Ten years ago, the buzz in the energy industry was largely focused on the emerging global market for natural gas. This market integration was coming about because of down-trending gas production in North America which was expected to be a permanent condition. Many tens of billions of dollars were invested in designing and building LNG liquefaction terminals worldwide and scores of import terminals along the North American Pacific, Atlantic, and Gulf Coasts in preparation for massive imports to make up the deficit.
This integration, however, never took place. While these preparations were being made, George Mitchell and his team were working under most people’s radar creating the North American shale gas revolution. Once it became clear that gas supply was no longer the issue, the LNG terminals were not built, terribly underutilized, or not utilized at all. Desperation provided a means for a possible solution. Cheniere, a small but ambitious firm which had built a huge LNG import facility named Sabine Pass, began promoting the idea that there was now so much gas supply that the industry should become exporters rather than importers of LNG. Once they began to have success in getting commitments from mostly Asian customers who were looking for both LNG and greater diversity of supply, many of the other US and Canadian import terminal owners began to develop their own export plans.
So now, in 2017, the world is again set for global integration, but this time North America is beginning to play a different role, that of a major LNG supplier to the world. But it is not a given that North America will be successful in this endeavour. Major competition from Australia, Qatar and Russia in the near term and East Africa in the longer term make this a wide-open game. And a lukewarm appetite for LNG in Asia make the game even tougher. Designing the scenarios and projecting the possible outcomes requires a sophisticated modelling system.
G2M2 is a modelling system used to analyze and forecast the future of global gas integration. Similar in many ways to its predecessor, GPCM, the North American Natural Gas Market Forecasting System, G2M2 is a system which allows users to run a wide variety of scenarios under assumptions of their own choosing. But G2M2 is also different from GPCM because it is modelling a variety of natural gas markets, some of which are competitive like the US and Canada, some of which are liberalizing like Europe, and many in which the government and its national companies are decidedly non-competitive. G2M2 has been designed to both address this current mix as well as to envision possibilities for evolution to increasingly more market-oriented approaches.