Lng Shipping
Economics Final Paper
The Impact of US Shale Gas Exploration on the global LNG tanker market
Abstract
The triggers for this study have been several articles prophesying a shale gas revolution in the LNG tanker business. Following that, the author seeks to assess the real prospects that can be drawn from US shale gas exploration and whether their impact is long- or short-lived.
The LNG tanker market is a market highly specialized and sophisticated with some of the most complex and expensive vessels on its hands. As is the case with most transport modes, also LNG shipping is derived from the demand and supply of its underlying commodity: natural gas.
Natural gas is one of the major energy sources and looking at increasing crude oil prices and emission control regulations in both the US and Europe, it might become of even greater importance. Further LNG has over the past years seen a shift from a regional market with individual and micro forces behind valuation to a more globally traded commodity with new pricing mechanisms.
The past years have seen a boom in the shipping of liquefied natural gas and the exploration of US shale gas has further fostered prospects. The aim of this paper is to assess the impacts of shale gas production in the US on the global LNG tanker market; major indicators used are changes in demand and supply volumes for liquefied natural gas around the globe as well as newbuild orders and freight rates in the tanker market.
Introduction
“Natural gas is the third largest source of energy consumed globally, after oil and coal” (UNCTAD, 2012) and its clean-burning characteristics make it convenient for power generation.
In many cases the geography of trade makes it essential for natural gas to be carried to its destination by ship, for which it has to be liquefied to reduce its specific volume, as opposed to the use of pipelines over shorter distances. However, despite advanced technology it is still very “expensive and inflexible”
The Impact of US Shale Gas Exploration on the global LNG tanker market
Abstract
The triggers for this study have been several articles prophesying a shale gas revolution in the LNG tanker business. Following that, the author seeks to assess the real prospects that can be drawn from US shale gas exploration and whether their impact is long- or short-lived.
The LNG tanker market is a market highly specialized and sophisticated with some of the most complex and expensive vessels on its hands. As is the case with most transport modes, also LNG shipping is derived from the demand and supply of its underlying commodity: natural gas.
Natural gas is one of the major energy sources and looking at increasing crude oil prices and emission control regulations in both the US and Europe, it might become of even greater importance. Further LNG has over the past years seen a shift from a regional market with individual and micro forces behind valuation to a more globally traded commodity with new pricing mechanisms.
The past years have seen a boom in the shipping of liquefied natural gas and the exploration of US shale gas has further fostered prospects. The aim of this paper is to assess the impacts of shale gas production in the US on the global LNG tanker market; major indicators used are changes in demand and supply volumes for liquefied natural gas around the globe as well as newbuild orders and freight rates in the tanker market.
Introduction
“Natural gas is the third largest source of energy consumed globally, after oil and coal” (UNCTAD, 2012) and its clean-burning characteristics make it convenient for power generation.
In many cases the geography of trade makes it essential for natural gas to be carried to its destination by ship, for which it has to be liquefied to reduce its specific volume, as opposed to the use of pipelines over shorter distances. However, despite advanced technology it is still very “expensive and inflexible”
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