The Emergence of Global Gas Markets: North America

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Gas markets around the world have undergone some major shifts in the past decade. Production and storage levels have risen to historic levels in North America, where speculation over liquefied natural gas has reached fever pitch. Add environmental and political concerns to the mix, and you have a recipe for a lot of misinformation across the market.

In a new five-part series looking at Canadian, European, Asian and African gas markets, our team at ZE will focus on individual regions to give you a deeper look at this rapidly changing industry.

My goal for this article is to provide a brief look at where the North American gas market stands today.

Shale gas across North America

With shale making up the largest proportion of expected future gas production, it’s become a popular topic in the media. But where is the shale gas actually located?

Figure 1: North American shale plays as of May 9, 2011. (Source: EIA, Canada/Mexico plays from ARI)

There are shale plays across numerous states with varying terrains. Estimating the amount of economically and technically recoverable shale gas has always been a tricky subject. With gas residing at different depths and technology rapidly changing, it’s been difficult to predict just how much gas is in the ground.

Estimates in recent years have shown high variation. As more drilling takes place the estimated amount of recoverable gas will likely change as well.

Gas prices in North America

With development springing up all over North America, the price of natural gas has fallen over the past 10 years:


Figure 2: Henry Hub and EEX NCG average prices. (Source: ICE, EEX, Graph generated in ZEMA)

A significantly lower gas price has opened up many possibilities for producers in North America. Figure 2 shows that prices have recovered from last year but remain significantly lower than other international markets such as NetConnect Germany (NCG).

Liquefied natural gas exports and future outlook

With so much natural gas being extracted around the US, the idea of exporting this cheap resource has become a major topic of discussion in the industry.

In order to enable the export of LNG, export terminals are being proposed along coastal areas in North America. As of last month, there is one terminal under construction in Sabine, Louisiana. However many more are likely on the way, with 22 terminals proposed in the US and Canada.

Figure 3: Import/Export Terminals in North America as of February 21, 2013. (Source: FERC)


The growth in the number of new terminals means LNG is likely to become a major driver of gas markets in North America.

Shale gas deposits are being explored, tested and drilled all over North America. There is a great deal of opportunity in low-cost domestic energy which has completely changed the landscape for the industry. As North American gas becomes even cheaper relative to international prices, LNG exports begin to look very lucrative.

While the US is clearly the front-runner in the LNG and shale gas market, there are other regions that are worth looking at. Check back later this week for our look into the Canadian gas market.

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