This macroeconomic view provides the top-down perspective for our natural gas investment strategy.
- North American natural gas prices remain at historic lows on excess supply
- U.S. natural gas exporting capacity could see enormous growth in the near future to take advantage of higher global pricing.
Those companies poised to take advantage of higher global natural gas prices provide the best opportunity in the medium term.
Research & Analysis
1) Natural Gas Prices
On average, global natural gas prices are 2-3 times higher than in the U.S. providing an opportunity for export.
The U.S. natural gas market became oversupplied in 2010.
- Growing consumption is not keeping pace with growing production
- Net exports are moving closer to positive (exports exceeding imports)
- Underground storage is stable
2) U.S. Natural Gas Export Feasibility
Here a couple short articles explaining the feasibility of U.S. natural gas exports.
There are a good number of export facility projects in the works. Not all of them will make it. But based on the graphic below, the U.S. has ~9.2 bcfd of capacity under construction. 2.8 bcfd or almost of third of it is expected to come online in 2015 (Sabine, LA).
Medium-term Investment Strategy
- BUY companies with greatest exposure to U.S. natural gas exports.
Triggers for Strategy Change
- Lower spread between North American and Global natural gas prices.
Type: Investment Strategy Thesis
Geography: U.S., Canada
Sub-sector: Natural Gas
Area(s) of Analysis: natural gas export facilities, natural gas prices, natural gas imports, natural gas exports, natural gas production, natural gas consumption