The Long Term Economics of U.S. Natural Gas Utilization: One of the 10 Best Oil & Gas Investment Interviews of 2012

Wall Street Transcript

67 WALL STREET, New York - November 28, 2012 - The Wall Street Transcript has just published its Oil and Gas Investing Forecast offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Oil and Gas Investing

Companies include: Enbridge Inc. (ENB), Spectra Energy Corp. (SE), ONEOK Inc. (OKE), TransCanada Corp. (TRP), Williams Companies, Inc. (WMB), Enterprise Products Partners L (EPD), Kinder Morgan Energy Partners (KMP), Energy Transfer Partners L.P. (ETP), Williams Partners L.P. (WPZ), ONEOK Partners, L.P. (OKS), Western Gas Partners Lp (WES), Anadarko Petroleum Corp. (APC), Noble Corp. (NE), Energy Transfer Partners L.P. (ETP), Sunoco Inc. (SUN)

In the following excerpt from the Oil and Gas Investing Forecast, an All Star expert analyst discusses the outlook for the sector for investors:

TWST: You believe natural gas will become the base load fuel for power generation. Please tell us about the factors that contribute to that hypothesis. And over what time period do you expect that hypothesis to play out?

Mr. Launer: Yes, that's a great question, and there are so many different ways to talk about it from the standpoint of what has been a very long-term trend toward more utilization of natural gas, especially for power generation. The major point of it is there have been fits and starts along the way with this.

If we go back 10 to 15 years, there was a very large construction boom in natural-gas-fired cogeneration facilities, many of which were built but not utilized to the level that they could have been. They were really peaking facilities in a market that needed that at that time for reserve margins. They were never really used to a level that would cause natural gas demand to rise materially.

But a confluence of events is now occurring that we think will last for quite some time - shutting down of coal plants around the U.S., especially in the Southeast, which have been scheduled because of environmental issues and cheaper natural gas compared to other forms of energy. It's still quicker and cheaper and cleaner to build or use natural gas for power generation than any other fuel.

The issues with nuclear around the world and in the U.S. are interesting too. A few years ago, in 2008, we were talking about a resurgence of nuclear, but unfortunately, with the catastrophe in Japan, no one is talking about that now - so we see natural gas, which is approximately 45% of the installed base of power generation in the U.S., but only has a utilization factor of about 25% growing in that utilization factor. This doesn't even require there to be a significant new construction of natural-gas-fired power plants, even though we think some of that is going to go on.

As an example, if you look at coal, coal is approximately 30% to 33% of the installed base of power generation in the U.S., but its utilization factor...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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