Shale Gas Drives $120B in LNG Projects

by | May 16, 2014

Lux Energy ManageCompanies are investing an estimated $120 billion in liquefied natural gas (LNG) infrastructure to tap into the North American shale gas boom and take advantage of global price disparities, according to new analysis from Lux Research.

While gas has been cheap for the domestic market during the boom, prices could rise once the global market balances.

The global LNG trade has grown seven-fold since 2002 to $170 billion in 2012, and LNG infrastructure is a bottleneck preventing US producers from accessing it.

Australia is set to become another export rival to North America. Strategically located to supply gas to energy-hungry markets, Australia has $180 billion in current investments to add 3 trillion cubic feet per year of natural gas liquefaction capacity each year until 2017 to help capture Asian markets in Japan, South Korea and China.

Lux’s report, “Navigating the Treacherous yet Lucrative LNG Sector” contends that if all the approved and proposed projects began operating at full capacity today, the US could export nearly 30 percent of the gas it produces by 2020.

Lux Research analysts found:

  • Global shale gas development threatens North America. North America enjoys huge reserves of shale gas and a head start in its development but many other countries are rapidly making progress.
  • LNG can replace diesel. LNG is targeted to replace diesel for a range of applications, mainly as a transportation fuel but also for off-grid power generation.
  • Novel business models are emerging. Companies such as REV LNG address high infrastructure costs for LNG by covering capex costs themselves and then charging customers between $2.50 and $2.80 per gallon of LNG, comparable to the price of diesel on an energy basis.

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