In the energy world, natural gas is getting a lot of attention. This is entirely deserved, of course, since production of natural gas has taken off over the past several years. That's due to an abundant supply in the United States, as well as revolutionary drilling techniques that are making previously untouchable domestic supplies available. Drilling down even further into the natural gas industry, one area gaining traction is liquefied natural gas, or LNG.

Liquefied natural gas holds great promise. It's a clear, non-toxic liquid that is formed when traditional natural gas is cooled to extremely low temperatures. As a liquid, it's much easier to store and ship, and since demand for natural gas is exploding across the globe, LNG represents a huge opportunity. Read on to discover why so many members of Big Oil, including Chevron (CVX 0.44%), Anadarko Petroleum (APC), and Royal Dutch Shell (RDS.B), are making huge investments in liquefied natural gas.

Tapping into emerging market potential
Chevron is perhaps making the biggest effort to build out its liquefied natural gas operations. It's in the process of completing two separate projects in Australia called Wheatstone and Gorgon. These will help supplement Chevron's emerging market presence, since the facilities will be perfectly suited geographically to supply LNG to Asia.

Wheatstone is a $29 billion project which includes two LNG trains with a combined capacity of 8.9 million tonnes per annum and a domestic gas plant. First shipments are expected in 2016. Meanwhile, the Gorgon development is one of the world's largest LNG projects. Gorgon is a little further along, as management expects first shipments early next year.

Australia is already the third-largest exporter of LNG in the world, according to estimates from the U.S. Energy Information Agency. Most of these exports go to Asia, where rapidly emerging economies such as South Korea, Japan, and China have a seemingly insatiable thirst for energy. As a result, Chevron has big plans for its Australian LNG business.

For its part, Anadarko's plans for LNG aren't quite as ambitious as Chevron's, but are impressive nonetheless. Its own LNG operations are focused primarily in Mozambique, which management believes has the potential to one day rival Australia in terms of export capabilities. In response, Anadarko has drilled more than 20 deep-water wells in its Mozambique operations and has discovered an estimated 45 million-70 trillion cubic feet of recoverable natural gas.

Recently, Anadarko struck long-term supply agreements with buyers in Asia for its Mozambique LNG, which it expects to deliver starting in 2018. Anadarko has drilled more than 20 deep-water wells in its Mozambique operations and has discovered an estimated 45 million-70 trillion cubic feet of recoverable natural gas. Long-term contracts such as these are critical for oil majors, as they provide a certain assurance of demand and provide the clarity needed to initiate major projects.

Similarly, Royal Dutch Shell announced it had reached a five or six year agreement to supply Kuwait with its own LNG. Shell, along with European major BP, have been contracted to supply Kuwait approximately 2.5 million tonnes per year over the course of the agreement, according to Reuters. Shell is no stranger to LNG. It actually provided the technology for the world's first liquefaction plant in 1964, according to the company.

Big Oil betting on LNG
Liquefied natural gas is a particularly interesting area of the natural gas business. It holds great promise, since it's easier to store and transport than traditional natural gas because LNG occupies up to 600 times less space. And, thanks to soaring demand for energy in the emerging markets, oil and gas companies are plowing huge amounts of resources into developing their LNG operations.

Chevron is arguably making the biggest bets with its two huge LNG projects in Australia. However, other oil majors are following suit with long-term supply agreements. Anadarko and Royal Dutch Shell will supply emerging nations with their own LNG. For all companies involved, LNG clearly represents an opportunity to increase production in the years ahead.