The US Market.

In the last two years, the US has emerged as a key growth market for LNG. Alone, the US accounts for 25% of the natural gas consumed in the world each day. As American imports from Canada increased over the 1990's,what had been national self-sufficiency slowly evolved into continental self-sufficiency and interdependence. And now, in addition, Mexico imports gas from the US.

The US enthusiastically embraced the new gas-fired technology to generate power. All together its use of natural gas in electric power production has increased almost 40% since 1990- with much more growth to come. Over 200,000 mw of new power - plant capacity has been built recently or will soon start production. This is equivalent to more than 25% of the countries entire installed capacity in 2000.And larger than the electric power industries of the UK and France combined.

Well over 90% of the new capacity in the US is fueled with natural gas. But rising demand for power has recently collided with a shortage of gas in the US. Since 2001, supply has declined by 4%. New wells will be drilled in the years ahead, and new supplies will be added. Owing to the depletion of existing wells, in 10 years more than half of domestic supply will have to come from wells that have not yet been drilled.

Although there has been a modest rebound in domestic gas supply since 2001(CDT)- which, together with a weak economy and mild weather, may temporarily mask the reality of the shortage in 2004 - the reality remains that theological base in the US is mature. Supply shortages, and the resulting jump in the cost of producing electricity from natural gas, were one of the reasons for the California power crisis of 2000. In response to the tightening of supply and demand in the US, domestic gas prices have gas. Gazprom, still a monopoly and controlled by the Kremlin, accounts for most of Russia's gas production and exports. Gazprom has said recently it plans to increase its gas production in 2004 by 10bn cubic meters (BCM) to 542 BCM and the output by 2030 should reach 610-630 BCM/year - a target just revised from 580 - 590 BCM/year. Its exports in 2004 will rise 6 BCM -140 BCM. It supplies 25% of Europe's gas requirements.

Another 25% world's reserves of natural gas lies under Qatar and Iran, mostly in a joint set of reservoirs called North Field on the Qatari side and South Pars on the Iranian side. This is an offshore field straddling the waters between Iran and Qatar, with the main reservoir being in a very deep Permian Khuff formation. Qatar intends to become the world's biggest exporter of gas (see the gas Market Trends.

Next are the gas reserves in each of Saudi Arabia and Abu Dhabi (the main part of the UAE). Saudi reserves are likely to increase substantially as a result of stepped up exploration by the state-owned Saudi Aramco and foreign companies. IOCs and energy companies have been invited to bid in early 2004 for a number of Saudi prospects for gas E&P. They can also bid for integrated gas-to-power/water desalination ventures, with a Shell-Total partnership having signed up for one such project.

The US ranks sixth but with only 3.3% of the world's gas reserves. The Energy Department's Energy Information Administration (EIA) reports that US proved reserves of natural gas in 2002 increased by 2% from 2001 to about 187 trillion cubic feet (TCF). Reserves additions were 118% of 2002 production, which posted a 2% drop to 19.4 TCF. Sharp production declines in the Gulf of Mexico were partially offset by large output increases in the Rocky Mountain States (Rockies).

US coaled methane (CBM) reserves in 2002 increased by 5% from 2001 to 18.5 TCF. Thanks to a doubling of gas prices in 2002, having risen sharply since 2000, CBM production increased by 3% from 2001 to 1.6 TCF. Most US gas discoveries in 2002 were made as extensions of existing conventional and unconventional gas fields - the latter including tight sands and shales.

Out of the top 20 US natural gas fields in 2002,11 were in the Rockies. In Texas, the prolific Barnett shale play of the Newark east field, the tenth largest in the US, accounted for a big increase in proved gas reserves.

Natural gas liquids (NGL) reserves, while showing no growth in 2002, accounted for 26% of US liquid hydrocarbon reserves at almost 8 billion barrels.

Most of the natural gas in world trade moves in gaseous from through pipelines. Since methane gas can be liquefied through cooling, shipped as LNG and used efficiently in any part of the globe, its share of the world's gas markets has risen rapidly.

According to the IEA, world investment in natural gas would have to reach $3.145 trillion by 2030 to meet demand. Of this, $1.731 trillion would have to be invested in exploration and development; another $252 bn would be spent on LNG; and the remaining $1.162 trillion would go for gas transmission, distribution and storage.

Natural gas has emerged as the main source for new electric power generation capacity. According to a study by Daniel Yergin and Michael Stoppard of Cambridge Energy Research Associates (CERA), an emerging global market in natural gas now as the potential to meet rising world demand for electricity. As natural gas becomes a traded global commodity, they say, it will be critical to meeting a host of urgent needs.

The US needs it to keep the lights on and stave off "a coming energy shortage", Europe to rejuvenate its energy, developing countries to boost growth, and "all of them to meet their aspirations to have a cleaner environment". The change will be accomplished both with long-distance pipelines and with LNG. From various gas - rich parts of the world, the LNG will be carried in tankers that can change direction on the high seas to respond to sudden shifts in demand or prices.