Shale Drives $120 Billion in LNG Projects in North America

The shale gas boom in North America has triggered a massive buildup of LNG infrastructure, with companies investing a whopping $120 billion in a bid to capture a slice of the lucrative global market, according to Lux Research. The shale gas revolution has meant dirt-cheap gas for U.S. companies and consumers, but the export infrastructure being built today could mean rising domestic cost as the global market balances.

The global LNG trade has grown sevenfold since 2002 to $170 billion in 2012, Lux reports, and LNG infrastructure is the critical bottleneck preventing U.S. producers from accessing it. But even as North America builds capacity, Australia is set to become another export rival. Strategically located to supply gas to energy-hungry markets like Japan, South Korea, and China, Australia has $180 billion in current investments to add 3 Tcf a year of natural gas liquefaction capacity each year until 2017.

“If all the approved and proposed projects began operating at full capacity today, the U.S. could export nearly 30% of the gas it produces by 2020, creating a much more robust international market,” said Daniel Choi, Lux Research analyst and one of the lead authors of a report titled, “Navigating the Treacherous, Yet Lucrative, LNG Sector.”

“This would eliminate extremely low North American gas prices, hurting some domestic users, but would benefit the international economy overall,” he added. Lux Research analysts evaluated the impact of the shale boom on the growing global trade in LNG, and the infrastructure buildup across the world. Among the findings: global shale gas development threatens North America. While the region enjoys huge reserves of shale gas and a head start on its development, many other countries are rapidly making progress. China has technically recoverable shale gas reserves of 32 billion barrels of oil equivalent (BBOE), and Argentina has even more at 161 BBOE.