Tags: Marvin | oil | gas | export

StreetAuthority's Marvin: Now You Can Invest in Future US Energy Exports

By    |   Monday, 07 July 2014 01:07 PM

One way to profit from budding U.S. energy exports is to invest in companies that are poised to benefit from new Commerce Department licenses to export gas condensate, a substance that the United States has a glut of languishing in Texas and Oklahoma tank farms, according to StreetAuthority's Chuck Marvin.

The opportunity stems from the fact there are few buyers for some of the new crude oil and natural gas liquids (NGLs) coming out of the ground from the nation's gushing shale sources, Marvin explained.

That's because the nation's dominant Gulf of Mexico refineries were built decades ago to process heavy, high-sulfur crude from the Middle East, Alaska and the Gulf of Mexico itself.

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"These refineries cannot process much of the light, low-sulfur stuff now coming from U.S. shale reservoirs," he argued.

Gas condensate, also known as ultralight oil, changes from gas to liquid when it rushes out of a wellhead, or when it flows through a natural gas processing plant.

"The basic laws of supply and demand suggest that oil producers would be better off selling lighter crude oils and NGLs to buyers in Europe, Asia and Canada, where refineries are better equipped to handle the light crude blends."

The Obama administration cleared the way recently for some condensate to be exported in limited quantities to foreign refineries, where it will be converted into gasoline, jet fuel and diesel, The Wall Street Journal reported.

The two companies granted the Commerce Department's export licenses are Enterprise Products Partners and Pioneer Natural Resources.

But Marvin noted a pair of up-and-comers in the NGL space could end up being even better stock investments. One is Targa Resource Partners, a master limited partnership that pays up to 48 percent of distributable cash to shareholders, and the other is its sister company, Targa Resources Corp., which acts as the general partner.

"Targa is building out a network of assets the span the NGL value chain, from gathering and processing to storage and marketing. It operates 11,300 miles of natural gas pipelines, 10 processing plants, railcars, pressurized NGL barges and other related equipment," Marvin claimed.

Targa is currently engaged in capital spending programs to expand its upstream gathering and processing system, and also its downstream business segment. As NGL exports grow, Targa will be ideally situated to be an important player in getting it to export points, he added.

The Journal reported The Brookings Institution estimates that as much as 700,000 barrels of gas condensate per day could be exported starting in 2015.

"Eventually, the exemption could grow to a substantial portion of the 3 million barrels a day of oil that energy companies are pumping from shale," The Journal predicted.

Not all Washington D.C. lawmakers support the limited export approval, especially if it leads to broader exports of U.S. oil.

Sen. Edward Markey, D-Mass., said that the Commerce Department's decision "puts America on a slippery slope to send more of our oil abroad, even at a time when the Middle East is in disarray and tensions are running high with Russia. We should keep our resources here at home for American families and businesses, not send this oil abroad even as we import oil from dangerous regions of the world."

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One way to profit from budding U.S. energy exports is to invest in companies that are poised to benefit from new Commerce Department licenses to export gas condensate, according to StreetAuthority's Chuck Marvin.
Marvin, oil, gas, export
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2014-07-07
Monday, 07 July 2014 01:07 PM
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