Natural gas has become the hottest fossil fuels play in the U.S. since the oil boom in the early 20th century. Improving shale extraction technology has lowered the costs for explorers and producers opening up a whole new set of shale reserves. And the cleaner burning fuel is attractive to everyone from utilities to trucking fleets.
If we’re going to invest in natural gas, then whom do we want to trust our money with? Here are a few of the companies you should keep your eye on in the natural gas industry.
Adding natural gas production has been a major priority for major oil and gas companies like ExxonMobil and Chesapeake Energy
The major producers may not have the flair of smaller pure plays on unconventional natural gas like Quicksilver Resources
With the cost of production for unconventional natural gas falling, it’s hard to see how production won’t continue to increase putting pressure on prices. This puts producers in a tough position, especially those who don’t have the balance sheet of a multinational corporation. Production may be hot, but there are safer ways to invest in natural gas’ growth.
The flip side of falling costs and increased production is that there’s more natural gas to move. If the price of natural gas remains low it will not only remain attractive for utilities and homeowners to use for heat, it may begin opening up new fueling options.
That’s why KinderMorgan’s recent acquisition of El Paso makes so much sense. The combination creates the largest natural gas pipeline company in North America owning both regulated and unregulated assets. These pipelines can be used not only to transport natural gas for use in the U.S., but may help turn the fuel into an export.
The U.S. is producing so much natural gas that Cheniere Energy
Natural gas’ biggest opportunities may be found in the new, innovative ways we will begin using the fuel.
Clean Energy Fuels
Chesapeake Energy has taken notice of this fuel shift and responded by investing $150 million in Clean Energy Fuels earlier this year. The money will help build 150 liquid natural gas truck fueling stations and help build out the infrastructure needed for more widespread adoption. As that infrastructure is built, trucking fleets and buses will find the lower cost of natural gas fuel an attractive advantage helping drive a cycle of adoption.
Foolish bottom line
Natural gas’ place in our economy is likely just beginning its growth curve because of its lower emissions and abundant supply in the U.S. These companies are helping shape that future by producing, moving, and making natural gas usable.
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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.
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