Jim Letourneau's Blog

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Natural Gas Supply Barriers

NaturalGas.org has listed some of the long term and short term barriers to natural gas supply. I believe that the best investment opportunities will occur at the critical bottlenecks to getting natural gas to market. Energy companies don't make any money unless they can get the gas out of the ground and transport it to market for sale. They are willing to pay through the nose to eliminate these barriers.

Short term supply barriers:
  • Availability of Skilled Workers
  • Availability of Equipment
  • Permitting and Well Development
  • Weather and Delivery Disruptions

  • General Barriers to Increasing Supply
  • Land Access
  • Pipeline Infrastructure
  • The Financial Environment

  • Natural gas is distributed in a resource triangle so there isn't a shortage of drilling locations. Companies that exploit lower grade "resource plays" try to use economies of scale to drive down costs but that is becoming more difficult with increasing competition for skilled labor. Resource plays often require specialized drilling and completion techniques and those services will be in the most demand. I continue to like oil and gas service companies (especially land drillers, well/production services and compressor manufacterers).

    Not Advice

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