NORTH AMERICAN NATURAL GAS MARKET, AND ITS GLOBAL CONTEXT – A THREE YEAR LOOK-BACK AT THE NATIONAL PETROLEUM COUNCIL NATURAL GAS STUDY OF 2003

The most recent comprehensive study of the North American natural gas market was completed by the National Petroleum Council in 2003. That study projected continuing demand growth and declining indigenous production, and recognized that increased imports of LNG will be required. It recommended conservation, expedited licensing of facilities, and a further diversification of the energy base on which we depend.

Increased dependency on LNG imports notwithstanding, the study limited the number of new liquification facilities it considered to those already under consideration (January 1, 2003) and assumed that any required product would be available to meet market demand. No attempt was made to examine the supply and demand situation for natural gas in the rest of the world.

Since the study was completed, the economies of China and India have grown at approximately 9% per year and the international markets have been hard-pressed to meet that demand. Seasonal demand in Europe has also been quite high. At the same time, demand in North America has continued to increase and indigenous production has continued to decline – both as forecast.

This paper attempts to illuminate some to the assumptions that underpinned the 2003 NPC study, and how some of those market and economic parameters have changed in the intervening three years.