Move Over, Saudi Arabia!

The US “Energy Information Administration,” or EIA for short, believes the US could become an “energy exporter” within the next 10 years:

W hy You Should Care:   If you agree with the EIA forecast, you might consider investment opportunities within the space.   Consider the geography:   Once extracted from the earth, natural gas must move to the consumer.   Pipeline companies do this.  They transport the gas.  They are toll-roads.

Many pipeline companies can be bought like stocks…and are called Master Limited Partnerships, or MLPs for short.   If the EIA forecasts are correct, these companies have a long, upward growth potential.

T aking Action:  I have bought and still own a number of these companies.   One is Energy Transfer Partners, or ETP.   Not only do I like the long-term value potential, I like the current yield:  11.2%.

T he BLOG:  Move over Saudi Arabia … the US is the next big energy exporter!

US ‘shale’ natural gas production has EXPLODED in the past ten or so years.   (No pun intended…well, maybe a small one.) 🙂

Take a look:

A huge contributor to this growth has been the Marcellus shale formation.   Since 2010, production from this area has skyrocketed and today almost 39% of all US ‘dry’ shale gas production originates from this location:

Marcellus and Utica production combined accounts for 1/2 of all US dry shale gas production.  And the EIA expects much of this production to be exported.

Currently, the US has eleven (11) “LNG Export Terminals” approved and under construction.   The largest terminals expect to be completed and operational between now and 2019.   In each, natural gas will be processed and liquefied, loaded onto ships, and exported all over the globe.   (How cold is LNG?   Converting the gas to a liquid requires it to be “supercooled” to a negative 260 degrees!)

One on the coast of Maryland, one in Georgia, and the balance in Texas or Louisiana.  (If you’re interested in locations and ownership, here you go:  https://www.ferc.gov/industries/gas/indus-act/lng/lng-approved.pdf)

Here’s the bottom line:   Tens of billions of dollars are being invested by numerous companies – often in the form of MLPs – in exporting terminals.   The EIA is bullish about exporting:

The large blue/gray area above shows the potential growth .   The dotted line is today.  Look at the change from 2000 to today.  And then look at the 2020 forecast.

Now might be the time to get in.   I already have … and I will continue to monitor this fascinating development.

• Terry Liebman