There’s just not enough of the clean-burning stuff to go around… and the big players who dominate the market, like Gazprom, are far too strong for the West’s liking. That reality can translate into strong profits for investors who know where to drill.

Warm Regards,

Justice Litle, Editorial Director, Taipan Publishing Group

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North America and Europe are becoming increasingly desperate in their search for new natural gas deposits. But their pain can be your gain…

Spring is traditionally the time of year when baseball gets into full swing, you start cussing at the lawn mower, and natural gas prices drop as heating demand eases and air conditioner demand is a month away.

But not this year. After two years of mild winters and low heating demand, natural gas has spiked during the traditional soft period. In fact, it’s more than doubled to an intraday high of $11.79.

Demand for Clean Energy

It’s ironic that the religion of global warming has taken root along side an emerging energy crisis. One feeds the other in a hippy spasm of Exxon greed and brown clouds over Mumbai.

The demand for clean energy means that most new power plants are fueled by natural gas instead of coal. And as Andrew Mickey so gracefully pointed out in this space a few days ago, natural gas is slowly becoming a fungible global market. That means that more gas is going to Europe and Japan, due to higher prices over there.

The end result is that North American inventories have been depleted, and prices are going up.

Market forces dictate that higher prices result in more supply, which is also happening. Formerly uneconomical supply sources, such as coal-bed methane and shale gas, are now becoming economically feasible.

U.S. natural gas supplies will likely go up by 3.6 billion cubic feet a day in 2008. This compares to a growth rate of 2.2 Bcf/d in 2007 and 1.2 Bcf/d in 2006. So far, the demand is sucking all this up and then some.

The good news is there’s a lag between the spot price chart and the stock price of natural gas producers. One small ($2.42) natural gas producer I recommended in Crisis Trader sells its product on the spot market. Which means it benefits greatly when the price goes up. It just reported a 160% gain in net income for the first quarter.

This validates the idea that the 2005 supply glut and subsequent market crash is now history. Times are good and getting better for natural gas producers, if not for customers.

Gazprom Turns the Screw

On Monday, the Russian giant, Gazprom, shut down a quarter of its gas supply to the Ukraine to force the country to pay off a $600 million debt. This was settled today, but underscores Europe’s worries over the reliability of natural gas coming from Russia.

The last time Gazprom played this game was two years ago, when the Ukraine went for three days without gas and pipelines in Europe saw a drop in pressure.

Europe gets 20% of its gas from Ukrainian pipelines. The Ukraine, in turn, gets its gas from Russia. It’s a system that leaves Europe beholden to Russia, much like the U.S. is beholden to OPEC.

As Lord Palmerston once said, “Nations have no permanent friends and permanent allies, only permanent interests.” This means that Europe is looking for other suppliers. North Africa fits the bill, and a pipeline is being built to Spain.

To my way of thinking, this smells like opportunity. And in fact, I’ve discovered one small player — soon to be big — that is sitting on vast, virgin natural gas deposits. I’m finishing up my report as we speak. I’ll have it to you in the next few days… Talk about perfect timing.

Christian DeHaemer, Editor, Crisis Trader

There’s no doubt America has an energy problem… or maybe you could call it a fossil fuel problem. All the fuels we’ve relied on since time immemorial are skyrocketing in price. (Dinosaur bones just don’t take the old gas tank as far as they used to — as we personally discovered yesterday filling up at $4 a gallon here in NV.)

The least harmful and most clean-burning fossil fuel, natural gas, is shooting up in price, too. The North American continent (both the U.S. and Canada) has been “running to stand still” for a long time now in terms of natural gas production. The rate at which new wells are coming on line is barely keeping pace with the depletion of old wells. And nor does it help that nuclear plants are looking a lot more expensive than first realized, or that natural gas and water are required in huge quantities to unlock the black treasure of Canada’s oil sands.

As a result of these and other factors, the time has finally come for the liquid natural gas (LNG) market. The world desperately needs to be able to ferry natgas from one continent to another — like crude oil — and LNG technology is the way to do it. BreakAway Investor editor Andrew Mickey is right on top of this trend. Take a look.

Selling Out to the Highest Bidder (for Natural Gas)

by Andrew Mickey, Editor, BreakAway Investor

“We are not in the charity business. Whoever will give me the best price, I will follow him.”

- Abdullah bin Hamad al-Attiyah, Oil Minister of Qatar

Qatar is already taking advantage of this situation. And they’re making no qualms about their motivation: make as much money as possible.

But Qatar is just one small player in the next monster trend in the energy business. The situation is getting bad, real bad. The profit opportunity, however, is just as big as the situation is bad.

