Natural Gas

2013 Natural Gas Prices: Now is the Time To Be Bullish

Forget the Farmer's Almanac.

As we move into the winter season, two things are becoming clear. First, this one will be colder than last year, nationwide. Second, natural gas prices are moving up.

A colder season ahead is an almost statistical certainty. The likelihood of having a repeat of last year's mild winter is quite low. And my second assertion is now supported by several factors.

Until very recently, the changing of seasons was a determining factor in gas prices.

The warm winter throughout much of the U.S. last year certainly contributed to the dive that saw gas prices plummet to near $2 per 1,000 cubic feet (or million BTUs), the NYMEX futures contract unit.

The bigger issue, however, has been the game-changing entrance of unconventional natural gas supply in North America. Both the surplus of in-market stored gas and the ready availability of expanding reserves have been driving factors in lowering prices.

The amount of available gas is staggering.

Known reserves of shale and tight gas, coal bed methane, and remaining free standing volume now allow up to a 25% increase in supply per year into the foreseeable future.

Now, nobody would actually drill that much, because they would destroy the market (the classic example of "drilling" oneself in the foot).

But the ready availability was restraining pricing. That resulted in a period in which gas rig utilization has fallen each month - to its lowest level in over a decade. The industry has been slowing the introduction of accelerating volume into what had been an oversaturated market.

The hottest summer on record also contributed to a steady improvement in price. As the power-generating sector moves quickly toward low-priced gas as the fuel of choice, rising temperatures also increase the need for gas.

But now, at last, the balance is forming.

The inventory is now the smallest in the last two years, as demand picks up in petrochemicals, industrial usage, and even vehicle fuel prospects.

The major thrust is beginning.

This will not be a straight line for natural gas prices. Volatility cuts in both directions.

But one thing is clear.

The gas market is about to get a whole lot stronger...

To continue reading, please click here...

How a Crude Oil Prices Slump Could Bury these Countries

As crude oil prices fall far below $100 a barrel, the trend is affecting the most oil-dependent economies in the world. You see, whether we're talking about a country or a company, having a "competitive advantage" is one of the most important principles involved in succeeding in business. Just like a company, a country does […]

Read More…

Natural Gas: Following T. Boone Pickens into the Energy Patch

An iconic Southwestern energy patch player, T. Boone Pickens has built a legacy over the decades that proves the old Texas saying: "It's not the size of the dog in the fight, but the size of the fight in the dog."

In the wild days of the 1980s, made famous by a generation of traders who emulated the likes of Gordon Gekko, few could ever match the Pickens eye for the big deal.

Never eat anything bigger than your head?.... Pickens never heard that one.

As the head of Mesa Energy, his first deal was to purchase the Hugoton Production Company - made notable by the fact the company was 30 times the size of his own.

His thirst for Goliaths continued for decades to come. He once even went after Gulf Oil, which is now Exxon Mobil.

The point is Pickens has never shied away from risk when he saw reward. And for all his bold achievements there is always less "crazy" there than there seems to be.

And if you're looking for a guy who knows:

  • How Wall Street traders and Texas wildcatters think.
  • Who can read a geological map.
  • Who can manage a hedge fund.
  • And who can make money in a volatile industry... Pickens is your guy.
He's the Warren Buffett of the energy patch.

That's why there is more there than meets the eye in his unique venture into the natural gas market with Clean Energy Fuels Corp. (Nasdaq: CLNE). Pickens is its founder and largest individual shareholder.

To continue reading, please click here...

The Natural Gas Budget Shortfall


State policy leaders around the country are coming to realize the long-term importance of natural gas exports to the health of their economies.

They are struggling to pass their 2013 budgets this year.

The recent low in natural gas prices is doing more than just hamstring production around the country. It's also slashing government budget forecasts due to the loss of tax revenue associated with natural gas sales.

So much so, that states are predicting steep decreases in revenues through 2014.

USA Today reported this week that "Energy-producing states are bracing for lower tax revenue from the plummeting price of natural gas, which is just above half of what some states forecast when they put together budgets for 2013 and beyond."

Low natural gas prices could cost Wyoming $125 million next year, and that the state will likely have to enact budget cuts of 8% for the year 2014 if prices don't recover by then. In Oklahoma, just a $1 drop in gas prices leads to a roughly $70 million shortfall for the state each year.

It's a rather staggering figure.

But Oklahoma's state Treasurer Ken Miller states that the "free market" will work itself out over the long term and natural gas prices will rise, particularly as large-scale coal-fired power plants convert to natural gas use.

More on that in a second.

As we've said before, the price rebound is inevitable. But we have to look at how we got here and where we're going to make sense of this situation.

First, the major technological breakthroughs in fracking and horizontal drilling have significantly increased the amount of unconventional resources available around the country. So much natural gas has been produced, combined with an unseasonably warm winter, that natural gas prices have slumped significantly.

