Drivers ranging from strong growth in combined cycle gas turbine (CCGT) generation to the emergence of a dynamic spot trade have fundamentally altered the LNG trade in the last decade. This paper will focus on a more recent development that is having a growing impact on LNG supply and demand: unconventional gas, including tight sands gas, shale gas and coal bed methane (CBM). In the US increasing unconventional gas production has been able to compensate for declining conventional gas production keeping US domestic gas production higher than expected. Improving technology could further reduce the production costs of this unconventional gas, thereby keeping a lid on US gas prices. LNG is largely a price taker in North America, and lower US gas prices have a direct impact on the profitability of LNG imports. North America is most advanced in terms of unconventional gas experience but is not alone in holding unconventional gas resources. Outside North America such resources are widely distributed. With the spread of production technology, unconventional gas development could accelerate and change gas market balances in key global LNG markets such as Europe, China and India. However, challenges such as costs, environmental impacts and infrastructure remain. On the LNG supply side, Australian CBM LNG export projects are attracting considerable investment. Already, five CBM LNG projects are being planned. Indonesian CBM reserves may also enhance LNG production. Developers however face issues such as gas quality of LNG from CBM and uncertainties in developing CBM production to satisfy the feedgas requirements of an LNG plant. This paper will discuss the impact of unconventional gas on long term LNG supply and demand and will raise the challenges and the opportunities facing LNG industry players in both competing with unconventional gas in the consuming markets and utilizing unconventional gas as a feedstock.
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