Who Will Collect This Chinese Energy Debt?

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Who Will Collect This Chinese Energy Debt? By Keith Kohl | Tuesday, February 7th, 2012 “Things are going to get a lot tighter around here,” a colleague of mine commented as he passed my desk this morning. That may be an understatement. Since 1990, the global population increased by nearly two billion people. Even if the population growth trend slows, as the latest BP Energy Outlook to 2030 report suggests, we can still expect to see a billion and a half new faces by 2030. And we can actually pinpoint where this increase will happen. According to that same report, approximately 96% of the world's energy demand growth will be from non-OECD countries (think: China and India). Furthermore, non-OECD countries will make up 80% of the natural gas demand growth. As if becoming the second-largest consumer of natural gas wasn't enough, China is also expected to account for half of the global liquids demand growth for the next twenty years. But by that time, the energy landscape won't be the same. Advertisement The $350 Billion Dollar Oil Secret U.S. oil production will rise by 1.2 million barrels a day over the next few years. At current prices, that's $350 billion in new oil revenue. But much of that revenue will go to small oil companies that currently trade between $3 and $8 a share. Annual revenue for this top pick will grow 1,790% — this year! You can get the full report here. Of course, population is just one factor that will fuel future energy consumption. BP's report went on to explain why North America will be almost completely self-sufficient when it comes to energy by 2030, saying North America's deficiency would become a small surplus. Interestingly, this “surplus” has pitted the United States against Canada in a footrace to ship energy resources across the Pacific. Race to Buy, Race to Sell The U.S. and Canada are in a mad dash to tap into Asia's LNG market... and in this race, absolutely nothing is off the table. But to what lengths will the United States go to sell LNG to China? Last month, Jeff Siegel told you U.S. LNG stocks were busy setting up long-term contracts. And that isn't the only thing these companies have been up to... Now they're planning to widen the Panama Canal by 2014, which will give LNG tankers from the Gulf region quick access to the Asian markets. The project should alleviate the major problem for modern LNG tankers, which are simply too large to navigate the Canal. These figures should give you a better idea of just why tensions are growing in the battle over natural gas: We're talking about unconventional gas. In 2030, more than half of North America's natural gas supply is projected to be from shale gas and coalbed methane. But if we had to bet on the outcome of this footrace to secure future energy supplies, there's a clear-cut winner. Canada has something of an ace up its sleeve in that they don't have to deal with U.S. politicians. More to the point, Canada has been looking to diversify its energy exports. As you read this, Canadian Prime Minister Stephen Harper is visiting China. Despite the fact that Uncle Sam is willing to do anything to come out ahead, Canada may have an entire year's head start over U.S. companies — with its first shipments expected to hit Asian shores by 2015. Advertisement You've Never Seen Anything Like This A Maryland-based analyst has perfected a way to generate endless income. We didn't think anyone would believe him... So we started using it and filmed the results. You can see them for yourself right here.  We also know that the Chinese are more than willing to pay top dollar for it. That much has been evidenced time and again by news that they once more spending billions in North America's shale operations. Just a few days ago, my colleague Nick Hodge showed you the latest of those deals with PetroChina's billion-dollar price tag for a stake in Shell's Canadian shale gas project. Believe me, dear reader, these dealings will only intensify going forward... As the fourth-largest natural gas consumer in the world, China's demand is expected to grow by 15% per year for the next decade. That alone will put them in second place within eight years. And the Middle Kingdom has made it obvious that they prefer Canadian oil and gas to Russian resources. Make no mistake; this game has just begun. North American LNG export is in its infancy, a fact that my readers and I have been keenly aware of — and prepared to profit from — since the first drill bits struck Canadian soil to tap shale gas resources. Right now, I'm putting the finishing touches on a report that details how you too can capitalize on this new opportunity. So keep an eye on your inbox. And later this week, we'll talk more about this footrace to Asia. I'll explain exactly how Canada has taken the lead and, more importantly, we'll take a look at what stands in their way. Until next time, Keith Kohl @KeithKohl1 on Twitter A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta tar sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.   Related Articles Investing in the Eagle Ford Formation Who Is Henry Hub? The Keystone XL and the Northern Gateway Natural Gas Rebound From the Archives... Proposed Bill Sets Drilling Standards 2012-02-06 - Brianna Panzica It's Official: China's Rare Earth Monopoly Is Dead! 2012-02-06 - Jeff Siegel Energy and Capital's Weekend Edition 2012-02-05 - Nick Hodge Has New Growth Plans 2012-02-03 - Stephanie Ginter Texas Strikes Oil Again 2012-02-03 - Keith Kohl

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