A once-in-a-generation opportunity is developing for investors. The upside potential is enormous. I am talking about a change so important, it will affect the way our economy works and our country is run. 

To say I am excited about this is an understatement. I largely missed out on the tech boom of the 1990s and the fervor for Chinese stocks that sent stocks like PetroChina (NYSE: PTR) up more than 1,700% in the five years to 2007. So I don’t plan on missing out on another groundswell of opportunity. 

These kinds of market changes only happen once every decade. And it’s even rarer that investors are able to see them coming, especially when we’re talking about the energy industry.

Changes in the energy sector have caused wars and influenced politics like few other sectors of the global economy. More important, the U.S. economy has been inextricably oil for more than half a century. But that’s all about to change, and I think there’s a big opportunity for investors to profit.

Of course, I’m talking about the revolution that’s quietly happening in the natural gas market. 

A changing supply-and-demand picture
If you’re a regular reader of Nathan Slaughter’s Scarcity & Real Wealth newsletter, you already know the story. Advances in drilling technology have unlocked a wealth of natural gas in the United States and around the world. 

Take a look at the graphic below. The United States ranks first in the world in annual natural gas production, at 611 billion cubic meters, according to the CIA World Fact Book. It’s also fourth in the world for proven reserves, at 7.7 trillion cubic meters, and that isn’t counting the 50 trillion cubic meters of estimated probable reserves.

Even with the boom in shale gas exploration, we have not been able to take advantage of this energy dominance because the United States also uses more natural gas than any other country, an estimated 683 million cubic meters annually. 

But this supply-and-demand balance is set to change. Data from the U.S. Energy Information Administration (EIA) show four-year annualized growth in production at 4.5% compared to a gain in consumption of just 1.2% per year. More to the point, the growth rate in production is artificially low: Energy producers are curtailing output in the face of historically low prices for natural gas in the United States. 

Global disparities in pricing ripe for huge profits
In contrast to the price of crude oil, the price of natural gas varies from as high as $18 per million British thermal units (btu) in Asia to 10-year lows of less than $3 in the United States. The reason for this tremendous 83% price difference: natural gas must be converted into liquefied form (known as LNG) in order to be transported. We simply don’t have enough infrastructure built up to convert natural gas into LNG and export it on a massive scale. But that’s all changing… 

The changing supply-demand picture, combined with the global pricing disparity means the U.S. economy could eventually become the Saudi Arabia of natural gas — a dominant player on the global market. 

The first to benefit will be U.S. energy infrastructure companies and exporters able to take advantage of the global price disparities. Manufacturing and other energy-intensive industries in the U.S. will eventually benefit from lower production costs, making them more globally competitive. Finally, as a result of this more vigorous manufacturing scenario, the U.S. trade balance should also improve, as less money is sent overseas to support the country’s energy needs.

With this in mind, here are two stocks that I think will thrive as a result of these changes in the natural gas industry. 

1. KBR (NYSE: KBR) 
This company operates an engineering and construction services company specializing in the infrastructure for liquefied natural gas (LNG) and gas-to-liquids. The company faced pressure earlier this year as a major contract with the U.S. Army started to wind down and the revenue outlook appeared difficult. 

The stock has since rebounded sharply on a $15 billion backlog in its hydrocarbon business and prospects for more LNG build-out. The backlog is almost two times the company’s 2011 revenue of $9.2 billion, which significantly supports future revenue growth. Shares trade for 12 times expected 2012 earnings per share and just over 10 times 2013 expected earnings per share– not the expensive multiple you would expect from a company on the edge of major growth. 

2. Cheniere Energy (NYSE: LNG) 
Cheniere is currently the only company approved to export LNG to countries without free trade deals. The company received private-equity money this year to convert its Louisiana import plant into an export facility, and is expected to start exporting to Europe and Asia by 2015. 

Though not yet profitable, the story here is all about potential. Analysts at Credit Suisse expect revenue to jump three-fold from $310 million in 2015 to $1.0 billion in 2016, and then almost double the next year as the company’s liquefaction business ramps up. The loss per share of $2.59 reported in 2011 is expected to shrink to a loss of just 23 cents a share in 2013, and could turn into a per-share gain of $1.89 by 2016. Expectations for earnings per share of $4.06 in 2017 mean a stock price of about $54 if the shares are valued at the industry average of 13.4 times earnings, representing a gain of about 230% in the five years for current investors.

Risks to Consider: Investors need to be ready to ride out the ups and downs in these two stocks. Shares are extremely volatile, as investors try to forecast the short-term outlook. KBR is up more than 39% from this year’s lows and Cheniere has more than doubled in the past year, while both companies have seen shares drop more than 30% at some point in the past year. 

Action to Take –> Companies building out the infrastructure for the use and export of natural gas are on the forefront of the next major cycle in the industry. Getting into these stocks now may mean riding out a bumpy ride until earnings really start pouring in, but the stocks have the potential to increase in a big way over the next 10 years.

P.S. — Although he is an expert in the area, oil and gas is far from the only thing Nathan’s readers are profiting from. Scarcity & Real Wealth aims to profit from the rarest and most valuable assets on the planet — precious metals, agricultural commodities, energy and other natural resources. All of these assets are in short supply, yet worldwide demand is on the rise, making them some of the best investments on Earth. In fact, you can learn about one important supply/demand imbalance Nathan has found that will be making headlines next year by visiting this link (and without having to watch a lengthy video).