Not to be outdone, Halliburton Company (NYSE:HAL) has its own operations in China, with software sales an important area to watch. One of the keys for China’s ability to exploit its unconventional resources will be its ability to use computer simulations to map out the physical properties of its shale deposits. This will help the country’s producers best exploit the resources that lie beneath.
All of these companies are working toward one ambitious goal: The country wants to produce 6% of its energy from shale gas by 2020. That’s up from virtual no energy produced from shale gas in the past year. If this is successful, it could put a dent in U.S. coal exports as well as exports of coal from Australia.
While that is a long way off, it is something that investors in Peabody Energy Corporation (NYSE:BTU) should keep an eye on. Not only does the company export some of its U.S.-mined coal to China, but the company also digging up revenue in the land down under. Those Australian operations have the company targeting 11 million-12 million tons of seaborne thermal coal sales this year. Though, these activities are likely to keep growing. China is several years away from being in the same position that we are in the U.S., where it can shut down coal-fired power plants and replace them with those burning cleaner natural gas.
The pollution situation in China should at least make it more apparent that the country needs to get serious about fixing the problem. Its vast shale resources offer an obvious solution, but one that will take vast sums of capital and ingenuity to exploit. In the meantime, the country has a lot of hurdles to overcome before widespread conversion to natural gas becomes a reality.
Peabody Energy has a lot at stake if and when China begins this transition
That’s one reason why investors in Peabody Energy will likely continue to do well. The company has deals in place to get its cheaper coal from the Powder River and Illinois Basins to India, China, and the EU. For investors looking to capitalize on a rebound in the U.S. coal market, The Motley Fool has authored a special new premium report detailing exactly why Peabody Energy is perhaps most worthy of your consideration. Don’t miss out on this invaluable resource — simply click here now to claim your copy today.
The article Will Chinese Pollution Lead to Coal-to-Gas Switching? originally appeared on Fool.com and is written by Matt DiLallo.
Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Halliburton.
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