With the final investment decision made this week for the Wheatstone LNG project in Western Australia, Chevron now has two multi-billion-dollar LNG developments in progress in Australia. At the same time, coal-seam-gas LNG projects along the east coast of Australia are moving forward. The Australian projects are busily lining up long-term contracts that are needed before the final investment decision is made and financing is arranged. Enough other projects are on the drawing boards or in the planning stages to allow Australia to challenge Qatar as the world’s largest producer of LNG. These companies are happily lining up to feed the lucrative Asian LNG trade. After the earthquake and tsunami in Japan earlier this year, the LNG market has gotten a huge boost at the expense of nuclear energy, especially in Japan. Australian LNG producers are making the investments needed to take advantage of the markets that are expected to be robust four or five years from now. But, where are the U.S. and Canada in this game? If the North American export projects don’t start getting some momentum, these will be left out in the cold. With at least three proposed LNG export projects in British Columbia, Canada is pursuing a more conventional approach to LNG development by seeking long-term contracts and investments from consumers. Canada’s natural gas exports to the U.S. have been steadily declining since the shale-gas boom in its southern neighbor has pushed back on Canadian supply and kept prices low. At the same time, Canada’s own shale gas development has made more gas available. The country’s proximity to Asia makes it a prime candidate for LNG export. U.S. projects seem to be focusing on being service providers for gas liquefaction. The gas producers or the end-users would do the contracting and pay for the liquefaction and storage. All of this would occur in the world’s largest gas market. Natural gas producers would like to be able to tap into the world gas market, which is higher than the U.S. market. Some companies are hoping this would boost domestic gas prices. Given the long lead time needed for LNG export plants, the North American projects are losing out to competition in other parts of the world. The window of opportunity won’t stay open very long. The ever-optimistic Cheniere Energy was the first of the U.S. companies to get export permission for its Sabine Pass facility from the U.S. Department of Energy (DOE). The company remains the biggest proponent of selling U.S. gas overseas. Three other import terminals want to become export terminals now as well. However, as far as I know, none of the projects has lined up financing and none of the gas producers has signed any long-term supply contracts. That, combined with the dismal track record for making profits at the import terminals, will tend to put a damper on the interest from financial institutions. Except for the Elba Island and Everett terminals, the utilization for U.S. import terminals is almost non-existent. The biggest question yet to be answered though is: will Canadian and U.S. politicians allow domestic energy to go overseas? Even though the DOE has approved the export licenses and Alaskan LNG has been going to Japan since 1969, the outcry to keep Lower 48 gas in the country to reduce reliance on foreign oil will get much louder as the projects become more concrete. I just can’t see U.S. politicians allowing domestic energy to go to consumers such as China. The natural gas exports to Japan involved gas reserves that could not be delivered to the Lower 48. And, keeping the gas in the U.S. will maintain lower natural gas prices, which is the dream of politicians from consuming states. Canada isn’t impervious to public opinion either. The Kitimat LNG project is a prime example. In the late 1990s, Phillips Petroleum proposed an export project called Pac-Rim LNG at Kitimat. The hue and cry over exporting Canadian natural gas without insuring there was enough gas for future generations put an end to that project. Then, Kitimat LNG was touted as an import terminal. However, the project died as natural gas supplies in North America increased so rapidly. Now, it’s an export project again. Provincial officials in British Columbia are fully backing the newest export projects. But, as is often the case in both Canada and the U.S., the people opposing these projects are from the eastern portions of the countries with the highest population centers. That kind of pressure can create some interesting political alliances. At least one of the Canadian projects seems to have the best chance to be completed. The U.S. projects are very much in the wait-and-see mode. For either country, time is running out to send natural gas overseas.