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Private Briefingwith WILLIAM PATALON III, Executive Editor
Since launching Private Briefing three years ago, we’ve focused a lot of our attention on the American “Energy Revolution.”
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Natural gas companies in the United States hope the worst is behind them.
In 2012, natural gas prices plummeted to a two-decade low at below $2 per million BTU. This meant U.S. natural gas lost 87% of its value over a six-and-a-half year period. The low price was thanks to a glut of gas due to newer drilling technologies such as fracking.
But there is hope for a brighter future on the horizon for these companies.
As pointed out recently by Money Morning Global Energy Strategist Dr. Kent Moors, a liquefied natural gas (LNG) export surge is expected in this country starting in 2014. By 2020, forecasts are for the United States to become a force in global LNG trade.
The U.S. is projected to account for nearly 10% of global LNG trade by the end of the decade, from zero today.
"The demand scenario forming is a primary reason why the industry is gearing up for a major resurgence," explained Moors.
And while there are obstacles, Moors said the long-term outlook is filled with profit opportunity.
"The natural gas market is about to get a whole lot better," said Moors.
The key to this entire scenario will be the continued booming demand from Asia, which accounts for almost two-thirds of global LNG consumption. China is expected to become the world's second-largest importer of LNG by 2020.
However, the demand is coming not only from emerging economic powers such as China, but also from countries like Japan and South Korea.
Japan's move away from nuclear power since the Fukushima disaster has only accelerated its move into LNG. According to gas exploration company BG Group, its LNG imports rose from about 70 million tons per year to 77 million tons last year and could reach 83 million tons this year.
And a South Korean utility, Korea Gas, is the world's biggest buyer of LNG on the open market.
It is this demand that lead Bernstein Research to forecast a doubling of demand for LNG over the next decade to 408 million tons annually.
Another plus factor for LNG exports from the U.S. is the fact that domestic gas prices are a fraction of gas prices in both Europe and Asia - about one-third of Europe's and one-sixth of Asia's prices. That makes an ideal scenario for U.S. gas companies to export some of their natural gas.
The first major move toward the United States becoming an exporter of LNG was made earlier this year.
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