The discovery of an economical method to unlock America's vast shale gas resource is a game changer for the country and the natural gas industry. America now has a more than a 100-year supply of natural gas, which is fueling a mega trend of opportunities for investors. Here are three such opportunities for investors looking to profit in the natural gas space.
North American energy companies are predicted to spend $641 billion through 2035 just on energy infrastructure needed to take advantage of the shale boom. This new infrastructure is needed because America is expected to see a surge in demand for natural gas by the power-generation and petchem sectors as well as from international export markets, as noted on the slide below.
Among the best-positioned companies to take advantage of this is Kinder Morgan (NYSE:KMI). Already North America's midstream infrastructure leader, the company is well positioned to capture new opportunities due to its large footprint. As that slide noted the company already has $5.3 billion in natural gas projects in its backlog as it widens its capacity even more. Beyond those projects, Kinder Morgan is working on a number of other potential projects that should drive growth beyond this decade. Furthermore, the company is a serial acquirer of energy infrastructure assets and it should be able to complement its organic growth by acquiring smaller rivals and further expand its energy empire.
Another large opportunity for investors is the natural gas production itself. As that slide above noted, production is expected to surge from 76.6 Bcf/d to 109.8 Bcf/d over the next decade. Moreover, growth in the Marcellus and Utica shale plays, in particular, will be robust as production may more than double over that same time frame.
One of the companies leading that production surge will be Antero Resources. The Marcellus and Utica shale focused producer is the fastest-growing large cap exploration and production company in America right now as its production is forecasted to rise 40% this year alone. Meanwhile, the company is sitting on an enormous natural gas resources base as its acreage position is right in the middle of the core of both the Marcellus and the Utica shale plays.
As that map indicates, the company has over 5,300 undrilled well locations as it is sitting on an estimated 53.8 tcfe of natural gas resource potential. For perspective, that's enough natural gas to meet the needs of more than 50 million homes for 15 years. It's a resource opportunity that will fuel growth for Antero Resources for years to come.
The last natural gas opportunity that investors should take a closer look at is the growing LNG market. Again, as the slide at the beginning referenced, LNG demand is expected to go from nothing this year to nearly 10% of total U.S. natural gas demand over the next decade. Leading the way here is Cheniere Energy (NYSEMKT:LNG), the early leader in constructing LNG export capacity in the U.S.
The company is investing $30 billion to build LNG export facilities in the U.S. and by 2020 it is expected to control 10% of the global LNG market and be one of the largest exporters of LNG on a global basis. It's also expected to be one of the largest buyers of natural gas in the U.S., pulling nearly 6 bcf/d of gas from the pipeline network to its LNG facilities. It should still have plenty of growth potential beyond that initial buildout as the global LNG market is anticipated to grow by a compound annual rate of 5.7% at least through 2025. To put that growth potential into perspective, the global LNG market needs to add what equates to Cheniere Energy's entire expected 2020 capacity every other year just to meet demand, suggesting the company has plenty of growth potential beyond its initial buildout.
Investors looking for a long-term place to park their cash should take a closer look at natural gas. The industry mega trend is expected to fuel strong long-term growth for pipeline infrastructure, LNG export facilities, and natural gas production. While there are many companies that will benefit from these three opportunities, the best positioned are Kinder Morgan, Antero Resources, and Cheniere Energy.
Matt DiLallo has the following options: short January 2016 $32.5 puts on Kinder Morgan and long January 2016 $32.5 calls on Kinder Morgan. The Motley Fool recommends Kinder Morgan. The Motley Fool owns shares of Kinder Morgan. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.