Liquefied Natural Gas (LNG) Exports from North America

The global market for liquefied natural gas (LNG) is changing rapidly as consuming nations expand regasification capacity while producing nations look to expand liquefaction to capture price arbitrage opportunities related to regional gas price differentials. The Capstone team advised Spectra Energy, a premier natural gas infrastructure company, regarding the key economic, regulatory and political barriers to North American LNG export projects.

The team defined the potential role of North American LNG exports in capturing Asia-Pacific and Atlantic basin demand over the mid- to long-term. The analysis was based on a critical review of leading outlooks for LNG supply and demand to 2030, and the identification of key drivers and uncertainties. The team also analyze, compare, and contrast the critical risks that threaten LNG export projects on the U.S. Gulf Coast and in Western Canada.

The strategy to evaluate LNG market potential for Spectra Energy includes: (1) Global Supply & Demand Outlook; (2) Risk Analysis; (3) Project Assessment; (4) Conclusions & Recommendations.

The Capstone team concludes that the largest source of incremental LNG demand will come from rapidly growing Asian economies.  The biggest risk facing U.S. and Canadian projects is arriving late to market, and regulatory delays prevent projects from moving forward at this time. Despite the challenges, the team forecast significant liquefaction capacity will be added in both the U.S. and Canada, and there are concrete actions Spectra Energy can take in both countries to strengthen its competitive position.