miningreview
executive director and chief economist Professor
Quentin Grafton.
The price of natural gas in the US has
dropped substantially over the past five years,
and buyers in Europe and Asia – markets with
separate pricing models – will be looking to
North America as it gears up to become an
exporter. Coal producers in the US have already
started selling to Europe as domestic orders from
buyers who are transferring to gas as an energy
source drop away. "There is potential for US
exports [to Asia], probably beginning in 2015,
and there's the implication of that for gas
prices in the Asia-Pacific region," Professor
Grafton says. As Australian LNG projects under
construction are made feasible by contracts for
future sales to Asian buyers, the possibility of
US supply is troubling.
In North America sophisticated domestic
infrastructure export plants are being built on
Canada's west coast and along the Gulf of Mexico,
Professor Grafton says. Asia's gas price is the most
expensive in the world while America's gas price
is the lowest. "That leads to the expectation that
there will be LNG exports out of the US and
Canada," he says.
Changes are afoot in China as well, with
Chatham House, a London-based think tank,
reporting last year that Chinese state-owned
companies have been directed to find twice the
nation's 2008 import volume in gas from coal bed
methane and shale by 2015.
Still, there's no need to panic, Grafton says. The
$200 billion in LNG projects under construction is
committed. "That money will be spent," he says.
"The projects are essentially a done deal." As for
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