2010 Natural Gas Outlook

Keith Kohl

Written By Keith Kohl

Posted June 26, 2010

Welcome to the Energy and Capital Weekend Edition — our insights from the week in investing and links to our most-read Energy and Capital and sister publication articles.

Editor’s note: For more updated information from Keith Kohl on Shale Gas Stocks, click here…

At times, an investment opportunity is so obvious, we shake our heads in wonder.


More interesting, however, is how the investing herd are oblivious until the last minute.

For years, I’ve told my readers over and over again what will be the world’s first step away from oil…

Natural gas.

Of course, it’s a bit complicated. Since the financial markets crashed, natural gas prices have fallen into the gutter.

The oversupply in the North American markets — thanks mostly to a surge in shale gas fields across the U.S. and Canada — didn’t help much.

Here’s the United States’ working gas storage for the last two years. See for yourself:

natural gas working storage 6-25-10

Since February of 2009, we’ve been riding the top of the 5-year range.

And if you haven’t guessed by now, the future of natural gas hinges on developing those huge shale gas deposits like the Marcellus, Eagle Ford, and Haynesville shale formations.

Unfortunately, we’re not the only ones that recognize this trend…

Foreign investors are rushing to pick up shale assets:

  • Back in April, India’s Reliance Industries shelled out $1.7 Billion to Atlas Energy for a 40% stake in Atlas’ acreage in the Marcellus shale.

  • Reliance Industries recently invested $1.15 billion in Pioneer Natural Resources Co. (NYSE: PXD) to develop approximately 212,000 acres in the Eagle Ford shale.

  • Expect to see China get a piece of the action. With significant shale deposits of their own, the only problem is that they lack the experience develop those resources. According to the IEA, China is sitting on roughly 26 trillion cubic meters of shale gas.

  • By 2020, Chinese officials are hoping for natural gas to account for 10% of the nation’s energy.

Natural gas bull

Although the long-term future of fossil fuels is inevitably limited, natural gas seems the most likely choice to be our bridge away from oil.

It’s not the electricity sector, however, where the problem is — it’s the transportation sector. Finding a substitute for gasoline is the key.

According to legendary oilman-turned-natural-gas-spokesman T. Boone Pickens, “You’ve got plenty of gas to do both.”

We couldn’t agree more.

And you can bet we’ll be on the front lines, finding you the very best natural gas plays in the U.S.

Enjoy your weekend,

keith kohl

Keith Kohl

Editor, Energy and Capital

P.S. In case your work week was as hectic and unforgiving as mine, feel free to kick back and catch up on the week’s top investing stories from Energy and Capital and our sister publications.

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