NEW YORK, NY--(Marketwire -02/23/12)- An abundance of available natural gas combined with muted domestic demand has sent prices for the fuel down to record lows this year. The U.S. Energy Information Administration projects shale gas production to increase from 5.0 trillion cubic feet in 2010 to 13.6 trillion cubic feet in 2035. With prices near historic levels, U.S. producers have started either idling wells or looking outward for other sources of demand. Five Star Equities examines investing opportunities in the natural gas market and provides equity research on Chesapeake Energy Corporation (NYSE: CHK - News) and Westport Innovations, Inc. (NASDAQ: WPRT - News) (TSX: WPT.TO - News). Access to the full company reports can be found at:
According to an energy sector report from EIC Consult, the rise in shale gas development has led to a number of Liquefied Natural Gas (LNG) terminals being converted from import to export terminals and LNG exports doubling between 2009 and 2011. By July 2011, imports were down 44 percent year-on-year, according to Reuters, with imports at the lowest monthly level since December 2002. At the same time exports almost doubled from 33.355 Bcf (billion cubic feet) in 2009 to 64.793 Bcf in 2010 - a result of the re-exportation of LNG imports.
EIC Consult argues that natural gas storage capacity is increasing to accommodate shale output with many new storage facilities entering construction, with resulting opportunities for the supply chain.
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EIC Consult warns, however, that the future of LNG remains uncertain as "the market for US exports is far from secure" as proposed export terminals are located on the East Coast lacking a direct route to the more profitable Asian markets.
Earlier this month Fitch Ratings issued a report arguing that the measured conversion of some U.S. liquefied natural gas (LNG) terminals to allow the export of liquid natural gas as positive. "However, currently favorable margins for U.S. LNG exports may not be sustainable and could set up long-term risks for these infrastructure projects," Fitch says.
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