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Recent liquefied natural gas (LNG) stock news highlights how this global gas revolution is finally gaining traction…
In December, for example, Cheniere Energy Inc. (NYSE: LNG) announced two contracts collectively worth $9.5 billion with Bechtel Oil, Gas & Chemicals to construct LNG trains and facilities in Corpus Christi, Texas.
Under the terms of the deal, Bethel will build three LNG trains, three LNG tanks, and two berths able to accommodate vessels with a capacity of up to 267,000 cubic meters. Construction is expected to begin in 2014, and Cheniere forecasts it will be up and running by 2018.
This deal is part of an increasing number of plans that have been proposed to produce and ship LNG to the energy-hungry nations of Asia and elsewhere.
Why? Simple economics.
Natural gas in the United States is currently selling around $4.25 per million BTU. Liquefaction, shipping, and regasification costs will add approximately $6 per million BTU, according to an estimate from consultancy Ernst & Young and reported by the Financial Times.
That brings the overall cost to roughly $10 per million BTU. Still a very attractive proposition when LNG is selling for $15 to $16 per million BTU in Asia today. Especially when one considers that the number of countries around the world buying LNG jumped from 11 in the year 2000 to 27 currently, and will hit 40 in 2020.
And this has been incredibly bullish news for LNG stocks…
LNG Stock News Picks Up Speed in U.S.
Foremost among the LNG projects moving ahead are some right here in the United States.
Cheniere was the first LNG stock to report major export news when it was granted approval for Louisiana's Sabine Pass project in 2011.
The Obama administration finally granted approvals for three additional LNG projects in 2013 after the president signaled in May that he approved of increased natural gas exports.
U.S. projects given the green light in 2013 included Cove Point, Md. – owned by Dominion Resources (NYSE: D); Lake Charles, La. – controlled by BG Group PLC ADR (OTC: BRGYY) and Energy Transfer Partners LP (NYSE: ETP); and Freeport LNG in Freeport, Texas – a partnership between Michael S. Smith and ConocoPhillips (NYSE: COP).
While the biggest LNG stock news has come out of the United States, there are global projects trying to join the export race…