This has naturally affected producers in the short-term, although midstream storage and pipeline companies remain healthy due to their contract structures as value chain suppliers.

But low natural gas prices won't last forever. Overtime, we're going to see prices begin to rise for four reasons.

To continue reading, please click here...

Natural Gas Reality Check: President Obama Got This One Right

In the past two weeks, a maelstrom of emails has been hitting my inbox from concerned readers, investors, academics, and even some prominent journalists.

What's got everyone so heated?

It seems a lot of people are concerned, confused, and even outraged over a recent Executive Order signed by President Barack Obama regarding the development of unconventional natural gas formations here in the United States.

The executive order, issued on April 13, calls for greater coordination in federal oversight of "fracking" - a revolutionary, yet-still-nascent process of extracting natural gas from rock bed.

Concerns stretched from sector performance questions all the way to the highly alarming and somewhat foolish argument that such an order precipitates a "government takeover of the natural gas industry."

Now, I'm overly cautious when the government announces any role in business. But when you take a close look, this announcement is actually rather benign.

And yes, I know it's easy to get caught up in the immediacy or negative impacts of a single act. But in the age of 24-hour media, we usually only hear a fraction of the real story.

The truth is there's a lot to like here.

That's why I'd like to take a few minutes today to explore the ongoing developments in this story, set a few eager minds at ease, and explain a few benefits - yes, benefits - of this Presidential directive.



To continue reading, please click here...

Natural Gas Prices: A Timeline for Investors… and State Budgets

State policy leaders around the country are going to realize the immense importance of LNG exports to the health of their economies as they struggle to pass their 2013 budgets this year.

The recent low in natural gas prices is doing more than just hamstring production around the country. It's also slashing government budget forecasts due to the loss of tax revenue associated with natural gas sales.

So much so, that states are predicting steep decreases in revenues through 2014.



Click here to continue reading...

Natural Gas Game Changer: The U.S. Paves Way for Sabine Pass

Last week, natural gas prices fell below $2 per 1,000 cubic feet for the first time in a decade. Let's talk about what that means for you, as an investor. The oversupply of natural gas continues to swell thanks to breakthrough technologies in fracking and horizontal drilling that "unlocked" this huge swath of energy. Tack […]

Read More…

Good News for Investing in Natural Gas: U.S. Government Approves Sabine Pass Plant

That breeze gusting through the streets this morning isn't the sign of a coming storm.

That's a collective sigh of relief coming from those investing in natural gas companies after a torrid first quarter for the sector. Natural gas prices have collapsed below $2 per 1,000 cubic feet for the first time in a decade.

And that's not even adjusted for inflation...

But on Tuesday came the first positive sign in months.

The U.S. government approved the development of the Sabine Pass plant, the first natural gas export facility in the lower 48 states.

CNN Money reports:

"The Federal Energy Regulatory Commission [FERC] voted in favor of Texas-based Cheniere Energy's plan to build a giant natural gas liquefaction and export terminal at Sabine Pass, which straddles the Texas-Louisiana boarder just north of the Gulf of Mexico.

Although environmentalists have threatened to sue to stop the 500-acre, $10 billion project, Cheniere says it plans to start building before July."

To continue reading, click here...

How to Play Decade-Low Natural Gas Prices

Natural gas prices remain below $2 per million British thermal units, the lowest level in 10 years. Prices will likely remain depressed for a while, but cheap natural gas now means great opportunities for long-term profits. Money Morning Capital Waves Strategist Shah Gilani joined Fox Business' "Varney & Co." to share two of his favorite […]

Read More…

The Truth About $6 Gas, $200 Oil and the Quest for Energy Independence

No one needs to tell the average American about the impact of oil and gas prices. If they don't feel it in their wallets every day, they hear about it on the news every night.

But surprisingly, amid all the rhetoric, there have been no real answers to some of the key questions driving the energy debate... until now.

Is President Obama truly responsible for high gas prices, and can his opponents really bring them back down?

What role has Federal Reserve Chairman Ben Bernanke's loose monetary policy played in soaring energy costs?

Is more domestic drilling the answer?

Renowned energy expert Dr. Kent Moors answers all of these questions - and more - below.

Dr. Moors, an adviser to six of the world's top 10 oil companies and a consultant to governments around the world, also talks about the effect political turmoil in the Middle East could have on energy prices in the immediate term and how North America will gain energy independence in 15-20 years.

Here's what else Moors - a bona-fide energy expert - had to say...

Dr. Moors on Gas Prices

Can a U.S. President actually impact gas prices- at least enough to get gasoline back to $2.50 a gallon? Or is this just talk? I don't know whom to believe anymore...



To continue reading, please click here...

How to Profit on the Natural Gas Surplus

The recent mild winter and the unparalleled potential in new shale gas production have combined to result in a depressed pricing market for natural gas.

