Cheniere Energy (NYSEMKT: LNG ) isn't just building an LNG export facility, it's building an LNG franchise. However, it's not the only company that will profit as America begins to export natural gas -- and investors might be missing those opportunities as they continue to pour money into Cheniere Energy's surging stock. So for investors looking for an off the radar opportunity to profit from LNG exports, Energy Transfer Partners (NYSE: ETP ) and Boardwalk Pipeline Partners (NYSE: BWP ) are worth a closer look.
Ahead of the game and the apple of investors' eyes
As of the end of April, construction was 65% complete on Cheniere Energy's first two liquefaction trains at Sabine Pass. If all goes according to plan, the company should be exporting natural gas by the end of next year. Investors can see the progress being made, which is why they have bid up shares of Cheniere Energy by more than 147% over the past year. That's a lot of gain over such a short amount of time.
However, bullish investors will point out that the company and its partners are investing a massive $31 billion to build upwards of nine liquefaction trains. The company could end up exporting 5.5 billion cubic feet of natural gas per day in 2019 when all of its trains are operational. That's a lot of gas, representing about 6% of the total volume of gas produced in the U.S.
Still, the Cheniere Energy LNG export story is very well known by investors. The company was the first mover in the LNG export space, and it's now well positioned to dominate it in the years ahead. That being said, the easy money in Cheniere Energy is gone, which is why investors might want to look elsewhere for profits.
Positioned to profit
While Cheniere Energy will be the first company to export natural gas out of the Gulf Coast, it won't be the only one to profit from natural gas exports. While a lot of natural gas is produced in close proximity to Cheniere Energy's export terminals, it still needs to get that gas from the production basins to its facilities. That could open up opportunities for midstream operators like Energy Transfer Partners and Boardwalk Pipeline Partners to transport more gas through their pipeline systems.
As the following map shows, Boardwalk Pipeline Partners sees opportunities to attract new customer loads on its pipelines due to LNG exports.
As that slide shows, Boardwalk Pipeline Partners could supply natural gas that's sourced from the Haynesville Shale as well as the Fayetteville Shale if demand from exporters grows as projected. That demand growth and the ensuing profits would certainly help fuel Boardwalk Pipeline Partners' unit price higher, especially given that the company's units are down more than 40% over the past year. So, while Boardwalk Pipeline Partners might not be constructing an LNG export facility of its own, it can certainly profit from the companies that are constructing these facilities by supplying them with gas.
Meanwhile, Energy Transfer Partners is in a similar boat, as it has assets perfectly positioned for natural gas exports. As the following map shows, Energy Transfer Partners has a number of key pipelines that could be used or expanded to move natural gas from production basins to export facilities.
Further, like Cheniere Energy it is pursing the construction of its own LNG export facility in Lake Charles. If built, the facility would be the second largest liquefaction facility in the U.S. behind Cheniere Energy's Sabine Pass. That being said, by the time Lake Charles is exporting LNG in 2020, Cheniere Energy could have all of its planned capacity already online. Still, there's more upside here, as Energy Transfer Partners' units are just up 11% over the past year as investors haven't yet realized that this company could become a real LNG export story. That could change later next year when Energy Transfer Partners makes a final investment decision on Lake Charles.
Cheniere Energy is a pretty hot stock these days as it's building an LNG export franchise that should fuel profits for its investors for decades to come. That being said, Boardwalk Pipeline Partners and Energy Transfer Partners are quietly well positioned to profit from increased natural gas flowing through their pipelines on its way to export facilities. Further, Energy Transfer Partners is planning its own LNG export facility. Because of this, either company might be a better way to profit from LNG exports.
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