When it comes to natural gas, the United States has a distinct
advantage. And this advantage creates a big profit opportunity
for a select group of U.S. companies.
Thanks to prevalent drilling and huge gas production from
places like the Bakken Shale and Marcellus Shale, the cost of
natural gas in the U.S. is downright cheap. In fact, the price
has fallen 68% since 2008.
Today, U.S. natural gas is considerably less expensive than
anywhere else in the world. Consider that liquefied natural gas (
) fetches $15 per million Btu (MMBtu) in Asia and $11.20 in
Europe. Yet in the U.S., the same gas costs just $3.60 per
That discrepancy creates a big profit opportunity.
Much money could be made exporting LNG to Europe and Asia. But
it's no slam-dunk. That's because liquefying and transporting
natural gas is costly.
For example, the cost to liquefy and to ship U.S. natural gas
to Japan is expected to average $9 per MMBtu, assuming a U.S.
market price of $4.
Should U.S. prices rise, or Europe and Asia prices fall, the
U.S. advantage could quickly evaporate. While the U.S. got in on
the ground floor of the shale gas boom, companies in Asia and
Europe are aggressively drilling.
Similarly, the ability to export LNG is not yet a reality. The
first LNG exports aren't scheduled to leave port until
But today there is a real opportunity to export U.S.
gas to Mexico.
Lack of investment in both production and exploration has
seriously drained Mexico's natural-gas reserves. In the late
1990s, Mexico had more than 60 trillion cubic feet (tcf) of
proven reserves. Today, those reserves have declined by more than
The dearth of supply, in turn, has led to rising natural gas
prices. Mexico's domestic natural gas is four times more
expensive than U.S. natural gas.
Thanks to the price advantage, U.S. producers have stepped in
to meet the Mexican shortfall. Natural gas exports have jumped
over the past decade.
Soaring U.S. Natural Gas Exports to Mexico
Source: Energy Information Administration
That's because while Mexican supply has dwindled, Mexican
demand has surged. And U.S. companies are stepping up to fill the
Economic growth is driving Mexico's natural gas demand higher,
particularly for generating electricity. To meet growing
electricity needs, Mexico plans to add roughly 28 gigawatts of
new electricity-generating capacity between 2012 and 2027.
At the same time, Mexico is pushing toward greener energy
The country is actively switching to cleaner-burning
natural-gas-fueled electric plants from oil-fueled plants. CFE,
Mexico's state-owned utility, estimates that plant expansions and
plant conversions could significantly raise Mexico's natural gas
This means Mexico will demand even more natural gas from U.S.
producers. The Energy Information Administration (
) forecasts U.S. natural gas exports to Mexico to quadruple by
Unlike natural gas exports to Asia or Europe, sending gas to
Mexico doesn't require costly liquefaction and ship
transportation. Nearly 100% of the natural gas exported to Mexico
is transported via pipeline.
Not surprisingly, the economics of delivering vital natural
gas to Mexico favor pipeline companies. In fact, several new
pipelines are currently in development to meet this growing
The best income opportunities reside in the pipeline companies
that border Mexico. Sixty percent of all U.S. natural gas
exported to Mexico arrives directly from pipelines in Texas, with
supplies originating mainly from the Eagle Ford shale.
Some of the best pipeline operators in the region offer a
healthy distribution yield of 6%. Others offer even more.
Exporting natural gas to Mexico is one of many profit
opportunities on the horizon as a result of the U.S. energy boom.
The investment team at Wyatt Investment Research views this as
one of the biggest growth opportunities of the next decade - and
we want to help you profit.
My colleagues - Ian Wyatt and Tyler Laundon - are holding a
live investing seminar to discuss the rapidly unfolding
developments and profit opportunities. This live tele-conference
U.S. Energy Alert: 3 Profit Plays for 2014 and
I invite you to reserve your seat to learn how to position
your investment portfolio for capital gains and investment income
in the years ahead. The event is 100% free and takes place
Thursday, October 3 at 2pm eastern time.
Just click here now to reserve your seat.