The natural gas industry changed in a very big way this week. With a single discovery, everything we thought we knew has been erased.
This may be the most exciting time to be an energy investor… ever.
Look around. The supply-and-demand equation is changing by the minute. Europe is quivering like a candle that’s about to be blown out. Something huge is ready to erupt in the Mideast. America is stuffed with natural gas.
… and now China goes and blows the whole damn thing apart.
Thanks to news from PetroChina this week, I flat-out cannot wait to get the latest issue of Safe Haven Investor in the hands of subscribers. The opportunity I lay out for them just got three times as appealing.
Here is what’s happening.
When I walked into the office on Monday, China had no commercial shale gas production. But then… we got this headline from the Australian edition of The Wall Street Journal:
ROYAL Dutch Shell has found shale gas in China, prompting fears that the country could develop enough domestic supply to limit imports of liquefied natural gas.
That is huge. Seriously… don’t underestimate what this means for the energy industry.
It’s a game changer.
Remember the pipeline the Canadians wanted to build in order to send their excess gas to China? If China has a major shale gas deposit… we can kiss it goodbye.
And what about that debt-ridden export terminal everybody wants a piece of in the Gulf? There’s no need for it now.
Bye-bye boom…
The ripples created by this week’s news are spreading across the globe. At deadline, shares of China Gas Holdings were halted for a major statement. It was the same thing for ENN Energy Holdings.
I’m guessing it’s a takeover deal. After all, everything we thought we knew about Chinese natural gas is off the table.
We’re starting over.
But this story is larger than China. It’s global.
As I was researching the news from Asia, Sara (doing the dirty work to uncover what’s next in the Mideast saga) told me she just heard Total — the French energy beast — is about to shell out just over $2 billion to get a 25% stake of Chesapeake Energy’s Utica Shale stake.
It is more industry jockeying as the shale industry goes from local… to global. As the Journal put it, fracking is “fundamentally altering the dynamics of the international gas market.”
In other words, what is happening here is way bigger than Pennsylvania, North Dakota or Texas. We are looking at an explosion of natural gas supply across the planet… from Poland to Africa (the real king?) and now China.
It is like Safe Haven Investor subscribers will read on Monday… everything we’ve been told about natural gas so far is wrong.
You haven’t been lied to — but you haven’t been told the whole story. Because it just changed.
Again, what makes all of this doubly exciting is the price of natural gas will plummet just as crude soars.
While we have been finding new sources of oil, the discoveries pale to what’s happened with natural gas. Worse yet, the recent boost to supply cannot overcome the volatility in the Mideast and the fact that much of the world’s cheap crude was pumped long ago.
The days of easy (cheap) oil are over. Now, it’s time for natural gas.
It won’t happen overnight, but I am convinced 2012 will be the turning point. After this… we’re not going back.
Finally, I’d be lying if I said all the gurus at ISG agreed with me that natural gas is America’s future fuel source. Some say it’s too early to call the race.
What say you? Drop me a line with your thoughts: asnyder@insideinvestingdaily.com.
P.S. The hostile situation in the Mideast is the catalyst for a huge surge in crude prices. Like I said, my co-editor Sara is all over the situation. If you have not read her latest research, I’ve included a link.