The U.S. is rich in energy resources like oil and natural gas. But for a long time, we couldn’t get it out of the ground.
That’s because much of the country’s vast oil and gas wealth is trapped in hard-to-drill shale rock formations.
Extracting it from vast basins around the U.S. was too difficult and expensive.
But when industry pioneers figured out how to tap into those resources at a low cost, it turned the U.S. into an energy powerhouse almost overnight.
We are now the number one oil producer in the world. Production here is 50% higher than the second-place producer, Saudi Arabia.
But there’s another overlooked area of the U.S. energy renaissance, and that’s natural gas.
U.S. gas production has doubled since 2006, and it’s up 33% just in the past six years alone.
Domestic demand is surging due to vast supplies and cheap costs. That’s why natural gas took over coal back in 2015 as the number one source of power generation.
But it’s not just demand within U.S. borders. International regions are clamoring for cheap and plentiful U.S. gas.
That’s allowed the U.S. to pull off a feat in global natural gas markets that even oil can’t touch…
One that has turned the U.S. into a new energy superpower. And that’s opening up profit opportunities for those who know where to look.
Let me explain…
An Emerging Export Leader
While the U.S. holds the top spot for producing oil, its developments with natural gas are making oil barons envious.
The U.S. is already the leading natural gas producer in the world. And now, it’s emerging as one of the top exporters, too.
That’s remarkable when you consider that the U.S. was importing more natural gas than it was sending abroad as recently as 2016.
But thanks to massive U.S. natural gas reserves and the shale revolution, production is now enough to both satisfy domestic demand – and export abroad.
Exports of natural gas have been going parabolic over the last several years. You can see for yourself in the chart below. It shows U.S. natural gas imports compared to exports.
Total exports of natural gas rose to a new record last year… hitting 6.9 trillion cubic feet. That’s about 18% of total U.S. production.
For a long time, it was pipelines taking those exports to our neighbors in Mexico and Canada. But thanks to massive investments in specialized infrastructure, U.S. gas can now be sent via ocean around the world.
An Emerging Leader in LNG
I’m talking about liquified natural gas (LNG). Thanks to massive investments in LNG infrastructure, U.S. exports of natural gas will grow even further.
Here’s why…
With LNG, gas is turned to a liquid state by cooling it to -260 degrees Fahrenheit. Then it gets loaded onto specialized ships, where it can be sent around the world.
By converting it to a liquid, the volume of natural gas is about 600 times smaller than its gaseous state. This makes transfer by ship economically viable.
For years, countries in Asia were the top natural gas export destinations. But in 2022, demand from European nations like France and the United Kingdom saw the region import over twice as much gas as Asia.
It’s these new sources of demand that will drive exports even higher…
For example, U.S. LNG exports have doubled over the last three years. They’ve grown at a compound annual rate of 101% ever since exports started rising in 2016.
And that lead should grow well into the future. The demand for LNG is expected to spark an additional $100 billion in new LNG investments over the next five years.
But LNG terminals are complex structures that can cost $10-15 billion – and take years – to build.
That means there are only a handful of companies able to build and operate LNG facilities.
And those are the ones positioned to reap bumper profits as the U.S. emerges as the top LNG exporter in the world. These are the kind of companies on my radar at my Energy Distortion Monitor advisory.
But for those who aren’t subscribers yet, an exchange-traded fund (ETF) gives you broad exposure to companies profiting from natural gas demand.
Consider the Global X MLP & Energy Infrastructure ETF (MLPX). It holds companies that move and store energy products like natural gas and oil. Plus, one of its top five holdings operates in the LNG sector.
And with a dividend yield of 5.9%, it’s a good way to benefit from our booming energy trade.
Regards,
Clint Brewer
Analyst, Rogue Economics
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