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ConocoPhillips (COP), Chesapeake Energy Corporation (CHK): Is the Most Expensive Policy Since Obamacare Gaining Momentum?

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While the pros, cons, and costs of Obamacare have received significant press over the last several months, the impact of the U.S. policy on natural gas exports could have an even more profound impact on the costs of day-to-day life than the health-care law. Goldman Sachs Group, Inc. (NYSE:GS) recently said that the conditional approval the U.S. Department of Energy granted to the Freeport LNG terminal in Texas is significant evidence that the push to allow the export of liquefied natural gas is gaining momentum. If the U.S. begins to export large quantities of LNG, while the price would reach global equilibrium — a benefit to natural gas companies — the push to shift to LNG as a primary energy source in the U.S. might be in jeopardy.

The significance of Texas

The Texas location is the second such terminal to receive conditional approval and would bring liquefaction capacity near the demanded capacity, according to Goldman’s Samantha Dart: “These recent developments support our view that at least 6.8 billion cubic feet a day of liquefaction of capacity will be built in the U.S.” Dart believes that demand capacity is roughly 7.7 billion cubic feet per day.

ConocoPhillips (NYSE:COP)The Texas installation is a joint venture involving ConocoPhillips (NYSE:COP), The Dow Chemical Company (NYSE:DOW), and Osaka Gas. The Dow ownership piece is particularly interesting, given that Dow is one of the most vocal opponents of LNG export. The company is an anchor member of America’s Energy Independence, a powerful lobby that opposes export. The group argues that by keeping the abundance of LNG in the U.S., American companies can benefit from low prices to gain a critical advantage. This position doesn’t seem to stand as an obstacle for The Dow Chemical Company (NYSE:DOW) in profiting from a loosening in U.S. policy.

Investment implications

In May 2011, Cheniere Energy, Inc. (NYSEMKT:LNG) received conditional approval for its Sabine Pass LNG Terminal in Louisiana. The gathering momentum and shifting in government sentiment should be a positive catalyst for the stock as well, particularly if permanent approval is granted. Dow and ConocoPhillips (NYSE:COP) would each benefit as well, as would Chesapeake Energy Corporation (NYSE:CHK), the largest natural gas producer in the United States. Chesapeake Energy Corporation (NYSE:CHK) has suffered recently as a result of the supply glut from shale operations. If prices rise significantly, each of these companies is sure to benefit.

The cost to your bottom line

Since the shale boom began, Clean Energy Fuels Corp (NASDAQ:CLNE) has been among the companies championing clean energy solutions. In the case of Clean Energy Fuels Corp (NASDAQ:CLNE), the company is attempting to build what it calls America’s Natural Gas Highway. The initiative is designed to place LNG filling stations across the country on major trucking routes, thereby allowing more and more freight to move by LNG-powered truck. Railroads are considering similar options, and early talk of an LNG passenger vehicle has begun.

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