The world is becoming increasingly electrified.
As more nations become developed, the demand for electricity is growing. And in already developed nations, the demand for power will grow dramatically with the electric-vehicle revolution.
The world’s thirst for energy is expected to grow by 28% by 2040.
Coal was once the powerhouse of industry. It supplied 40% of total energy needs as recently as 2012. But the heavy polluter has fallen out of favor due to its dirty reputation.
Replacing it is a clean-burning fuel that was once burned off as a byproduct: natural gas.
Natural gas is often found alongside oil. For decades it didn’t offer enough value to even bother with. Producers would “flare” gas and just burn it off.
That dynamic is quickly changing. Natural gas is becoming a valuable commodity.
This winter, natural gas prices surged over 40% thanks to a shortage of stores going into winter.
Natural Gas Supplies
North America is sitting on vast reserves of natural gas.
The shale basins that became famous for their rich stores of oil are also rich in natural gas. Beyond our own needs, Europe and Asia are eager to tap into our supplies.
Transporting natural gas domestically is usually done via pipelines. But to make overseas transport economical, natural gas is refined and cooled into liquified natural gas (LNG).
Specialized terminals and tankers ship LNG to Western Europe, South Korea and China from North America.
LNG export terminals sprouted up along the Gulf of Mexico thanks to its proximity to shale basins in Texas. But now a new section of coastline is threatening its dominance.
The Northwest, including Alaska and British Colombia, offer a competitive advantage for shipping to East Asia. While the terminals are more expensive to construct there, natural gas is cheaper to produce.
And the travel time is cut from nearly 30 days to 10 days. That’s helping to make new projects, like Royal Dutch Shell’s in British Colombia, to be among the cheapest in North America.
Alaska Gasline Development is also planning a new terminal in Alaska to capture the geographic advantage.
Natural gas’s dominance on the global energy stage is clear.
Early 2019 will likely see fear roiling through the energy markets over tempering demand. But this will create a great buying opportunity.
At Real Wealth Strategist, we are waiting for the best opportunity to jump into positions to grab the growth in LNG and natural gas.
Internal Analyst, Banyan Hill Publishing