Global gas markets: The North American factor

New exports of low-cost gas from Canada and the United States could threaten liquefied natural gas projects in other regions.

February 2014 | byGiorgio Bresciani, Dieuwert Inia, and Peter Lambert
Cost curves, which array blocks of supply according to their expense, can clarify the dynamics of supply in commodity industries. They are particularly useful when multiple new sources compete to serve a finite market. Such a situation exists today for liquefied natural gas (LNG). Exporters from North America—now among the world’s low-cost gas producers, given recent advances in recovering shale gas—aim to export LNG in competition mostly with projects in Africa, Australia, and Russia.

The exhibit shows how the required breakeven costs of global LNG projects could shift in three North American export scenarios. The Canadian and US governments have so far permitted the building of six LNG export terminals, with capacity equivalent to 25 percent of current global LNG demand (moderate scenario).

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