Here at Money Morning, Dr. Kent Moors and others have spoken often about how the coming liquefied natural gas (LNG) export boom will be a huge profit windfall for natural gas companies. LNG exports should begin in earnest from this country in 2015.
But there is a natural gas export boom that is occurring right under many investors' noses.
Vast amounts of U.S. natural gas are currently being shipped via pipelines to many experts' favorite emerging country.
The country in question? Our neighbor to the south: Mexico.
Mexican Nat Gas Usage Surges
Natural gas consumption in Mexico soared 160% since 1990. Since 2007 alone, gas usage in the country jumped nearly 17%.
Much of the increased demand is driven by the increase in power fueled by natural gas. In 2000, only 20% of the country's power generation was driven by natural gas. But by 2007, that number had already risen to 50% and has risen even further since.
Mexico is expected to add 28 gigawatts of new electric power capacity by 2027. That may add to the country's natural gas needs by more than 5 billion cubic feet a day.
This is significant since gas production from Mexico's state-owned oil and gas company Pemex plummeted in recent years.
This leaves Mexico with one solution. . .imports.
Total natural gas imports hit 767 billion cubic feet last year, which is about 30% of Mexico's total supply. And while Mexico does import some LNG, an increasing amount of its gas needs is being met by cheap natural gas from the United States.
According to the U.S. Energy Information Administration, U.S. exports of natural gas rose by 24% in 2012 to 1.69 billion cubic feet per day. This equates to 80% of Mexico's gas imports and meets about 20% of the country's demand. It is also the highest level of exports since data collection began in 1973.
An interesting side bar here is that 60% of those U.S. gas exports to Mexico come from pipelines emanating from Hidalgo County, TX, with the gas coming from the Eagle Ford shale formation. This may be a plus for gas producing companies in the region such as EOG Resources Inc. (NYSE: EOG).
Natural Gas Companies in Prime Spot
The real investment story here is not the multinationals who are benefiting from their operations in Mexico powered by cheap U.S. natural gas, but instead the import surge that would benefit U.S. natural gas companies…