Saturday, December 18, 2010

"With an abundance of natural gas now in North America we need to liquefy it and export what we are not going to use here"

Dow Jones Industrial Average  11491.91  (Up)  Week ending  12-17-2010

Cheniere - Sabine Pass LNG
 If you live here in Pennsylvania, like I do, then you know that the northern tier counties in the state like Bradford, Sullivan and Susquehanna are experiencing a natural gas drilling boom. Marcellus Shale gas deposits all across the Appalachian Basin are producing large amounts of natural gas to be processed.
Chesapeake Energy Corp. (Symbol CHK, $23.30) seems to be doing a majority of this exploration. Not surprisingly, Carl Icahn has built a 5.8% ownership position in this company. 

 In September 2010, CHENIERE ENERGY PARTNERS (Symbol CQP, $19.55) received US approval to export liquefied natural gas. Up until that time, the facility's primary purpose was to import LNG to distribute in the US.  CHENIERE has a very nice 8.7% dividend payment and a low PE of 11.5. Cheniere Energy Partners reported a deal with Chinese energy firm ENN Energy for 1.5 million tonnes per annum of bi-directional LNG from the Sabine Pass LNG terminal in Louisiana. The MOU covers a 20-year agreement for the supply of
LNG to ENN, should regulatory approvals proceed as planned.

Boone Picken's Plan to use natural gas to power cars and most importantly 18 wheeler trucks, which use 33% of the barrels of oil that we bring in for diesel to move goods around the country, continues to gain traction. Natural gas is also used in many power plants in the country to produce electricity.

Apache Corp. (Symbol APA, $116.95)  owns 51% and  EOG Resources Inc. (Symbol EOG, $91.67) owns 49% of the planned liquefied natural gas (LNG) export terminal to be located at Bish Cove, near the Port of Kitimat, about 405 miles (652 kilometres) north of Vancouver, British Columbia. Planned capacity of the proposed Kitimat LNG terminal is about 700 million cubic feet of natural gas per day or 5 million metric tons of LNG per year. In November 2010, members of the Haisla Nation voted overwhelmingly in favour of approving a lease of reserve lands required for the construction and ongoing operation of the Terminal. Federal and provincial environmental authorizations for the initial design of the Terminal have also been obtained.

The plan is to export LNG to Pacific Rim countries from
Canada and plenty of it.

Out of these stocks I like Cheniere and Apache the best for shorter term one year trades and Chesapeake and EOG more as longer term 3 year investments.

I think that Liquified Natural Gas is a good energy product to balance our trade deficit and is an excellent clean fuel for use here and abroad. We need to add more storage capacity for LNG as a country as a matter of national energy security. It is definitely an integral energy source for this decade.

Enjoy your holiday gatherings with friends and family this week.


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