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US shale gas revolution puts Australian LNG exports at risk

The Australian has a rather weird article suggesting Australian exports to Asia of LNG from coal seam gas could be under threat from American exports of shale gas - US revolution puts Australian exports at risk. While shale gas seems to have solved the USs yawning natural gas deficit it doesnt look like the shale plays are going to supply the sorts of volumes in the long term that will underpin LNG export infrastructure.

THE shale gas revolution in the US could threaten long-term demand for Australian LNG exports as big energy players start to talk about exporting gas from North America to Asia.

While any export of shale gas is at least six years away, big energy players such as Apache are already mentioning the potential for shale gas exports to Asia.

As recently as five years ago, the US was expecting to need large volumes of LNG to offset a domestic gas shortage.

But technological leaps in shale gas extraction technology have unlocked previously unavailable resources.

The domestic US market is now oversupplied with low prices.

"Talk of new LNG re-gasification (import) terminals in North America has been replaced by talk of liquefaction plants, which means that US shale gas may find markets in Asia and compete against other suppliers, including Australia," Deloitte Australian oil and gas leader Stephen Reid said.

Deloitte focused on the issue in a report released yesterday.

The potential for shale LNG exacerbates earlier concerns that increasing shale and coal seam gas production in China could give Australia only a short time to line up LNG contracts for a host of planned multi-billion-dollar export ventures.

While analysts have raised concerns, most LNG producers maintain China-driven gas demand is likely to be strong enough to soak up all new supply.

Apache is looking to open Kitimat LNG terminal on Canadas west coast, producing 5 million tonnes a year, and has shale gas acreage that could eventually be shipped to Asia.

Encana has also talked about exporting LNG through Kitimat, while Houston-based LNG terminal operators Cheniere Energy and Freeport LNG have reportedly applied to US regulators for permits to export gas from the US Gulf Coast.

Last week, ConocoPhillips, which owns 50 per cent of the Australia Pacific LNG plant slated for Gladstone, said LNG demand was already rising because of Japans need for the fuel to replace power lost from nuclear plants at Fukushima.