Will This Be The World's Last Surviving Fossil Fuel
- FN Media Group Presents Oilprice.com Market Commentary
LONDON, Oct. 22, 2020 /PRNewswire/ -- Natural gas could be the single most important energy source of the next decade. For investors who want both profitability and longevity, the natural gas sector is the very first place to look. The math is simple: Big banks are fleeing oil. The coal industry is in terminal decline. And renewable energy is years or even decades away from meeting global demand. Mentioned in today's commentary includes: BP p.l.c. (NYSE: BP), Exxon Mobil Corporation (NYSE: XOM), TOTAL SE (NYSE: TOT), TC Energy Corporation (NYSE: TRP), Canadian Natural Resources Limited (NYSE: CNQ).
So while the multi-trillion-dollar ESG trend is cutting off financing for oil and coal, the global energy transition to renewables is helpless without a bridge fuel. A fuel that is abundant, cleaner than oil or coal, and cheap to produce. That fuel is natural gas.
Big money is banking on this bridge. And the trend has already begun, with some players racing to one of the most profitable natural gas frontiers in the world… Colombia.
A combination of skyrocketing demand and falling supply have left the Latin American nation desperate for the world's most sought after transition fuel, making it a great case study for the coming global natural gas resurgence. In fact, while prices for natural gas in the U.S. have spent most of the year below $2 per thousand cubic feet, prices in Colombia have climbed as high as $7/mcf.
That's a 250% premium on a resource that costs roughly $0.60 to produce and transport to the market. [seems low as the proposed pipeline tariff is $.70. Colombia truly is a producer's paradise. And right now, a top exploration and production team in this most profitable venue is NGX Energy International (GASX; PENYF).
Colombia: The Big Margin Bonanza
Colombia's natural gas prices are some of the highest in the world. Imagine gas contracts at $5/mcf and above, or spot prices that reach to $7/mcf. And then imagine near-zero volatility. Colombia's natural gas supply is about to be cut in half at a time when demand is set to rise over 50%. Existing producers can't keep up.
Now, consider that amid the skyrocketing demand, declining supply and high natural gas prices, Colombia's proven reserves are dwindling … Proved gas reserves are almost half what they were in 2009. That means it desperately needs another major discovery.