The rise in demand for everything from electricity to petrochemical feeder stock, liquefied natural gas (LNG) exports, and even usage in vehicle fuels, will start driving that price up over the next two years.

You already know that, of course.

We've talked about it many times before.

But now there's something else on the horizon that is likely to provide a boost to investor prospects even sooner.

Utilities, one of the main beneficiaries of the gas boom, are moving to capitalize on the accelerating transition in power generation.

And in the process, two important trends are emerging that will be of interest to retail investors.

First, the low current prices and the prospect of rapid increases in extraction rates, if the market warrants, are allowing electricity managers the opportunity to plan for multi-year cost projections.

That, in turn, is propelling the intensified replacement of aging capacity with new gas-fueled plants.

As Pacific Gas & Electric Co. (NYSE: PCG) CEO Tony Earley noted this week, infrastructure investment becomes a priority when projected fuel prices are low. The system has to be upgraded and replaced in any event, as large segments of it reach the point of "retirement."

Earley also has advanced the idea that the power industry needs to speak with one voice in its dealings with regulators and policy makers.

This need for solidarity has been reflected in comments from other leaders in the power industry as well.

As policymakers increase capital expenditure spending in infrastructure replacement and expansion, we are also likely to see a renewed interest in developing a consensus on where the next "generation of generators" is going to be moving.

And one of the drivers coming onto the scene moves right into familiar - and profitable -territory, at least for us.



Click here to continue reading...

The Natural Gas Act: Another Washington Boondoggle

With gasoline fast approaching $4 a gallon and heading toward $5 this summer, it's no surprise that politicians are panicking.

In Washington D.C., everything is an emergency. Legislation is always the antidote.

So now politicians are pushing the Natural Gas Act as a solution to high gas prices, rather than allowing the market to work.

Of course, none of them want to take the time to understand the true reasons why gas is going to $5 a gallon.

That would require a basic understanding of business or economics, something few in Congress seem to have.

Instead, what you can expect is the typical Washington response-a task force to investigate speculation in the oil futures markets.

U.S. President Barack Obama announced one last week without recognizing the futures markets actually improve liquidity and oil production certainty.

It's how Washington works. The Natural Gas Act is just more of the same.

To continue reading, please click here...

Start Seizing Master Limited Partnership (MLP) Profits

Last week, Kent challenged me to offer you a way to make some money in energy.

I started scanning the energy and agricultural stocks I monitor, and began combing financials, looking for some undervalued little company about to pop.

Then I stopped.

I already knew a failsafe way to ace Kent's challenge. And so do you. We talk about it all the time.

It's the midstream sector of the energy supply chain, particularly in Master Limited Partnerships or MLPs

And it's the best and easiest way to make money in energy today.

I want you to understand the value of these companies that are involved in the gathering, transport, and storage of oil and gas. Not in terms of just how important they are to the industry, but also how important they can be to generating very strong returns for your wallet.

Because if you're ignoring them, you're missing out.

Big time.

That's why today I'm going to share with you one investment opportunity in Kent's Energy Advantage portfolio that is blowing the doors off and making investors a killing.

And you can join in.

MLPs: The Golden Age Continues

The United States is in the early stages of one of the greatest financial booms in its history.

Technological advances in horizontal drilling have allowed companies to access natural gas and oil resources once thought to be unattainable.

Upstream gas drillers continue to develop shale deposits in Pennsylvania, New York, Utah, and other states. So someone has to take care of all the gathering, feeder and transport pipelines, terminals, storage facilities, fractionating, and initial processing of these fuels.

This is what has made Master Limited Partnerships (MLPs) such attractive opportunities.

These midstream companies make their money by charging transport fees for the fuels they process. And over the past few years, these fees have remained almost constant, even though natural gas prices have dropped considerably.

MLPs offer investors the opportunity to make profits in two ways.

  • The stock appreciates in value, due to growth in the sector and strong financial returns.
  • The stock pays higher-than-average yields and quarter distributions to investors (otherwise known as dividends).
The yield benefit is driven by the fact that all company profits are distributed directly to partners and the investors, bypassing corporate taxes.

And when we identify MLP plays that do both at the same time, that's when we really start to see some profits.

A 139% Return in Under Three Years

MLPs are attractive investments. So are the indices that track their overall performance.

And for the last 18 months, Energy Advantage readers have benefited from growth of one fantastic index.

The JPMorgan Alerian MLP Index ETN (NYSE: AMJ) tracks the performance of the booming energy MLP sector. Created in 2009, the market cap-weighted index currently pays an attractive yield of 5%, while the underlying share price has doubled in a little less than three years.

The index offers many of the same benefits of investing in a traditional MLP. The two biggest benefits are those opportunities to acquire a strong yield and to reinvest those dividends into appreciating shares.

This two-step process unleashes the power of income investing.

Just how much potential are we talking about?



To continue reading, please click here...