Natural Gas Opportunities Gaining Momentum

 |  Includes: APA, CHK, CLNE, CMI, DVN, HAL, HK, SD, TLM, WPRT
by: Invest Chief

At the end of 2010, I predicted natural gas would become popular in 2011, and ultimately begin to become an energy star. Four months later, I am beginning to see the signs of growth for natural gas. The biggest sign is that fact that the U.S. government is finally starting to warm up to the idea that natural gas could be the future.

President Obama said that natural gas has "enormous" potential to replace gasoline as a clean source of energy. He also stated that natural gas use could go as far as power our vehicles one day. This is a good sign for natural gas.

Natural gas has been in the spotlight since the Japanese nuclear crisis. Governments are trying to look for cleaner alternatives to nuclear power. However, as a side note, nuclear power is not dead and is not going anywhere anytime soon.

The United States has been trying to fight a Middle Eastern oil addiction for decades and has had no real success on an alternative. However, I think we are reaching the time of action, the time to finally limit our oil use and move into an alternative. I think that source is natural gas.

To be clear, this will not be a short term project. This could take 10 to 20 years to get a working system for natural gas use in autos. However, we need to look at this in small victories. The first small victory is the fact that the government has finally recognized natural gas as a possible alternative, clean source of energy. The next victory will be natural gas bills that are introduced in Congress and the bill passing the House and Senate and becoming law.

A good start for natural gas to be used as an energy source would be to create trucks that run on natural gas instead of diesel. There are a few plays on this transition: Westport Innovations Inc (NASDAQ:WPRT), Cummins Inc. (NYSE:CMI), and Clean Energy Fuels (NASDAQ:CLNE). Both of these companies build natural gas engines for trucks and commercial vehicles. Next, those trucks and vehicles will need to fuel up, and that's where Clean Energy Fuels (CLNE) and Talisman Energy (NYSE:TLM) come into the action. CLNE sell compressed natural gas (CNG) and liquefied natural gas (LNG). They also sell taxi, semi-truck, van, shuttle engine conversion so that these vehicles may run on natural gas. It should be noted that T. Boone Pickens has a large stake in CLNE.

Now as for non-auto natural gas usage, natural gas could see a spike in usage an a heating source and power source. For these moves, you may want to check out Chesapeake Energy (NYSE:CHK), Halliburton (NYSE:HAL), Devon Energy (NYSE:DVN), PetroHawk (NYSE:HK), Apache Energy (NYSE:APA), SandRidge Energy (NYSE:SD), and the list goes on. These companies are responsible for extracting, exploration and refining of natural gas, which is the first step before it can be turned into a usable energy source. Without these companies, natural gas couldn't be a real usable energy source. These are also less volatile than the other companies above simply because they are extracting and refining natural gas, which has a higher demand than say a natural gas engine.

As I had predicted for 2011, natural gas has started its revival as an energy source. The government is finally recognizing the potential of natural gas, which is an American energy, as we have a large reserve here in the U.S. We could develop fuels ourselves and no longer be dependent on foreign oil. It's time to change the old, worn out ways into a growth story. Higher natural gas demand also means more jobs. Bottom line, 2011 is the year of natural gas. I recommend you climb aboard or risk being left behind.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.