natural gas investing
An array of energy's sub-industries are making a fortune from America's natural gas boom.
Rigs, pipelines, rail, wastewater treatment, trucking, seismic imaging, well-site security... And a lot more opportunity is on the way, like the deal Kent just uncovered.
But perhaps the most unlikely beneficiary of the shale revolution is the coal industry.
After all, "King Coal" has been dethroned in recent years by the swelling supply - and bargain prices - of clean-burning natural gas. Indeed, thermal coal at the Australian port of Newcastle, the Asian benchmark price, is currently near lows not seen since November 2009.
Australian producers have especially been struggling. They've been cutting costs and paring back production because U.S. and large project financiers like the World Bank are pulling away from coal projects.
And overall, ever-increasing environmental regulation is discouraging coal-powered electricity.
But the dynamic is suddenly changing.That's why these $19 coal shares could jump to $26...
A 795,000 Mile Long Pipeline to Big Energy Profits
At the request of a major player in oil and gas pipelines, I was given a major task.
I had to estimate how much of the U.S gas and oil infrastructure needs to be replaced by 2025.
Then I needed to estimate the extent of additional connectors that would be needed to handle new domestic hydrocarbon developments.
And you thought Super Bowl Sunday was a lot of pressure.
I have done these estimates beforeâ€¦ but something different popped up this time around.
Each time I crunched the figures, a new record amount emerged. Now while my client is in the tubular business, the sector that provides the metal needed to construct pipelines. His interest was straightforward enough â€“ what volume is his company likely to see in the next 12 years?
Well, there are two dynamics here.
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Betting on the Coming Boom in Natural Gas Prices
As I write this from Pittsburgh, the temperature has reached the single digits. This is not a big deal for some of you elsewhere - like the Plains States or New England - but it does serve as a reminder of what season this actually is.
There is also something else happening this morning.
Natural gas prices are moving up.
There is still some way to go before these natural gas reached the $4 plus level (still the perceived breakeven point for a number of producers). Still, after testing the low $3 range earlier in the month, the temperatures in the East are certainly bringing gas back into perspective.
Natural gas usage remains sensitive to temperatures and weather conditions during the winter. Last year's unusually warm temperatures depressed gas prices more than usual.
That was because the amount of gas extractions was much above anticipated levels. The combination of lower demand and higher supply translated into a downward price pressures.
But we are in a different environment for gas production than we were a few years ago.
Until 2005, the assumption was that the U.S. would need to import more liquefied natural gas (LNG) to compensate for accelerating declines in conventional domestic production.
LNG overcomes the primary problem faced by natural gas users. Available supply is traditionally limited to where pipelines are running. LNG, on the other hand, cools gas to a liquid, allowing it to be transported by tankers almost anywhere by water, regasified at an import terminal, and then injected into the local pipeline network.
By the middle of last decade, estimates of how much domestic gas need would have to be imported via LNG were as much as 15% and as soon as 2020.
But the ability to exploit unconventional deposits (shale and tight gas, coal bed methane) has dramatically changed the equation.
- Three Natural Gas Stocks Ready to Ride the Price Rebound