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Natural gas: Future #1 export?

Motley Fool (yes, I’ve sunk that low)

Getting repeatedly kicked in the balls, on my natgas holdings.

BTW, Kitimat is a joke all unto itself. This is about the third proposed use I’ve heard of, for the cast-off old aluminum smelter city, in the past 10 years. Stunning natural beauty, but there’s nothing else much around there and, as PoorSoul says, “In Kitimat, if it’s not raining….it’s because it’s snowing!”.


The great Tom Petty once wrote, “The waiting is the hardest part.” While fans may claim he was addressing intimate relationships, I know he was really lamenting the time it takes to build a liquefied natural gas export terminal. Apache (NYSE: APA ) is well under way with plans to develop such a facility outside of Vancouver, but even if everything goes according to plan, the plant won’t be up and running until 2015.

But we’re buy and hold long-term investors, right? Three years is no big deal! Let’s take a look to see if this news makes Apache a consideration for our portfolios.

Project stats
Apache will operate the plant in conjunction with EOG Resources (NYSE: EOG ) and EnCana (NYSE: ECA ) . The plant will sit 400 miles north of Vancouver in Kitimat, British Columbia. A 287-mile pipeline operated and maintained by Pacific Northern Gas will run from Summit Lake, B.C., to Kitimat. The expected price tag for the project is $3.5 billion.

Business discussions are under way to lock in customers in the Asian markets, and again, first shipments aren’t expected until 2015.

The LNG situation in North America
Right now, there is no facility in North America capable of liquefying natural gas for export, which makes the Kitimat facility incredibly important. Cheniere Energy (AMEX: LNG ) also has a facility project in the works on the Gulf Coast, but its construction is subject to further federal regulatory approval. At a price tag of $6.4 billion, the company that hasn’t made a profit in 13 years also needs to come up with financing, securing Kitimat as North America’s most likely bet right now.

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