SOURCE: MarketResearch.com

MarketResearch.com

September 20, 2010 08:08 ET

Abundance of Unconventional Natural Gas Changing the Industry Landscape

ROCKVILLE, MD--(Marketwire - September 20, 2010) - MarketResearch.com has announced the addition of GBI Research's new report "Natural Gas Industry to 2016 - Abundance of Unconventional Gas Changing the Industry Landscape," to their collection of Energy market reports. For more information, visit http://www.marketresearch.com/product/display.asp?ProductID=2794226

The North American natural gas industry is expected to witness a steady growth in production from 72.4 Bcf/d in 2008 to 82.1 Bcf/d in 2020, at an AAGR of 1.2%. The unconventional natural gas is expected to account for 52% of the total production in 2020. In the US, the unconventional natural gas already accounts for approximately 50% of the production. By 2020, the share is expected to increase to 58%. In Canada, the unconventional natural gas production is expected to account for 30% of the production in 2002, up from approximately 5% share in 2008.

The global economic crisis has led to a significant drop in natural gas demand globally. The global natural gas demand dropped drastically in 2009, which led to a huge slump in natural gas prices. The excess production and low demand have forced the natural gas prices to remain low at an average of $4 - $4.5 per MMBTU, even with crude oil prices hovering at around $80 a barrel. LNG demand too has suffered, as a result of it being interdependent on natural gas demand. LNG prices have dropped significantly as a result in the recent past. Prices of spot LNG in Asia for immediate delivery slumped to as low as $3.8 per MMBTU in May 2010 from about $25 MMBTU in 2008, as the global recession cut demand from Japan and South Korea.

While the global LNG demand dropped substantially, the supply of LNG improved with new LNG liquefaction plants becoming operational in Qatar, Yemen, Indonesia and Russia. The new planned LNG terminals may further deepen the LNG supply glut. The major contributors to this increase are Australia, Iran, Nigeria and Qatar. Even in the Asia-Pacific region, where demand in India and China continued to grow, the drop in demand from major consumers like Japan, Korea and Taiwan created a slump in the overall LNG demand in the region. A major part of this increasing liquefaction capacity was intended for the US market, which was at one point struggling with decreasing natural gas production. However, with the spurt in production from shale basins, the new liquefaction terminals will further deepen the global LNG supply glut.

The excess of natural gas supplies in the world has led the LNG spot prices to new lows. The drop in spot LNG prices has made buyers rethink long term LNG contracts. Importers can now easily tap the global market for spot cargoes at lower prices than the long-term supply agreements. Consequently, the LNG industry will be buyer driven until 2011, as supplies would continue to exceed demand as in 2009. The 'tough phase' of the industry could be potentially aggravated by upcoming additional new LNG facilities. This is in sharp contrast to the supplier-driven LNG market of 2008. Along with this, the major factor of increasing natural gas supplies from unconventional sources is expected to adversely affect the industry. These factors have significantly altered the supply situation, inducing a surplus in supply.

For more information, visit http://www.marketresearch.com/product/display.asp?ProductID=2794226

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