A Possible Value Play developing -
New Interest in Turning Natural Gas to Diesel
energydelta.org
From the article:"...Diesel and jet fuel are usually made from crude oil. But with oil prices rising even as a glut of natural gas keeps prices for that fuel extraordinarily cheap, a bit of expensive alchemy is suddenly starting to look financially appealing: turning natural gas into liquid fuels.
A South African firm, Sasol, announced Monday that it would spend just over 1 billion Canadian dollars to buy a half-interest in a Canadian shale gas field, so it can explore turning natural gas into diesel and other liquids..."
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"...In the deal announced Monday, Sasol acquired a 50 percent stake in Farrell Creek shale gas assets, in British Columbia. With the other owner, Talisman Energy, it will begin a feasibility study early next year on building a gas-to-liquids plant, and Talisman will have the option to own 50 percent of that....".
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Companies in Play:
finance.yahoo.com
TLM Web Site: talisman-energy.com
SSL Web Site: sasol.com
Provident Energy Trust (PVX) should provide the transportation & distribution pipeline network for this distillate. Their network services both Canada and the U.S.. If Sasol and Talisman Energy eventually build their $1.5 Billion NG to Diesel conversion plant in Calgary, I suspect that the production would be transported through the PVX network.
Both SSL & TLM are priced too high for me (perhaps 30% too high), more downstream distillate supply would benefit PVX. Completion of any new processing facility is at least 24 months away but it adds another positive to adding PVX on any sell off in the low $7.00/share area.
Disclosure: I own a some PVX shares with my last purchase 12/07/2010. Will be looking to investing in this theme by buying SSL, TLM on any correction and will continue to build my PVX position as this project develops.
EKS |
