After Disrupting The Price Of Oil, U.S. Shale Producers Are Now Going To Shake The Global LNG Markets

The liquefied natural gas tanker Asia Vision left Cheniere Energy’s Sabine Pass export terminal in Louisiana on Wednesday with the first cargo of U.S. shale gas. The carrier ship is shown Wedneday in an aerial photograph taken over Sabine Pass, Texas. (MUST CREDIT: Bloomberg photo by Lindsey Janies)

Fuel Fix: U.S. shale gas is shaking up global LNG market

Shale drillers from Pennsylvania to Texas flooded the U.S. with so much natural gas over the past decade that prices slid to a 17-year low. Now they’re going global, with the potential to upset markets from London to Tokyo.

The U.S. began shale gas exports by sea this year and is projected by the International Energy Agency to become the world’s third-largest liquefied natural gas supplier in five years. Gas will challenge coal at European power plants and become affordable in emerging markets, where prices have been high and supplies limited, according to the IEA and Goldman Sachs Group Inc.

LNG became the world’s second most traded commodity after oil last year and demand will keep growing, Goldman said. U.S. gas is adding to the global glut triggered by new Australian supply and weakening Asian consumption. Shale is having an outsized impact on how LNG is sold, prompting spot trading in lieu of long-term contracts.

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WNU Editor: This is a major development ..... and it will deflate global prices. On a side note .... expect more downward pressure on oil prices as fracking technologies continue to improve the ability of oil producers to extract oil cheaply .... Energy companies find at least 1 benefit of downturn (Fuel Fix). The two sentences that caught my eye were the following ....

.... development cost in West Texas’ Permian basin has plummeted from $25 a barrel two years ago to $8 a barrel last quarter .... and .... has been able to cut development costs in the Permian from almost $20 a barrel last year to about $10 in the second quarter of 2016.

These cost efficiencies are huge, and will have a definitely downward impact on future oil prices.