Natural gas is set to become a far more important fuel in the global energy mix in coming years. Gas is cheap, abundant and clean, making it an ideal solution to energy security, price and environmental concerns.

In addition, producing power from gas is a developed and efficient technology; integrating more gas-fired power capacity to the grid is a lot simpler than adding wind or solar capacity, making it an ideal bridge fuel.

In This Issue

The Stories

History demonstrates that the economic and practical often trump gee-whiz technology. Here’s how the lessons of the past apply to today’s alternative energies. See Gee Whiz.

They might not receive as much fanfare, but nuclear power and natural gas are two bridge fuels that could help reduce carbon dioxide emissions and dependence on costly oil. See Building Bridges.

Energy consumption patterns evolve gradually, but signs indicate that natural gas is on the rise worldwide. See Evolution, Not Revolution.

Liquid natural gas (LNG) is one way to play rising demand overseas. See Playing the LNG Equation.

The Stocks

Chevron (NYSE: CVX)—Buy @ 85
Dresser-Rand (NYSE: DRC)—Buy @ 36
Teekay LNG Partners (NYSE: TGP)–Buy @ 30
Oil Search (Australia: OSH; OTC: OISHY)–Buy @ AUD6.50
BG Group (London: BG; OTC: BRGYY)–Buy @ USD105

Gee Whiz

I can recall my first experience with home video–a VHS player manufactured by RCA that was roughly the size of a modern microwave and far heavier. There was no digital display, no remote control, the buttons were extremely difficult to press and the “record” function worked, at best, intermittently. 

Last weekend I watched a James Bond film downloaded from Apple’s online store to my Apple TV for a total of $3.99 without leaving my living room. The video quality of my first VHS player was pathetic compared to the Apple TV, and renting movies at that time cost about $5 per day.  Despite its myriad drawbacks, VHS technology still fit a basic need: the ability to watch movies in the comfort of one’s own home.

In the late 1970s and early 1980s a fierce format war was underway between VHS and Sony’s Betamax format. Our local, long-since defunct “Best” department store devoted roughly one-half the video rental section to VHS and \the other half to Betamax. The VHS half gradually expanded, but it was nearly a decade before Betamax finally died out and VHS became the de facto standard. Believe it or not, the last Betamax machine finally sold in 2002.

Some wondered why Betamax lost out to VHS. By most accounts, Betamax tapes offered superior video quality, and the format enjoyed ample financial backing–Sony was hardly an unknown brand. Betamax machines also had arguably more impressive features than most VHS players of the day. 

Among many other problems, Betamax tapes simply cost more to produce.  While arguably of lesser quality, cheap and simple VHS relegated Betamax tapes to the dustbin.

Fast forward to the late ‘80s and early ‘90s and witness a replay of the same basic story. Cheap and ubiquitous personal computers with Microsoft’s (NSDQ: MSFT) Windows operating systems ended up taking market share from the first mover in the home computing industry, Apple’s (NSDQ: AAPL) Macintosh. This occurred even though many users found the Mac’s operating system more intuitive.

The energy industry is no stranger to this phenomenon. Crude oil became the dominant oil for lighting in the US just a few years after self-styled “Colonel” Drake drilled his first well in Pennsylvania in 1859. Crude was less than one-tenth the price of whale oil–not to mention cheaper and safer than camphene, the other illuminating oil commonly used at that time. The advantage of a cheap source of light that didn’t periodically explode was hard to ignore for 19th century consumers.

More recently, Toyota Motor Corp (NYSE: TM) was mocked when it introduced its first Prius hybrids; the conventional wisdom in the auto industry was that no one wanted small cars. And companies that did research on hybrids felt that the technology in the Prius was too simple–it was better to wait and work the bugs out before launching the product. In the end, Toyota’s Prius wasn’t perfect but gave the company a leading market share in hybrids and became one of its best-selling products. Former naysayers, including General Motors, are now struggling to play catch up.

The lesson: Cheap, the economic and practical oftentimes trumps gee-whiz technology. Most successful products include at least one of the following key features: a superior user experience or a cost advantage. Complexity isn’t necessarily the best way to meet these two needs.

Building Bridges

The world faces major energy challenges, rooted in two basic issues: the rising cost of energy and concerns about the environmental impact of our energy consumption. Depending on political and economic views, one might argue that one of these concerns is more important than the other. However, I suspect few investors would argue that these issues aren’t central to the energy debate.

