Market Overview

Shale Gas Exports Set To Grow (LNG, CQP)


The Marcellus Shale formation in the Northeast could be one of the best solutions to the world's growing demand for energy. Recent moves by Cheniere Energy (NYSE: LNG) and Cheniere Energy Partners LP (NYSE: CQP) are now helping underscore that potential.

Cheniere Partners owns 100 percent of the Sabine Pass LNG terminal located in western Louisiana on the Sabine Pass Channel. The company, along with Chesapeake (NYSE: CHK), is working on building the first liquefaction plant in the U.S. in over 40 years. The plant could start exporting LNG by 2015 and could be huge for the domestic natural gas industry. CEO Charif Souki recently said of the project, "With the abundance of estimated natural gas reserves and the expectation that gas prices will remain competitive for years to come, the U.S. is positioned to become an attractive, low cost alternative supplier of natural gas for international buyers."

And those buyers are ready. Cheniere recently inked a memorandum of understanding with Klaipedos Nafta to discuss future natural gas needs in Lithuania. This follows on the heels of a deal with Japan's Sumitomo to contract up to approximately 1.5 million tonnes per annum of supply from Cheniere.

Analysts estimate that global production capacities of LNG will more than double by the end of the decade and LNG imports are seen as growing an incredible 8.2 percent per year over that time. If Cheniere can continue adding contracts and builds the necessary capacity at Sabine, the stock could be long term monster for investors.

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