Back in the early ‘70s, the US vowed to never again be at the mercy of foreign sources of oil and gas. We not only made it easier for our own companies to explore for and produce energy from Nature’s Batteries (my term for what the enviro groups disparagingly call “fossil fuels”) but we encoded in law that we would not export unrefined products beyond our shores. So even if we would ever have a surfeit of oil or gas, we’d keep it for ourselves. Well, that day of surfeit has arrived. And it portends an excellent opportunity to exchange the huge amounts of natural gas our fracking technology has unleashed, even allowing us to exchange it for the oil others can produce more cheaply than we can.

One company has won both the legal right to export LNG and built the facility to do so. As a result, Cheniere Energy (LNG) stock has seen the greatest level of investor interest and a resulting acceleration in its stock price. However, Cheniere is not the only company to have received Dept of Energy approval to pursue building export terminals. In fact there are so many that I cannot list them all in this short space. If you are interested, check out this website. What I will say is that of the 54 projects listed there as either “approved” or “pending approval” to move forward to the next step you will find many more ambitious projects funded by firms with deeper pockets and considerably more-depressed stock prices.

Among these? Conoco’s Kenai facility, already up and operating, supplies LNG from Alaska primarily to Japan; utility Dominion Resources’ (D) new plant at Cove Point, Maryland; fellow utility Sempra Energy’s (SRE — the old San Diego Electric & Gas and So Cal Gas) facility in Cameron Parish, Louisiana; and the Freeport Liquefaction project in Texas, of which old hand at this LNG process Conoco (COP) is the majority shareholder. In addition, right behind these soon-to-launch facilities are plenty more from BG (BG) (hence the RDS bid,) Chevron (CVX), Exxon (XOM) and Veresen (FCGYF), which we own. I am convinced the big integrated oil firms will play an increasing role in this market going forward.

Call options?

Energy prices are currently in rally mode, but I imagine there is more volatility to come. While I continue to see Citicorp’s projection of $20 oil as nothing more than a marketing ploy — if it happens, they can crow for years about their clever call; if it doesn’t, who will remember they were the idiots that called for it — I doubt the market will go straight up from here. As I see declines in the following stocks based on an adverse earnings quarterly report or some other temporary affliction, I will advise, probably via a mid-month update, purchase of long term call options on any of these fine companies: Apache (APA) Anadarko (APC) Hess (HES) Marathon (MRO) Suncor (SU) Occidental (OXY) Devon (DVN) EOG (EOG) Canadian Natural Resources (CNQ) Noble Energy (NBL) EnCana (ECA) Cenovus (CVE) and Canadian Oil Sands (COSWF).