In just a few short years, Australia will surpass the world's biggest exporter of LNG, Qatar, when a number of Australian LNG projects under development are all exporting to overseas energy markets. However, the anticipated benefits may not be as great if the US opens its massive LNG industry to the international export market.
Energy producers BHP Billiton Limited (ASX: BHP) and Woodside Petroleum Limited (ASX: WPL) are in a position to take advantage of opportunities stemming from the LNG revolution.
— BHP looking to US and Mexico
BHP Billiton is taking an active position way outside of Australia and in the centre of oil activity in the US and Mexico. It is now one the of biggest shale oil gas producers in the resource rich Eagle Ford region in Texas. It is applying for permits to export its product and is confident it will get them. The expanded revenues it can reap from this can help offset the weakness in the iron ore market and keep BHP's earnings rising.
At the same time, it is lobbying the Mexican government to get access to bountiful offshore oil regions within the Mexican waters of the Gulf of Mexico. It intends to win development rights in upcoming auctions where other majors like Exxon Mobil (NYSE: XOM) and Chevron Corporation (NYSE: CVX) have similar plans.
This shows why BHP is a better long-term investment than Rio Tinto Limited (ASX: RIO) due to its resource diversification. It isn't locked into the ups and downs of the iron ore or coal markets only.
— Woodside could pick up new projects
Woodside Petroleum doesn't have any shale oil projects in the US, but it may benefit from it just the same. Here's why.
Shale oil in the US can be developed and produced at much cheaper prices than overseas projects in Canada and Australia. Already, US-based Apache Corporation (NYSE: APA) is being pressured by shareholders to concentrate on US energy development and sell some of its foreign assets.
Apache holds stakes in the Gorgon and Wheatstone LNG projects with Chevron located near WA, but now it plans to exit those. The high production costs of Australia may make it difficult for Chevron to find new international partners.
This plays to Woodside Petroleum's advantage just at a time when it is searching for new projects to fill its development pipeline. If Apache puts its stakes in the two LNG projects up for sale, Woodside could pick up one or both with the multi-billion dollar acquisition war chest it's sitting on.
Analysts and investors have been concerned that Woodside doesn't have a lot of projects that will start in the near term, which has pushed the company's share price down. Buying into projects like these could raise its earnings growth outlook and send the stock back up.
