It’s been a cold Spring. Winter came late this year in Michigan and Spring has been pushed back. The first four months ended April 30, 2016 have been freezing. But, we’ve finally turned the corner and it’s getting warmer. Sun’s out guns out for the next 5 or 6 months straight and a we are all looking forward to the warm weather. Free heat from the sun will reduce natural gas demand from consumers all across Michigan and the Midwest until next winter. Michiganders demand natural gas to stay warm for months on end through the cold season with a just a simple digital click of their thermostats. Nearly 80% of Michiganders heat their homes with natural gas as well as use natural gas to dry their laundry and heat their chicken noodle soup. Natural gas is poised to gain additional market share in 2016 around the world and to displace demand for oil similar to the way it has displaced demand for coal.
Cheniere (NYSE: LNG) is the first company in America to be given a license to export liquefied natural gas by FERC. The world became interested in researching Cheniere in 2011 when this authorization was given. Just a few years prior, in 2005, the US was building LNG import facilities as natural gas shortages seemed imminent. Natural gas prices continued to climb from 2005 to 2008 as the world did not recognize the fundamental energy shift sweeping across the planet during the great recession of 2008. From 2008 to 2011, the US & world energy market paradigm was changing fundamentally. With new technological abilities related to hydraulic fracturing and horizontal drilling, natural gas drillers had unlocked the potential of the Eagle Ford and the Mighty Marcellus. Many operators didn’t recognize the fundamental changes taking place in natural gas markets.
Cheniere, however, adapted to world markets differently between 2005 and 2011 as they reacted faster than anyone else when they saw the future of natural gas, not the present. Before modern era hydraulic fracturing into the Eagle Ford and Marcellus shales had reached the ears and psyche of America, Cheniere adapted their LNG strategy to be a natural gas exporter. In 2011, Cheniere had the approval they needed and long-term sales agreements locked up with some of the world’s largest energy customers. And now in 2015, Cheniere’s first liquefaction train for export is about to go online. How did Cheniere come to be the first company licensed to export LNG internationally? Let’s begin our recap of Cheniere’s story in the year 2011.