U.S. Shale Gas Revolution Drives a New World Order in the Global LNG Market

According to a new report from BENTEK Energy, LLC, the world natural gas market has entered a period of dramatic change – in large part triggered by U.S. market dynamics.

The LNG Market: New World Order, examines the impact of the U.S. shale revolution on LNG markets, demonstrates the displacement of crude-indexed pipeline supplies in Europe by lower priced LNG imports, assesses the role of floating storage and regasification unit technology (FSRUs) in the development of new LNG markets in South America, the Middle East and Asia, and forecasts the impact of these shifts in supply/demand on global prices.

“The U.S. shale gas revolution has resulted in a massive reduction in the need for new LNG imports into North America – possibly even turning the U.S. into an exporter. This development has thrown the global gas market into an oversupply situation,” noted E. Russell (Rusty) Braziel, Managing Director of BENTEK Energy.

“Spot prices are down. Lower prices are driving supplies into new markets, and are backing out traditional crude-indexed-priced volumes. But it is only a matter of time before these developments drive enough demand growth to bring the market back into balance.”

BENTEK’s report examines the LNG market from the perspective of capacity utilization and flow dynamics, and based on this analysis projects that the global oversupply will dissipate by 2013 resulting in a balanced world market.

That balance could shift to a shortfall of up to 1.5 billion cubic feet per day (Bcf/d) in 2014, taking into account a number of new regasification projects planned for construction over the next four to five years. Detailed information on these projects is provided in the report.

BENTEK’s Market Alert titled The LNG Market: New World Order examines the major shift in U.S. market conditions and resulting global LNG market changes. This report represents the first examination of the world LNG balance based on capacity utilization.

As the second of five Market Alerts to complement BENTEK’s Forward Curve Suite, it also provides extensive details on the direction markets are headed in the next five years. In addition, it provides a broad overview of current global LNG supply and demand conditions, including a detailed look at the regasification and liquefaction capacity additions that have taken place over the past few years in anticipation of robust U.S. LNG demand.

The report ends with a list of the LNG regasification and liquefaction projects BENTEK expects will be built and a forecast of  U.S. LNG sendout.

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Source: Bentek Energy, September 20, 2010;