Is it shale and liquefied natural gas (LNG), or shale or LNG? That was the question at a panel during the Offshore Technology Conference earlier this month. According to Rafael McDonald, an associate director with research firm IHS-CERA, the answer depends almost entirely on location.

“The Japan crisis is increasing global demand for LNG,” McDonald said. “In North America, LNG demand is down because of shale gas.”

According to McDonald’s presentation, four factors determine the level of competition between LNG and shale gas consumption, such as scale (how much is there? can it meet all of the demand?); price and cost (how much will it cost?); policy (are policies supportive? what role for security of supply?); and timing (how long will it take?).

McDonald said that as the recession eases, a multispeed recovery will take place worldwide. The global recession barely hit the economies of some countries, such as Brazil, India, and China. Gas supply and demand was barely affected there. However, other countries, like South Korea, were hit hard economically by the recession and have currently bounced back stronger than before the recession. Australia may soon surpass Qatar as the world’s largest LNG exporter if it continues its plans to increase its liquefaction and LNG export capacity, according to McDonald’s presentation.

The presentation also highlighted outside factors that have affected natural gas demand globally. Consecutive cold winters have increased Europe’s demand for LNG, while Japan’s earthquake and tsunami in March increased the country’s demand for LNG to help fuel power plants that were taken out during the disasters. Political unrest in the Middle East has also affected supply and demand worldwide as exports and production fluctuated.

Since North America's LNG demand is down because of the 'shale gale,' Cheniere Energy Inc. is going through with their plans to export LNG from the U.S. David Thames, president of marketing at Cheniere Energy Inc., said during his presentation that the company is proposing to convert U.S. natural gas into LNG for export at its LNG terminal, located on 853 acres of land on the Sabine Pass River on the border between Texas and Louisiana, in Cameron Parish, Louisiana.

Contact the author, Rebecca Torrellas, at rtorrellas@hartenergy.com.