In December, world leaders tried to address the latter concern at the United Nations Climate Change Conference in Copenhagen. But, as I noted in the Dec. 23, 2009, issue, Minding the Alternatives, many observers regarded the summit as a failure after developed countries and their emerging-market counterparts failed to agree on a mechanism for ensuring reductions. Emerging economies such as China are growing rapidly–along with their demand for energy. These countries are reluctant to commit to hard reduction targets, a move that could impede their growth potential significantly. Instead, China and other nations have committed to targets for increasing their carbon and energy efficiency.

Developing countries are also demanding money and technology. The idea is that developed countries would help pay for the clean technologies the developing world would need to reduce emissions. Although developed countries agreed to allocate some funds to developing countries, sentiment varied widely as to what constitutes a reasonable amount.

This is likely to remain a thorny issue for years to come. Imagine pitching a plan to the US public that involves handing China, India and other fast-growing nations billions of dollars in annual subsidies for green technologies. Such a proposal is a tough sell in the best of times and nearly impossible in the current economic environment.

Meanwhile, developed countries are pushing hard for absolute emissions reduction targets. In most cases, developed world countries have sought to meet these targets by imposing some variation on a cap-and-trade scheme. A classic example is The American Clean Energy and Security Act, passed by Congress over the summer and analyzed at great depth in the July 1, 2009, issue, The Politics of Carbon.

As I noted in that issue, the bill passed by the US House of Representatives over the summer would do more than just establish a cap-and-trade system. Under cap and trade, the government would set absolute caps on the total amount of emissions and allow emitters to trade allowances amongst themselves; in this case, each emissions credit would be worth 1 metric ton of carbon dioxide (CO2) equivalent. For example, if one utility emits too much carbon in a given year, it could buy emissions credits from a firm that emits less than allowed. This effectively puts a price on carbon emissions, encouraging firms that emit too much carbon to cut back and directly rewarding those companies that emit less than allowed. The basic mechanism is similar to the existing cap-and-trade system for sulfur dioxide emissions that cause acid rain.

But The American Clean Energy and Security Act includes a mandate for a renewable energy standard (RES). The bill states that retail electricity suppliers must meet at least 20 percent of electricity demand via renewable energy sources such as wind, solar, waste-to-energy and geothermal power. Implementation of the RES ramps up quickly in 2012. The bill not only requires companies to reduce greenhouse gas (GHG) emissions but also mandates how they’ll accomplish the task.

Unfortunately, many renewable energy technologies such as solar and wind have become synonymous with attempts to limit emissions of CO2, sulphur dioxide, nitrous oxides and other pollutants. 

These technologies are heavily pushed in the US cap-and-trade bill passed by the House last summer. As I noted in Minding the Alternatives, it’s highly unlikely any US cap and trade bill will become law in 2010. In light of the Republican Scott Brown’s recent election to the US Senate, such a bill is fast becoming an even more remote possibility. But the bill illustrates a key fallacy among policymakers that CO2 reduction requires a strict focus on renewable energy sources.

Of course, alternative energies often are promoted as a means of cutting energy costs and reducing dependence on imported fossil fuels; whereas solar and wind power are domestically produced forms of energy, the US must import oil. T. Boone Pickens, for example, continues to promote a vision of the future that involves greater use of wind energy. The so-called Pickens Plan aims to reduce dependence on fossil fuels imported from less-than-stable parts of the world.

But renewable energy isn’t a panacea. The cost of producing power from wind and solar energy remains higher than producing power from coal and natural gas. The US Energy Information Administration’s (EIA) Annual Energy Outlook 2010 includes data showing the agency’s assumed costs for a long list of electricity-generating technologies. A abridged version of that table appears below.

Source: EIA

This first column in this table illustrates the lead time required for a project announced in 2009. For example, building a gas turbine takes two to three years depending on the technology employed–a relatively short lead time. Meanwhile, nuclear reactors require a lead time of six years; a project announced in 2009 wouldn’t be constructed until 2015, at the earliest.

The overnight cost is essentially the plant’s capital cost–that is, the cost of construction. This component is higher for nuclear-power facilities and coal plants that incorporate carbon sequestration.  In the case of a nuclear power, building the structure and safety features surrounding the reactor accounts for the majority of these costs; as the table shows, such facilities entail scant variable operation and maintenance (O&M) costs–fuel costs aren’t much of an issue with this.

