National Grid, LNG, and Portfolio Diversification!

Interesting read on the Guardian website today re. National Grid and the importing of Liquified Natural Gas. The article relates a visit to the company's new terminal (the world's largest outside of Japan and Korea) which, it is estimated, can supply up to 20% of the UK's annual demand.
The UK now has 3 terminals in total which should be able to supply up to 50% of annual demand but the article goes on to forecast that by 2020 the UK will need to import 70% of its annual demand from all sources ie the pipelines and LNG terminals. 
According to the International Energy Agency there is an unexpected global gas glut that could last for a decade as new means of producing "unconventional gas" from coal seams and shale are found. It also seems that oil companies such as Shell will soon be producing more gas than oil for the first time.
However, the article quite rightly maintains that there is still significant risk to supply from price competition. 
But, interestingly for me it groups a number of my investments together as having significant stakes in the same immediate future, these being: BP, BG, Centrica, Scottish and Southern, and NG. Each company does have other strings to their bows, but finding, recovering, and supplying natural gas, in one form or another, does have a significant impact on their viability and profitability and as it stands each company is only one link in the total energy supply chain. 


So, it is worthwhile considering this in the context of portfolio diversification as it may be that holding these 5 companies or similar is not really diversification at all. Although, on the flip side it is a significant group holding in a finite, indispensable commodity albeit one that is in a "temporary" global glut. 
That being the case it also stresses the need to look at these investments strategically as long term investments, at which point consistent earnings and dividend growth become very significant as a regular means of shareholder returns alongside potential, but longer term, capital growth. I will look at this further later but of the 5, 4 are in my Value, Income and Recovery portfolio and 1 is in my Growth and Speculative.

The Guardian article on National Grid's LNG terminal can be found through the following link:

http://www.guardian.co.uk/business/2010/dec/27/lng-transforms-uk-gas-supplies