3 Losers From Natural Gas Exportshttp://www.fool.com/investing/general/2013/05/23/3-losers-from-natural-gas-exports.aspx Justin Loiseau
May 23, 2013
Natural gas wannabe exporters scored a huge win last week when the Department of Energy (DoE) gave the green light a second LNG facility for exporting gas to countries that are not in a free trade agreement with the U.S. Natural gas exports could pave the way for a domestic energy economy revival – but there could be major losers, too. I outlined three winners in my last article, but now let's take a look at potential losers.
The perfect price storm
But if this latest report from the DoE is any evidence, America isn't keeping its gas to itself. After approving Cheniere Energy's (NYSEMKT: LNG) Sabine Pass Terminal in 2011, the department gave the green light to a new $10 billion Freeport LNG project.
While natural gas exports could increase U.S. energy independence, reduce our trade deficit, and improve our overall economy, several stable utilities could feel a price squeeze like never before.
In the past year, natural gas has jumped 50% in price, and exports could keep those numbers headed higher. By opening up domestic gas supplies to a larger international audience, demand could balloon while supplies are sucked lower and lower.
We've already seen some evidence of how higher natural gas prices hit utilities hard this past quarter. Exelon (NYSE: EXC) took a $235 million one-time hit from bad hedges, while PPL's (NYSE: PPL) unregulated earnings dropped more than 50% from natural gas' unnatural rise.
From a long-term perspective, utilities with major domestic natural gas assets could lose major cost competitiveness. While companies like Dominion Energy or Sempra Energy are poised to export, nationally focused natural gas utilities won't be so financially fortunate.
Duke Energy isn't doing too well, either. The company uses natural gas and fuel oil for 37% of its regulated generation, and 42% for its unregulated division.
TECO Energy (NYSE: TE) is known for its coal-centric capacity and ownership of Appalachian mines, but t