In comparison, coal plants and gas turbines (see “scrubbed coal new” and “advanced gas/oil comb cycle”) have relatively low capital costs but high variable O&M costs because the operator must continually buy gas and or coal.

Nevertheless, solar thermal and photovoltaic plants are among the most expensive. Although solar plants don’t involve variable O&M costs, the capital costs are five to six times higher than for a gas plant and about double that of coal-fired facilities. Wind power is much more economic but still entails higher capital costs than gas. That being said, costs for both wind and solar should come down over time as technology advances.

The cost of building plants and generating power isn’t the only issue. As I’ve noted before, the power grids in the US and most other countries are set up such that the power generated must balance with power demanded at any given point in time.

But output from wind and solar plants is inherently variable–unlike the more reliable output from coal, nuclear and gas plants. The more renewable power on the grid, the more difficult it becomes to balance supply and demand. By most estimates, revamping the grid to integrate renewables on a greater scale would require trillions of dollars in investments.

And the payoff for this massive investment in renewable-energy technologies appears rather modest. The International Energy Agency (IEA)’s so-called BLUE Map scenario for wind forecasts that wind power will account for 12 percent of global energy generation in 2050. In that scenario wind power’s contribution to the global energy mix would be less than that of nuclear, natural gas or coal. Meeting that goal would require $3.2 trillion in total global investments, a roughly 75 percent jump in annual investment compared to 2008 levels. Much of that investment would have to be made in developing countries; the IEA envisages nearly one-third of that $3.2 trillion would be spent in China.

Solar and wind ultimately will become more important parts of the global energy mix, and these technologies will produce investment opportunities over time. But the idea that solar and wind will replace traditional fossil fuels in the near term is a totally unrealistic dream. According to the most optimistic estimates from the EIA, fossil fuels will still account for 78 percent of total US energy use in 2035. Check out the graph below.


Source: EIA

Renewable energy could account for around 17 percent of the US electricity in 2035, roughly double its current 9.1 percent share. But much of that is hydroelectric power; solar and wind combined are expected to account for less than 5 percent of total power generation in 2030. And coal, natural gas and nuclear are still projected to dominate the grid. Non-hydroelectric renewables are hardly a game-changing technology in the near term.

Despite all the hype surrounding these technologies, wind energy accounted for less than 1.9 percent of US power generation in October 2009 and solar accounted for 0.0193 percent. 

And investments in renewable energies have a mixed record of actually generating carbon emissions reductions. Germany, Spain and several European nations have aggressively subsidized wind and solar power for over a decade. But in 2006, wind still accounted for just 4.8 percent of Germany’s electric grid, while solar generated less than 0.5 percent. In Spain, wind accounted for around 7.5 of power generated in 2006 and in wind-buffeted Denmark the contribution is closer to 14 percent. However, in most EU countries the replacement of coal-fired plants with natural gas has been at least as important a factor in reducing CO2 emissions.

For example, the UK has managed to reduce emissions substantially by shuttering coal plants and aggressively building out its natural gas-fired capacity. Similarly, Denmark’s use of natural gas has expanded alongside wind power, and the two technologies have combined to reduce the nation’s dependence on coal.

This could be the year when the consensus on renewable energy begins to break down in favor of simpler and cheaper interim solutions. Specifically, I expect natural gas and nuclear power to garner much more attention this year as so-called bridge fuels. Both address environmental concerns, cost and independence issues. Although renewable energies have a certain cachet as high-tech solutions to the world’s energy problems, they’re also impractical in the near term. On the other hand, gas and nuclear are proven, economical technologies.

Use of natural gas as a transportation fuel may also increase. A bill currently making its way through the US Congress would offer significant tax credits and incentives for natural gas powered vehicles in the US. If approved, the Alternative Transportation to Give Americans Solutions Act of 2009 (HR1835) would also mandate that 50 percent of vehicles purchased or placed into service by the US government by the end of 2014 be capable of burning natural gas fuels. And the act also authorized the Dept of Energy to invest in research and development for gas-fueled vehicles.

