5 LNG Producers for the Long Term

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“Put our industry to work,” were the words of ExxonMobil’s (NYSE: XOM) Kenneth P. Cohen regarding the company’s recent energy forecast.  “With the right policies we can see more energy developed, more jobs created and far more revenue generated for government.”

ExxonMobil’s energy forecast, along with the NERA study released recently, mean good things not just for the energy industry, but for the U.S. economy overall. These benefits will come from  “access to new oil and natural gas reserves, onshore and offshore, a common-sense approach to regulation and fostering a pro-growth energy investment climate,” according to the American Petroleum Institute blog.

The ExxonMobil report is also good news for the other major oil and gas companies, particularly the ones involved in hydraulic fracturing, such has Halliburton (NYSE: HAL), ConocoPhillips (NYSE: COP), BP (NYSE: BP), and Dominion Resources (NYSE: D).

A turnaround in North American oil and gas production will position the United States, and Canada, to be net exporters of crude oil, refined products and natural gas within the next 17 years, according to the ExxonMobil energy forecast earlier this month. The company also forecasted the “ability to significantly expand prosperity with relatively modest growth in demand” because of greater energy efficiency.

[If policies change] Projections show that liquefied natural gas (LNG) will begin to export to Europe and Asia by 2020, while a turnaround in oil trade appears likely in 2030, according to William Colton, ExxonMobil’s vice president for corporate strategic planning.

The ExxonMobil forecast indicated that demand for natural gas in developing nations will rise 65 percent by 2040 compared to 2010. That is nearly twice the rate of overall demand growth worldwide, which is currently at 35 percent. The company also predicts it will become a net energy exporter in the U.S. by 2025.

By 2040, nearly 80 percent of North American natural gas will come from local resources such as fracking. Worldwide, natural gas supplies from fracking and other unconventional sources will grow to about 60 percent.  Meanwhile, in the same timeframe, about 55 percent of the world’s liquid supply will come from conventional crude oil production. All oil and gas producers will benefit from this growth and change, not just ExxonMobil.

Dominion Resources already has billions of dollars invested in the LNG import market that never took off. The cost of converting those import resources into exporters is cheaper than building new facilities. The company hopes to build an LNG export facility in Maryland. Prospects are hopeful that in light of the projections for natural gas exports, that the facility will be approved.

Halliburton was held back in the past few quarters due to high exposure to the domestic natural gas glut. However, over the last few months, natural gas prices have been rising, and the expectations in the ExxonMobil forecast, give the Halliburton, and other companies suffering from the glut reasons to believe margins will soon increase.

Earlier this year, ExxonMobil, ConocoPhillips and BP announced plans for a major LNG project to build a natural gas pipeline in Alaska to export LNG to Asia. The project could cost as much as $65 billion. The Alaska to Asia Natural Gas Pipeline will export natural gas from Alaska's North Slope 800 miles to the coast. The natural gas will there be converted into LNG for export on tankers. The Alaskan export project would compete with more than a dozen proposed plants in the U.S. that hope to get federal approval to sell liquefied natural gas to Asia, where gas sells for several times the U.S. price.

No one can safely predict energy prices, but future energy usage can be measured and anticipated. These oil and gas producers are taking the right steps to manage and anticipate future demands and challenges. If oil drops in a potentially unhealthy economy, so will all oil and gas producers. But the research and expectations of the future are promising and reassuring for the long-term for investors.


ErinAnnie has no positions in the stocks mentioned above. The Motley Fool owns shares of Halliburton Company and ExxonMobil. Motley Fool newsletter services recommend Dominion Resources and Halliburton Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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