| | | Natural Gas Vehicles May Provide Long Term Support For U.S. Natural Gas Prices
Exploration & Production (Citi)
4 June 2013 ¦ 12 pages ir.citi.com
The Growing Use Of Natural Gas As A Transportation Fuel May
Ultimately Provide Upside For Natural Gas Leveraged E&Ps
Global Demand For Natural Gas As Transportation Fuel Is Set To Grow... – As
highlighted in Citi’s June 4th Citi GPS: ENERGY 2020: TRUCKS, TRAINS &
AUTOMOBILES note, the shift from oil to natural gas is underway in the US, where the
shale gas revolution is providing an economic incentive to make the switch. One of the
outcomes of the U.S. shale revolution is a push to substitute natural gas for oil in the
fuel transportation market. Currently natural gas (compressed “CNG” and liquefied
“LNG”) has a low penetration rate in the domestic freight truck market, likely in the low
single digits. However, by 2020, Citi expects this penetration to rise to ~25%.
...Which Is Ultimately Positive For The Natural Gas-Leveraged E&Ps – Any
incremental natural gas demand as a result of increased natural gas substitution for oil
in the fuel transportation market would ultimately tighten the North America natural gas
supply/demand balance, yielding further upside to natural gas prices. As a result, this
would positively impact the bottom line of the more natural gas-leveraged E&P
companies in our coverage group including COG, CHK, ECA, RRC, SWN and UPL
(see Figures 5 and 6). |
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