It appears increasingly unlikely cap-and-trade bill will pass in 2010. However, that doesn’t mean that Congress won’t try to pass some energy-related legislation. I suspect that could come in the form of a bill that offers subsidies for clean energy and might include provisions such as those in HR1835. Such a bill would garner more bipartisan support than carbon cap and trade. Although the bullish story for natural gas doesn’t depend solely on legislation, such an outcome certainly would accelerate this process.

Previous issues have covered how production from America’s unconventional gas plays has grown rapidly, changing the US equation for natural gas. Five years ago, most analysts would have told you that North America would soon have to import large quantities of liquefied natural gas (LNG) to meet domestic demand. Now, the problem is just the opposite: Aggressive drilling in unconventional gas shale plays in the first half of 2009 left the country with a glut of gas.

That oversupply is just starting to be worked off, thanks to the coldest winter in decades, but few would argue that natural gas prices around $6 to $7 per million British thermal units are enough to tempt producers to increase their drilling activity. But the capacity to produce massive amounts of natural gas still exists.

I’ve written extensively about the US unconventional gas industry’s potential and have covered my favorite plays in the sector. The Jan. 6, 2010 issue, The Crystal Ball, and the Dec. 23, 2009, Flash Alert, Ten Takeover Plays, offer a detailed look at this trend.

Evolution, Not Revolution

Contrary to popular belief, the US energy mix is far from static and has tended to evolve gradually. This holds true for most countries, but Americans are famous for their exhaustive statistics; the graph below tracks the changing US energy mix from the colonial period to 2000.

Source: EIA

As the chart shows, wood was the main source of energy in the US from 1635 until the late 19th century when coal took over. Coal was used to power steam trains, generate heat and, later, produce electricity.

By the mid-20th century, however, petroleum had surpassed coal as America’s fuel of choice, as cars underwent the transformation from a curiosity for the wealthy into a common consumer product. More recently, coal and natural gas have begun to play catch-up with oil in terms of the overall energy mix. These shifts have taken decades to play out.

Last year oil giant ExxonMobil (NYSE: XOM) published a long-term energy outlook that calls for natural gas to evolve in coming decades into a much more important energy source in coming decades. The company expects global natural gas consumption to grow 1.8 percent per year between 2005 and 2030, compared to 0.8 percent growth for oil and 0.5 percent for coal. Exxon also forecasts that nuclear power consumption will increase at an annualized rate of 2.3 percent.

Exxon backed up that view with an offer to purchase US natural gas-focused producer XTO Energy (NYSE: XTO). This deal not only secured acreage in key US shale plays such as the Haynesville, but also the technical know-how to produce unconventional gas plays. Exxon has significant shale acreage in Europe that could be a valuable source of natural gas. Buying XTO will accelerate Exxon’s ability to develop these fields.

Exxon isn’t the only major energy firm that’s bullish on natural gas and untapped potential of unconventional fields outside the US. BP (NYSE: BP), Statoil (NYSE: STO) and others have also partnered with US gas producers or purchased stakes in US plays. Yesterday, China’s Sinopec (NYSE: SNP) announced it was in talks with BP over collaboration on shale gas fields in China. No specifics of that deal have emerged, but Sinopec indicated that talks were proceeding smoothly. And last November Royal Dutch Shell (NYSE: RDS A) and PetroChina (NYSE: PTR) announced a deal to co-develop shale resources in China.

I expect these trends to continue. I’m not arguing the world will forget or abandon renewable energy; however, there is a growing realization that the world’s energy challenges will not be solved with any single technology. Moreover, the climate summit in Copenhagen reinforced that government-mandated adoption of advanced technologies isn’t likely to be a successful or cost-effective strategy. Sometimes the simpler situation wins out; at this juncture, natural gas and nuclear energy represent a major part of the solution.

Playing the LNG Equation

Rapid production growth from unconventional natural gas plays has obviated the need for the US to import large quantities of LNG to meet domestic demand. But that doesn’t mean that LNG is unimportant on the world stage.

LNG is a super-cooled version of natural gas. When gas is cooled to around minus 260 degrees Fahrenheit (minus 162 degrees Celsius), it condenses into a liquid.

Better still, as gas cools, it takes up less space; LNG takes up roughly one-six-hundred-and-tenth the volume of gas it does in its natural gaseous state. To put that into context, a beach ball-sized volume of gas shrinks to the size of a standard ping-pong ball when it’s converted to LNG.

