Alaska's North slope and LNG: North America's energy bridge to Asia.

Author:Gupta, Sourabh
Position:SPECIAL SECTION: World Trade

The views expressed herein are the authors' own and not those of Samuel International and/or the University of Alaska.

When the first modern shale well as drilled a couple of miles north of Fort Worth, Texas in the late-1990s, few would have believed what a global energy market game-changer it would turn out to be barely a decade removed. At the time it was anticipated the United States would be, during the first half of the 21st century, one of the largest global importers of liquefied natural gas (LNG); today the U.S. domestic natural gas market is oversupplied and prices barely a fraction of that which they fetched just a couple of years earlier.

It is now foreseen that increased production of natural gas (and oil, as the U.S. is slated to dethrone Saudi Arabia soon as the largest producer of black gold) will make the U.S. energy self-sufficient, on net, within 25 years. Along the way, it is expected to provide a foundation for a domestic manufacturing renaissance, supply billions of dollars in revenue to federal and state governments, lessen the pressures on the current U.S. account deficit (via reduced oil and gas imports) and provide upward support to the value of the dollar. Broader geo-political benefits are also likely to accrue.

Meanwhile, on the global demand side, as per the International Energy Agency's most recent World Energy Outlook 2012, natural gas is expected to be the only fossil fuel for which global demand is anticipated to persist--in fact, increase--in any-and-all policy scenarios and contingencies over the next 25 years. Unconventional gas (particularly shale gas) will fulfill nearly half of this increase in demand, much of it arising from Asia's seemingly unquenchable thirst for energy to fire its unstoppable economic engine.

During 2000-2011, more than half the increase in demand for liquefied natural gas came from Asia with imports from China and India growing as much as 30 percent and 52 percent, respectively, in 2011. Active policy support and regulatory reforms are expected to ensure that China's consumption expands from its current 130 billion cubic meters (bcm) to 545 bcm in 2035. In the interim until 2020 though, Japan is expected to be Asia's leading importer of LNG, due to its need to find a quick and dependable substitute fuel source in the wake of the Fukushima disaster and the subsequent and continuing nuclear plant shutdowns.

Furthermore, a key driver of Asia's demand dynamics arises from its need to...

To continue reading