Even as tensions in Ukraine ease with Russian President
Vladimir Putin asserting that military intervention is not on the
cards and force will be used only as a last resort, the
confrontation between Moscow and the West - the most serious
since the end of the Cold War - has captivated world energy
Russia's bloodless seizure of border posts in Ukraine's Crimean
Peninsula threatens to derail hydrocarbon deliveries bound for
Europe. In particular, with about a third of the continent's
natural gas supply coming from Russia - most of it via pipelines
passing through Ukraine - any escalation of the conflict there
will severely disrupt natural gas availability to downstream
customers in Europe, sending prices soaring.
Following two prior supply cuts in 2006 and 2009 and a possible
third anytime, Europe is on the lookout for other sources that
can reduce its dependence on Russian gas. The most viable
alternative seems to be the U.S., which, thanks to the shale
revolution, is flush with the
With the success of 'shale gas' - the kind trapped within dense
sedimentary rock formations or shale formations - and the advent
of sophisticated drilling techniques, natural gas is now
available in abundance, while domestic prices have fallen by two
thirds. This gives the U.S. leeway to export some of the excess
and cheap gas through sea - in the form of liquefied natural gas
(LNG) - to the European markets.
Let's look at some companies that are likely to benefit a great
deal from the growth and development of the LNG markets.
Cheniere Energy Inc.
) is the first name that comes to mind. The only Federal Energy
Regulatory Commission/FERC -approved operator in this space with
the 2.6 billion cubic feet per day Sabine Pass terminal in
Cameron Parish, Louisiana, this Zacks Rank #2 (Buy) company has
got the first mover advantage. Cheniere is expected to witness
earnings growth of 14% in 2014 and 33% in 2015, when first
commercial production from the Sabine Pass facility is expected.
While Cheniere Energy is clearly ahead of the pack when it comes
to natural gas export, there are certain other players that are
in line to get federal approval for their terminals. These
Dominion Resources Inc
) Cove Point facility in Maryland,
) Cameron terminal in Louisiana and
Energy Transfer Equity L.P.
)/BG Group Plc's Lake Charles facility, also in Louisiana.
As natural gas production in the U.S. soars, domestic prices
remain constrained, and the Obama administration speeds up LNG
approvals, more and more companies will be eyeing European
markets through export. Importantly, this will loosen Russia's
energy squeeze on Europe and provide the region with long-term
DOMINION RES VA (D): Free Stock Analysis
ENERGY TRAN EQT (ETE): Free Stock Analysis
CHENIERE ENERGY (LNG): Free Stock Analysis
SEMPRA ENERGY (SRE): Free Stock Analysis
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