The United States is in the midst of an energy renaissance, with plentiful natural gas helping to lead the way. That left natural gas prices near historical lows and companies switched to the fuel as a way to save money and/or reduce pollution. The swift price spike during the recent cold spell, however, highlights a key problem that only a few companies can solve—supply may be tighter than people realize.

When things go right
The northeast is, perhaps, the poster child for natural gas conversion. The region's grid operator notes that at the turn of the century natural gas accounted for about 15% of the region's power. Today it makes up over 50% of the total and looks like it will keep heading higher. If fact, the grid operator believes this creates a systemic risk to the grid.

But utilities aren't the only ones switching to natural gas. For example, trash haulers Waste Management (WM -0.26%) and Republic Services (RSG -0.55%) are both in the process of switching material portions of their fleets over to natural gas. Waste Management has over 2,000 natural gas vehicles. The company estimates it avoids the purchase of 8,000 gallons of diesel a year for each natural gas truck. Republic doesn't have as many natural gas trucks, but about half of its new purchases are natural gas powered.

The success of Waste Management and Republic Industries with their natural gas shift has provided proof for other companies considering the move. For example, United Parcel Service (UPS 0.11%) has pledged to buy over 1,000 long-haul trucks powered by natural gas. It estimates that the move could save it up to 40% on its fuel costs. Who wouldn't jump at that?

The problem in all of this is that as demand builds across the country, the abundant supply that's kept prices low gets eaten up. A few days of extreme cold leading to 10-year high spot prices shows just how tight the gas market is starting to get. And demand is only set to go higher. So UPS' bet on natural gas is great when prices are low, but if prices move higher those saving start to go away. That's true for Waste Management and Republic, too.

Getting things where they have to go
One of the big issues in the natural gas space is actually getting the fuel from where it's drilled to where it's used. And that's the purview of pipeline companies. For example, industry giant Enterprise Products Partners (EPD 0.70%) has over 21,000 miles of pipelines dedicated to natural gas.

Increased use of natural gas not only allows Enterprise to keep building and buying pipelines, but it also keeps the volumes up on what it already owns. Since the limited partnership is basically a toll taker, the more volume the better. PVR Partners (NYSE: PVR) shows just how much potential there is.

The company opened its Eastern Midstream business in 2010 serving one customer. By the end of the year it had three wells connected to its line and volume of 25 million cubic feet per day. At the end of 2013, PVR had 15 customers and nearly 320 wells. Over 1.8 billion cubic feet per day of natural gas was flowing through its pipes—up 60% compared to 2012 volumes.

An opportunity
Transporting gas across the country and just getting it from the well head to the big pipelines are both vital steps in getting the fuel to market. Although owning natural gas pipelines isn't exciting, the fuel's price spike shows that the increasingly in-demand fuel could provide this boring sector with years of growth. Indeed, if a few cold days can push prices to their highest levels in a decade, there's clearly more need for natural gas infrastructure and more good news to come for pipeline operators serving the natural gas sector.  

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