Market Overview

The Best Natural Gas Play In The World



Traders and investors are always looking at future trends to make money. One of the latest themes presenting an opportunity to make money in the future is the natural gas sector. Many so called "experts" believe that the United States has more natural gas than any other country on the planet. If this is true, then it is reasonable to assume that the natural gas stocks have future potential of trading much higher once this energy source is readily available for exporting to other countries.

Sure, there is dozens of stocks in this gigantic sector that traders can play at this time. Some leading stocks in the industry group include Chesapeake Energy Corporation (NYSE: CHK), Devon Energy Corporation (NYSE: DVN), Southwestern Energy Co. (NYSE: SWN), Apache Corp (NYSE: APA), and Comstock Resources Inc. (NYSE: CRK) just to name a few. The large integrated energy stocks such as Exxon Mobil Corporation (NYSE: XOM), Chevron Corporation (NYSE: CVX), and ConocoPhillips (COP) all have a foothold in the business as well. The one company that stands out the most is Exxon Mobil Corporation (NYSE: XOM).

In late 2009, Exxon Mobil Corp bought out natural gas giant XTO Energy for $41 billion. This was Exxon Mobil's largest acquisition in over a decade. Please remember, Exxon Mobil Corp is the world's largest energy company by market capitalization, which is at nearly $400 billion. When the world's largest energy company makes an acquisition as large as this one, it is certainly telling the world where the future of energy will be. Often, investments such as these will take five or ten years to pan out, but it is certainly telling of where the energy sector is going, and that is the route of natural gas.

Why hasn't the use of natural gas become main stream already? While there are massive reserves of natural gas in the United States, there is the problem of getting the gas out of the ground safely. The process of retrieving the natural gas is called hydraulic fracturing or hydro-fracturing, commonly known as fracking. This is the process of drilling and injecting fluid into the ground at a high pressure in order to fracture shale rocks to release natural gas inside. Some chemicals such as lead, uranium, mercury, ethylene glycol, formaldehyde, methanol, and radium are just a few of the many agents used in fracking fluid. Many reports have claimed that this process pollutes the water supplies around the United States. Therefore, until this process can be accomplished safely, natural gas may have some time to go before we can expect to use it in our motor vehicles, everyday energy needs and exporting to other countries.

Some other potential natural gas related plays include Clean Energy Fuels Corp (NYSE: CLNE), Cheniere Energy Partners LP (NYSE: LNG), Westport Innovations Inc (NASDAQ: WPRT). If and when this natural gas sector explodes all of these stocks mentioned could see significant upside. Traders and investors should view all of these stocks as potential trading vehicles at this time. All of these stocks are likely to be seen in a much more positive light in about three to five years from now when better and safer techniques are used to retrieve the gas. At this time, Exxon Mobil Corp (NYSE: XOM) is still probably the best way to play the natural gas sector simply because of its diversity and shear size in the oil, and natural gas sector.   

Nick Santiago

Posted-In: Commodities Markets Trading Ideas


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