This process makes natural gas easier to transport. Traditionally, the vast majority of natural gas has been transported through pipelines in its natural state. Most natural gas consumed in the US is either produced domestically or imported by pipeline from Canada.

By extension, gas reserves located far from existing pipeline infrastructure had little or no value. Although oil from such fields can be loaded onto tankers and shipped anywhere in the world, the accompanying natural gas was considered stranded. Producers routinely burned (flared) natural gas or re-injected it into the ground as a form of permanent storage.

LNG frees gas from the pipeline grid’s constraints. If you’re able to turn natural gas into a liquid, it can be loaded onto tankers and transported anywhere in the world. Gas reserves once considered stranded and useless can now be exploited.

The basic LNG supply chain is simple. The gas is produced and transported by pipeline to a liquefaction facility, where the gas is treated to remove some of its impurities, such as corrosive sulfur, CO2 and water, and then fed into a gas liquefaction unit known as a train. Most liquefaction facilities are made up of multiple trains. After the gas is liquefied, it’s loaded onto specialized LNG tanker ships.

The final step in the LNG supply chain is the re-gasification terminal, which is located in the importing country. Natural gas is reheated until it returns to a gaseous state and is then injected into the pipeline network for regular use.

In recent quarters the LNG industry has suffered from a global oversupply; a number of new LNG export facilities have come on-stream and several new projects are the horizon.

To make matters worse, many of the world’s biggest natural gas consumers have faced glutted domestic inventories. A few months ago US natural gas storage facilities were near capacity, prompting most of the nation’s import facilities to lie idle.

With international gas prices well off their highs, importers are taking advantage of the present oversupply to renegotiate contracts or secure long-term supplies at low prices. An example is Woodside Petroleum’s (Australia: WPL) Browse LNG project in Australia. In late December, PetroChina announced it was pulling out of a deal signed in 2007 to supply 3 million metric tons of LNG annually. PetroChina was able to pull out of the agreement because the Browse project has been delayed by a few years.

But it would be hasty to declare the LNG industry’s death. Global natural gas inventories are tightening rapidly because of extraordinarily cold weather in the US, Europe and Asia.

In recent weeks, near-record low temperatures across much of North America have been an important support for natural gas prices. The cold weather has increased demand for heating fuel, driving higher-than-normal drawdowns in natural gas inventories. The latest drawdown, reported Jan. 14, 2010, was just a few billion cubic feet shy of an all-time record draw. The graph below demonstrates what a difference a few weeks of cold winter weather can make to the gas market.

Source: EIA

Just three months ago, natural gas traders fretted that the US might exhaust its storage capacity; many pundits assumed that US gas inventories would remain glutted for the foreseeable future.

But as of the most recent report, inventories are just 121 billion cubic feet above the five-year average. In the week ended Jan. 8, 2010, US gas inventories fell to 266 billion cubic feet, roughly 130 billion cubic feet above the average for that week. In other words, the US natural gas market is now just one cold week away from below-average inventories. With weeks of winter weather ahead of us, it’s not at all unreasonable to expect gas inventories will end the heating season in March near average levels.

UK gas prices are also on the rise. Reports from the country show inventories of gas at uncomfortably low levels for this time of year. Rising natural gas prices internationally are making LNG deals more attractive, as buyers can lock in long-term supply at attractive rates.

And there are still plenty of LNG deals being struck globally. For example, in mid-December Chubu Electric Company (Japan: 9502) signed a long-term agreement covering 1.44 million metric tons per year from the Gorgon LNG project in Australia. Gorgon is an LNG project that’s managed by Proven Reserves Portfolio holding Chevron (NYSE: CVX).

And although PetroChina pulled out of the Browse project, it signed a long-term supply deal with ExxonMobil last August to supply 2.25 million metric tons of LNG annually from Gorgon; PetroChina isn’t abandoning the LNG market by any stretch of the imagination.

The key to playing LNG is to look for companies with attractive long-term LNG reserves that will be in a position to sign long-term supply deals with importers. Although the LNG market might look oversupplied near-term, that perception is likely to change over time as international gas prices rise and demand for gas continues to grow. In addition, that oversupply should begin to abate; gas demand has already begun to recovery from the recession, and global inventories are falling. Here’s a rundown of my favorite LNG plays.

