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U.S. Natural Gas Dominance

The Russia-China Energy Alliance

Written by Keith Kohl
Posted September 2, 2014

Love or hate the guy, you have to respect Putin's knowledge of 11th century Chinese literature.

Nearly 800 years before the famous Drake well was drilled in Pennsylvania, a Chinese scientist named Shen Kua wrote a booked titled Dream Pool Essays, which predicted that oil and natural gas “would become widely used in the future.”

Naturally, this turned out to be the understatement of a millennium.

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And while U.S. natural gas demand will continue rising at slow pace through 2040, China's gas consumption has increased sixfold since 2000.

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Luckily, Russia is willing to help out a friend in need... especially with the possibility of more sanctions ahead.

The two countries moved a step closer to a gas alliance after breaking ground on a $400 billion pipeline, which is expected to supply 4 trillion cubic meters of natural gas to China during the next three decades.

During the last 10 years, China has more than tripled its natural gas production, with output projected to reach 5.5 trillion cubic feet next year... but it's not nearly enough to satisfy its burgeoning demand.

Still, you can't really blame China for using more natural gas. The country has been looking to transplant its addiction to coal for years (reducing its air pollution in the process).

But despite the country's growing love for all things natural gas, it still won't hold a candle to U.S. consumption — even 30 years from now!

And it's up to you to take advantage of this...

The Missing Link

A few years ago, I told you that tapping into the United States' shale oil and gas resources is — without question — the single-greatest investment opportunity of our lifetime.

You can't say you didn't see this coming, either.

The Energy Information Administration, which itself was a few years late to the party, showed us precisely how important shale gas will become going forward...

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Yet there are still few people who understand how vital this production has become to the United States energy dynamic. And even though this is certainly the case for tight oil plays in states like North Dakota and Texas, which account for 48% of our domestic oil production, the disparity is even greater when it comes to natural gas.

Why?

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Simple: Nowhere else in the U.S. shale revolution do you see one formation mask production declines happing virtually everywhere else. Last week, I mentioned that production from the Marcellus shale recently topped 15 billion cubic feet — about 40% of all U.S. shale production.

In fact, the EIA even reported that shale gas will be responsible for 87% of the United States' natural gas production growth between now and 2040.

And below are just a couple of the projects that have sprung up lately in the Marcellus...

  • EQT Corporation and NextEra US Gas Assets LLC formed a joint venture to construct the Mountain Valley Pipeline, which will ship up to 2 billion cubic feet of natural gas to the Mid- and South Atlantic regions of the U.S.

  • Dominion will build and operate a 550-mile interstate that will transport up to 1.5 billion cubic feet of natural gas down the Atlantic Coast and will come with a hefty $5 billion price tag.

  • Consol Energy is looking to invest as much as $28 billion in West Virginia, Pennsylvania, and Ohio over the next decade on shale-driven opportunities.

  • Columbia Gas is spending $1.75 billion on two new projects — a 160-mile pipeline in Ohio and West Virginia, as well as a compression facility next to its existing Gulf Coast operations.

Not only will this trend continue, but we're also going to see similar projects pop up across the Appalachian Basin.

Of course, there's one remarkable advantage that we hold over both Russia and China.

While major oil companies like Chevron face multi-year delays in developing shale gas resources in China's Sichuan province, U.S. companies are becoming alarmingly more efficient at extracting gas from the tight rock formations.

Cabot Oil & Gas has already shaved nearly a million dollars off of its drilling and completion costs in the Marcellus... and how it did it isn't a secret.

You see, there's a fundamental transition taking place in virtually every shale play in the Lower 48.

If you haven't done so yet, I strongly urge you to learn about this revolutionary technology that will shape U.S. shale development for the next three decades.

Until next time,

Keith Kohl Signature

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing's Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.

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