Already Exxon Mobil, Merrill Lynch, BHP Billiton, and dozens of others are getting in on the action. Now, as we put all the pieces of this complicated puzzle together, you can take your piece of the action, too.

Decades in the Making

For decades we’ve heard it’s coming — a completely new source of energy. But I’m not talking about some economically questionable alternative energy source or something with numbers that only “work” with lavish government subsidies. I’m talking about liquefied natural gas, or LNG.

The LNG market has been on the verge of a major breakout, seemingly for years. But the numbers just never made sense. It has taken years of infrastructure buildup to lay the foundation for the industry. And with oil companies required to shell out at least $5 billion just to build an LNG plant, they just weren’t going to take too big of a gamble.

That, however, is all rapidly changing.

Exxon Mobil, Merrill Lynch and China National Oil Company have combined to commit $30 billion to investing in new LNG facilities over the next five years. BHP has committed $25 billion for new LNG facilities in Australia. Worldwide, LNG investments are expected to eclipse $100 billion over the next decade. Warren Buffett, Shell, BP and Gazprom are all betting big on LNG.

Together, they’re all helping to nurse the LNG industry from infancy to maturity in short order. And with all these companies placing huge bets, you can bet they’re laying the foundation for a major win.

But the LNG market is still in its relative infancy. As a result, most investors just don’t understand all the details… yet. But that’s exactly what is creating an opportunity in the next big trend in energy.

We’ve got to understand three aspects of the booming LNG industry in order to profit from this situation. First, we’ve got to look at the basic nuts and bolts of the industry (how natural gas is turned into LNG and so forth). Second, we’ve got to realize natural gas will finally become a truly global commodity and the highest bidder will get the gas. Third, we’ve got to find the bottleneck — and who has is developing the solution. And that’s where we’ll put our money.

Natural Gas Goes Global

The United States has been getting natural gas on the cheap for decades. Most natural gas consumers (primarily power companies and utilities) have been paying very low prices for natural gas compared to the rest of the world. Despite the recent doubling in natural gas prices, U.S. utilities can still buy it for around $11 per million BTU (MMbtu).

The rest of the world is paying much higher prices. Spain pays $13 per MMBTU, Korea and India pay $14 per MMBTU, and Japan pays the highest price of about $15 per MMBTU.

The cause of the wide price range is pretty simple. Natural gas is produced and consumed locally. For instance, natural gas in the U.S. is produced from a well and transported via pipeline to the end-user.

Although there are some fairly long offshore pipelines, building a pipeline across the Pacific or Atlantic Oceans is technically and economically unfeasible. As a result, Asian, European, African, Australian and North American natural gas prices can vary widely. There was no way to trade natural gas on a global level.

The growth of the LNG industry is already starting to change all that. Japan recently paid $19 per MMBTU of LNG and China and Europe are also paying top dollar for LNG. But they’re happy to do it. The price may seem high now, but the long-term LNG contracts these countries have signed will save them a lot more money as natural gas prices continue to rise over the long term.

There is no transparent market for LNG. The LNG market is made up of privately negotiated contracts between suppliers and consumers. That lack of transparency is helping to keep this boom quiet for the time being.

That’s exactly what’s happening. The global boom in liquefied natural gas (LNG) is just getting started. And the big boys in the energy industry are all cutting eight-figure checks to build the infrastructure. The U.S. Energy Information Administration went so far as to say, “[LNG] growth will require a $250 billion investment over the next 30 years.”

It’s already started. PriceWaterhouseCoopers says, “Given the number and scale of new LNG projects proposed or under construction, global production capacity could more than double by the end of the decade.”

There are bound to be quite a few investment opportunities with that kind of money being thrown around. As you can see in the chart above, Big Oil is on pace to become major LNG producers. But the largest player of all will be the world’s top natural gas company, Gazprom.

Russia’s de facto state-controlled natural gas company has long been eyeing its opportunity to increase its grip on the world through LNG. Now the major energy companies are falling in line to provide the opportunity the company/country (sometimes its tough to tell the difference) has been waiting for. Learn how Gazprom is going to do it, and how you can take advantage of the coming LNG boom.

Good investing,

Andrew Mickey

Editor in chief, BreakAway Investor

Exposed: The Truth Behind Putin’s Stealth Attack on America!

He’s got the world’s economy under his thumb, and his incredible power only continues to grow. Now Vladimir Putin is aiming to take down the U.S. economy and put Russia on top of the financial food chain. My exclusive on-location report from Russia is the only way you’ll learn how to protect yourself from his dangerous game — and bank gains of up to 493% this year fighting against it! His plans are already underway. The time to act is now. Read on for complete details…

Source: The $250 Billion Energy Bet