Conditions are creating more demand for American natural gas, and Cheniere Energy (LNG -0.97%) is set to benefit. In this clip from "The High Energy Show" on Motley Fool Live, recorded on May 31, Fool.com contributor Tyler Crowe explains why he thinks Cheniere looks like a good investment right now.
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Tyler Crowe: LNG, is specific natural gas, specifically LNG is going to play a huge part in the next 20-30 years of the energy landscape. Specifically LNG out of the United States because the US has a monumental benefit to producing natural gas than anywhere else in the world, we are pretty much the only place that has an individual market for gas. Everyone else does what's called an index price based on energy equivalent, which is basically like, I think it's like 6,000 square feet or cubic feet of natural gas is equivalent to one barrel of oil, and they priced everything on that. The US actually has a spot trading for natural gas and it's significantly brought down the price, and so the price difference between how much we can produce in United States versus prices paid in Europe, in Asia, significant and so there's a lot of money to be made with the export.
Now, as far as how it actually benefits the future of energy when you produce oil and gas, or specifically like if you're producing an oil well, you're going to produce a lot of excess gas and we've heard a lot of talk before about flaring. Flaring is a big environmental issue either because if it's methane, it's even worse than CO_2 and carbon monoxide with methane, and so if we can better utilize those and better-utilizing means finding more demand sources for natural gas in United States. That means exports, and that's why I think creating more demand for American natural gas that is going to help support oil production over the next 15-20 years is actually going to have a significant impact on methane emissions, carbon emissions in the United States because we can actually monetize it, especially compared to what are some of the other options. Where outside the United States, the carbon intensity for produced oil and gas is significantly higher. Let's not kid ourselves here, so there are opportunities to have a slightly positive impact by using LNG. I think the Cheniere is an established business, it's profitable, its debt is coming down, it's buying back stock. As far as an actual investment, it looks very good.
