too.
Goodbye Old King Coal
In a number of regions around the country, the decline of King Coal will also usher in some
interesting (and wider) applications of renewable energies – wind, solar, and geothermal.
Still, it's the movement from coal to gas that will highlight the initial phase of these developments –
especially through the end of this next decade.
Dramatically increasing gas reserves, combined with new regulations covering mercury, nitrous, and
sulfurous oxide emissions, will characterize the new power-generating sector.
Both of those factors will be changing the cost dynamic. Expenses for the use of gas will remain low,
and the cost of coal will increase.Oil & Energy Investor
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As you might guess, coal costs are going up because of the infrastructure expenses involved in
refurbishing aging plants, as well as the need to significantly lower non-carbon emissions.
Meanwhile, even though a rise in gas pricing should take place before the end of next year, known
reserves subject to immediate extraction will rise sharply, as well.
So natural gas costs will remain subdued.
Two Important Things to Keep in Mind Here…
First, U.S. and Canadian gas producers could increase overall production by 25% each year for years
to come.
They will not do this, of course. Such a move would destroy the market.
But this amazing little detail certainly does illustrate why we now believe North America has much
more than 100 years of natural gas reserves.
The flood of unconventional (mainly shale gas) coming on the market is responsible for this game
change. And we may not have even seen the largest of the new basins to come.
Already, projections are nothing short of staggering.
From a rough equivalence between coal and gas as a fuel source for electricity in 2010, the
environment will transform into one decidedly favoring natural gas… before the end of this decade.
By 2020, the U.S. is likely to use 20% to 25% more natural gas for the production of electricity than it
does now.
Meanwhile, not a single new coal-fired or co-fueled (using both coal and natural gas) power plant is
on the drawing board. All of the new generation facilities of any consequence will run on either gas or
renewable sources.
This is a "super shift" of major proportions.
This Isn't Just a U.S. Phenomenon
U.S. producers are poised to profit in the coming years as they prepare to export an ever-increasing
amount of natural gas.
Around the globe, nations that once turned to nuclear power are looking to natural gas to fill the
void.
In Japan, following the Fukushima nuclear disaster, customers were paying as much as $16 for a
volume of liquefied natural gas (LNG) that cost less than $4 in the United States.
Japan will continue to rely on natural gas in order to rebuild portions of its economy, as well as fuel
its continued expansion as an Asian economic powerhouse.
Germany, which was one of the most advanced nuclear energy economies in the world, has decided
to shut down its entire network of plants. The same is happening in Switzerland.Oil & Energy Investor
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But while coal might offer a short-term remedy, the environmental costs and carbon taxes will
immediately spike the cost of electricity across the European continent.
The world will look to the United States for its sources of natural gas.
And it appears we have a glut in supply to meet rising demand.
American companies are now preparing for an era of great profitability as the United States begins to
export natural gas to energy-starved trading partners.
The Great American Exporter
The company I want to highlight today is one I have written about many times before.
Cheniere Energy (AMEX: LNG) is a company positioned to profit from the coming trend.
LNG is a major remedy for the accelerating glut of American and Canadian unconventional
production, which runs the risk of over-saturating the market and depressing prices.
Exporting the gas, on the other hand, taps into a widening international demand and carries the
prospect of actually improving profitability for gas producers in North America, even while the domestic
need for the energy does not keep pace with the rising supply.
In so doing, U.S. and Canadian producers are simply paralleling developments already in place with
major projects in Australia, New Guinea, Russia, and above all Qatar – the first dominant gas producer in
the world to commit all of its exports to LNG shipping.
This worldwide trend has led to the transformation of the LNG trade from import to export.
As recently as five years ago, we were still talking about importing more LNG into the U.S., as our
conventional production declined.
Now with shale gas (along with coal-bed methane and tight gas), the unconventional sources are
providing more available gas than we ever imagined.
The issue now is how to export the surplus gas.
Enter Cheniere's Sabine Pass terminal.
This terminal is a modular facility that increases its footprint as major long-term contracts are signed.
Cheniere has also received the first blanket permission from the U.S. Department of Energy to export
LNG to any country in the world not on a sanctions list. It has responded by lining up big deals with
some of the world's largest LNG importers – for either straight sales or contract swaps.
A Potential Double
Cheniere Energy pays no dividend. Not yet – any way.
But its value will increase with each major contract Cheniere signs.
And the BG Group contract a few months ago certainly did that. The stock jumped 127.6% in one
month. The good news is more contracts are likely on the way.Oil & Energy Investor
Take my word for it: The LNG export market will only be increasing.
And you can expect shares of Cheniere to do the same.
Sincerely,
Dr. Kent Moors,
Editor, Oil & Energy Investor
Editor's Note: Cheniere is just one of the stocks that Kent has identified that stands to make investors a
potential fortune in the coming years. Here's another one.
Fuente:
Saludos
Rodrigo González Fernández
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