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About 13 years ago, I was at a meeting of energy experts close to Dominion Energy's liquefied natural gas (LNG) terminal in Cove Point, Md.
At the meeting, it was unanimously concluded that at least 15% of U.S. natural gas demand would be met by LNG imports within the next decade.
In those days, nearly 70% of the U.S. crude demand was projected to be met by imports.
At that time, American oil production was not even 7 million barrels a day, with well over 60% of total volume coming from "stripper wells" – each providing less than 10 barrels daily, but many more barrels of water than oil.
Back then, we were aware of the potential lurking in shale, tight oil, and gas…
But nobody could have foreseen (myself included) the largesse LNG would provide.
Well, a great deal has changed since then – and this revolution currently happening in the U.S. energy market will spell massive profits for us in the coming years…
The Energy Market's Incredible Progress This Year
This past February, the U.S. Department of Energy reported that the United States would become a net exporter of crude oil and natural gas by 2022, which would mark the first year that U.S. energy exports surpassed imports since 1957, when Dwight Eisenhower was president.
That forecast has already started to come true, as evident from the fact that U.S. oil exports reached a record high of 3 million barrels a day this summer. For context, it's more than most OPEC countries export each day, only lagging behind Saudi Arabia and Iraq.
All of this is a very huge deal.
Understanding why the United States is on pace to export more energy than it imports boils down to two events that have dramatically transformed export prospects.
The first is when lawmakers ended the 40-year ban on U.S. oil exports back in December 2015.
At the time, excess supply was wreaking havoc on the energy sector as a whole. There was just too much American oil sitting around in storage, with no one around to buy it.
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The second event is the LNG Revolution.
The growth in U.S. LNG exports has dramatically transformed the global energy markets.
As I said above, just over a decade ago, the United States was expected to become a growing LNG importer, not exporter – likely to be dependent on Russian, Middle Eastern, and North African gas.
Instead, the United States has quickly become a dominant force in the LNG market by offering cheaper and more flexible cargos and by being a more politically palpable supplier.
Fact is, both of these events have significant implications for investors because they bring into focus some companies likely to profit – a trend that should be continuing for some time.
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About the Author
Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.
Tags: Oil Prices