Billions of dollars are being spent right now in Western Canada getting ready for the first shipment of Liquid Natural Gas in 2015 and later. Companies are drilling and fracking to prove up trillions of cubic feet of gas, enough for the big LNG companies to sign 20 year supply agreements with Asian utilities.
Who is getting all that money right now? One group is the junior gas producers in Western Canada. Exxon spent $3 billion last year buying Celtic Resources on the Toronto Stock Exchange, to get access to their huge natural gas land package on the BC Alberta border. Malaysia's National Oil Company, Petronas, spent $6 billion in 2012 buying Progress Energy, also listed on Toronto, for their natural gas in the ground.
The other group getting a huge influx of that money is the energy services sector in Canada. Drilling companies are now back to being busy in Canada. The frackers have gone from zero to 60 in mid-2013. Everyone was already busy exploring for high priced oil, but now that LNG is coming, gas drilling—for LNG exports—is increasing again. That means day rates, profit margins, and stock prices are increasing for Canadian energy service stocks.
The spending will only get more intense.
On June 11 – Petronas said it will spend another $16 BILLION on a west coast LNG project - $10 or $11 billion for the plant and $5 billion for the pipeline—total of 2.4 B's a day.
A "B" industry slang for a billion cubic feet per day—so Petronas wants to export 2.4 billion cubic feet.
Then on June 13—Exxon said they would build an LNG plant even bigger —4 B's a day. There was no estimate on capital cost, but as a rule of thumb, it costs $5 billion for 1 B of gas per day.
Then on June 19—BG Group PLC from London, England said they wanted to build an LNG export plant on Canada's west coast for 3.3 B's a day. That's more than a $15 billion investment. They also need a big pipeline.
There are now 10 proposals to ship Liquid Natural Gas off the northwest coast of British Columbia. Just the top 6 would require ALL of the 13 billion cubic feet of gas that Canada produces today. Every single molecule would have to go offshore.
Now, of course, that's not going to happen. All this is early stage. Some projects won't get funded, or won't be able to sign big, long term contracts with buyers at prices that will guarantee them a profit.
And if you're going to spend $16 billion before you get ANY revenue, you want to know there's going to be a profit.
But the reality is, the first ships loaded with Canadian LNG to Asia are expected to leave port in early 2015—less than two years from now. That first project is very small, but will likely cost over $1 billion all-in.
Like I said, a general rule of thumb is that an LNG plant will cost about $5 billion to build for every bcf of gas it exports. For northwest Canada, 13 bcf a day equals a potential $65 billion in construction business.
That doesn't include building pipelines.
That doesn't include the spending required to drill up 20 years of reserves. No Asian utility will sign the kind of 20 year contract to buy gas unless they are absolutely sure that supply is secure.
Look at Asian companies like Malaysia's National Oil Company, called Petronas. They have already spent $3 billion buying a big Canadian gas producer called Progress Resources, and are spending hundreds of millions more drilling and fracking and proving up of TRILLIONS of cubic feet of gas reserves in B.C. and Alberta for their LNG play.
So even though LNG shipments may be years away, billions are being spent right now.
I've put together a list of public companies that I think will benefit greatly from this LNG build-out, and I've invited them to present to you, in person, at my LNG Conference in Vancouver, Canada on September 25, 2013.
Some of these stocks are already starting to enjoy the benefits of more business and more profitable business. The senior management teams from each one will be in Vancouver on Wednesday, September 25 to tell you about their investment merits.
This conference is for you, the retail investor. You will never get another chance to listen and meet with all of these teams in one room, in one day. You will learn more about the economics of LNG and the stocks that will benefit from it—right here at my conference—than anywhere else.
I have over 100 subscribers attending already, and I'm only allowing 150 other people to attend. Go to my conference website and sign up right now at http://www.ogiblngconference.com/. You will see which companies are presenting, and be able to see all the LNG proposals, who is behind them, and when they think they may be in production.
My basket of LNG stocks are up handily in what otherwise is a tough year for the energy sector. Come and meet these teams directly, and understand the long term investment opportunity we are now being given. http://www.ogiblngconference.com/
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