Modeling the implications of expanded US shale gas production

Conventional thinking just ten years ago was that the United States would become a major importer of liquefied natural gas. Yet, today the discussion has shifted to one of export potential, largely driven by the rapid development of shale gas resources. This has had dramatic implications not only for the US, but also for the rest of the world. In particular, the outlook for several gas exporting countries has been substantially altered. Namely, while the US has certainly from an energy security standpoint, Russia, Iran, Venezuela and Qatar have seen their projected fortunes reduced. Development of shale gas has effectively increased the global elasticity of supply and could substantially reduce overall dependence on exports from these critical countries.

► North American shale gas development has major implications for global natural gas trade.
► Shale makes global supply more elastic, enhances liquidity, and lowers long term price.
► Shale has implications for traditional pricing paradigms, such as oil indexation.
► Shale has shifted perceived LNG opportunities away from North America and toward Asia.
► The potential for future shale development in Asia could also be paradigm shifting.
► Globally, longer term supply focus moves away from Russia, Iran, Qatar and Venezuela.