Already a member of the Proven Reserves Portfolio, super oil Chevron (NYSE: CVX) is involved in several LNG projects, including the aforementioned Gorgon LNG deal in Australia. In addition to Gorgon, Chevron owns a 16.7 percent stake in the North West Shelf Venture LNG projects in Australia, the development stage Wheatstone LNG in Australia and projects in Angola and Nigeria.

Chevron isn’t a pure-play on LNG but management has expressed considerable excitement about its gas projects in recent quarters, particularly LNG deals targeting Asia–a region where demand is expected to grow at a rapid pace in coming years. And of all the super majors, Chevron has the best overall production growth projects. Buy rock-solid Chevron under 85.

Dresser-Rand (NYSE: DRC), recommended in Playing the (Oil)field, published on Nov. 18, 2009, manufactures and provides parts and maintenance for compressors and turbines. Turbines and compressors have myriad uses at all stages of the energy business, but the LNG industry is one of Dresser’s top end markets.

The company was awarded a contract for a floating LNG unit offshore Nigeria. Building a large onshore LNG liquefaction facility is expensive and requires easy access to large gas reserves to make such a project worthwhile. Floating LNG equipment is relatively easy to relocate and allows producers to exploit smaller gas fields that wouldn’t be economic using traditional onshore developments.

And because compressors are used in every LNG facility–whether onshore or offshore–Dresser’s leading market position should enable it to garner substantial business from the 60 LNG projects planned worldwide.

Australia is emerging as a powerhouse in the LNG industry with mega-projects such as Gorgon and the Northwest Shelf. The nation benefits from its well-established energy industry and infrastructure, loads of well-capitalized players and good relations with foreign producers and technology providers. Australia also benefits from its large resources of stranded gas and geographic proximity to the fastest-growing developing markets in the world. Buy Dresser-Rand under 36.

Proven Reserves Portfolio holding Teekay LNG Partners (NYSE: TGP) owns 26 tanker ships, including 15  LNG carrier ships, three liquefied petroleum gas carriers and eight Suezmax-class crude oil tankers.

Tanker rates for crude-oil tankers are notoriously volatile, but Teekay LNG’s fleet is booked under 15 to 20 year contracts that guarantee fixed charter rates. This represents solid, reliable cash flow that Teekay LNG can use to back up its 8.7 percent yield.

Teekay LNG is a master limited partnership (MLP), a group I explained at some length in the Nov. 22, 2006, issue, Leading Income. MLPs provide major tax deferral advantages compared to normal corporations. In addition the taxation for the group would not be adversely affected by plans to raise the US dividend tax rate. I cover master limited in great detail in an advisory I run with Roger Conrad, MLP Profits.

And Teekay doesn’t just provide stable income–there’s room for further growth in distributions. The company has the opportunity to expand its fleet and contract these carriers to support the more than 60 global LNG products currently under development. Teekay also has an opportunity to participate in some of the floating LNG projects currently underway.

The MLP raised capital in late 2009 by issuing additional units and likely will use the proceeds to fund new ship acquisitions that will allow it too boost its payout. Buy Teekay LNG Partners under 30.

Oil Search (Australia: OSH; OTC: OISHY) is traded in Australia but was founded in Papua New Guinea in 1929 and operates all of Papua’s major oil and gas projects. The local government owns 17.6 percent of the company.

Oil Search holds a 30 percent interest in the Papua New Guinea (PNG) LNG project that is operated by oil giant ExxonMobil. That project is scheduled to begin its first sales of LNG in 2013 or 2014 and will have a maximum capacity of around 66 million metric tons of LNG per annum. There is potential upside because PNG likely has additional gas reserves that would be suitable for production via LNG. Oil Search recently completed a strategic review and could announce additional expansions to this project

I recommend buying Oil Search in Australia, as the shares are far more liquid in the local market; if you must purchase the over-the-counter ADRs, use a limit order to ensure a decent price. Oil Search rates a buy under AUD6.50 in How They Rate.

Britain’s BG Group (London: BG; OTC: BRGYY) has operations in all legs of the LNG supply chain, including liquefaction capacity agreements that cover LNG volumes in Australia, Egypt, Equatorial Guinea, Nigeria and Trinidad. The company also owns a fleet of LNG carrier tankers and regasification terminals in the US and Europe. BG is one of the largest marketers, traders and producers of LNG in the world.

And BG also has stakes in some of Brazil’s most promising deepwater oil and gas finds. BG rates a buy under USD105 in How They Rate.