The discovery and rapid proliferation of shale gas basins has revolutionized the supply of natural gas in North America. Natural gas from shale basins accounted for less than 1% of total natural gas supply in 2005; today shale basins provide approximately one quarter of total natural gas production. Although the supply outlook looks promising, demand for natural gas is growing moderately, if not stagnant. Sustainable growth of the natural gas industry requires that demand keep pace with supply. There are a number of natural gas monetization options including the use of gas to produce electric power; liquefaction to produce LNG for shipping globally; conversion to liquid transportation fuels such as gasoline and diesel as well as chemicals; and use as transport fuel. The relative economics and incremental impact on demand varies for each of these options. ADI Analytics has recently conducted an in-depth assessment of these gas monetization options. Our findings show that cheap North American shale gas will have global industry-wide impacts through development of new LNG supply that can compete with existing supply, moderation of oil demand through substitution and GTL and MTG, a resurgence of the chemical industry driven by new supply of NGLs. Further, there are numerous competitive developments in LNG, GTL, ethylene crackers, NGL pipelines, and cleantech, all of which could alter the industry while providing first movers significant competitive advantage. These and other findings are the subject of this paper.

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