The Key Differences Between the Natural Gas Markets in...

The key differences between the natural gas markets in Asia, Europe and North America November 2012 Table of Contents Summary 3 Overview 4 Conclusions 8 References 9 Summary The major difference of the natural gas market, which sets it apart from the truly global oil market, is that the former has historically been developed with respect to the regional supply bases. This was primarily defined by existing technology for natural gas transportation and availability of other energy resource: primary oil and coal.†¦show more content†¦Table 1: Natural gas market balance for North America Source: BP Statistical Review of World Energy 2012 Most of the natural gas transportation in the USA is done through 305,000 miles of transmission pipelines. Existing LNG degasification facilities allow for limited international trade of LNG (Table 2). Due to free market pricing when natural gas cost less in summer period, gas-storing facilities are widespread over the country including more than 400 underground storages and 113 LNG peaking facilities (EIA, 2008). Table 2: Natural gas trade in North America Source: BP Statistical Review of World Energy 2012 With the carbon emission regulations recently introduced by US government, natural gas is the most likely substitution to coal for electricity generation for years to come. Latest price reductions made natural gas from a cost perspective much more attractive than coal. Recent spike in US and Canada shale gas production have reduced the prices in the region to historical minimum of less than $4/MMBtu, a half of the price for Europe and five times less the price for China or Japan. This difference in prices has raised huge interest to export of LNG from USA to Asian market. 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