As recently as 12 months ago, the North American LNG market was characterized by a glut of exportable gas bottlenecked by a murky regulatory process in the U.S. and nearly limitless, if undefined, potential in Canada.

Several U.S. terminals had the advantage of being import facilities but their operators were having trouble sorting through U.S. Department of Energy (DOE) and Federal Energy Regulatory Commission (FERC) approvals to become liquefaction terminals. Canadian proposals on the British Columbia coast had no existing facilities, but had an abundance of gas in the country and a friendly provincial government.

The ensuing year saw a near complete reversal of fortunes for the two nations. Three U.S. projects have now received final FERC approval, and two of those have begun construction on their liquefaction facilities for export. These projects put the U.S. on track to develop the expected liquefaction capacity forecasted in Stratas Advisors’ new Global LNG Service.

Several other potential projects on the U.S. Gulf Coast have contracted out full or partial liquefaction capacity with foreign buyers, indicating confidence by the global market in U.S. LNG.

British Columbia Premier Christy Clark has focused great efforts in the past several years to grow the western Canadian LNG industry. She has taken economic development trips to Asia to spark interest in Canadian gas and leveraged her campaign on a new tax bracket for LNG projects that would make the province extremely wealthy. The progress, though, has been slow.

In July, Apache Corp. announced plans to divest its stake in the Kitimat LNG project, leaving Chevron as the lone proponent. In October, the president of Pacific NorthWest LNG, the venture led by Petronas, resigned just weeks after Petronas’ CEO warned that the project would be delayed unless regulatory and tax reform issues were resolved. Shortly after that, BG Group announced in its third-quarter earnings call that it would halt, but not altogether cancel, its plans for the Prince Rupert terminal, citing oversupply coming from North America, particularly the U.S.

With these major energy companies pulling out and showing less interest in Canada by the day, British Columbia slashed its tax bracket proposal from the originally planned 7.5% down to 3.5% for fully developed projects. The tides have clearly turned from promising to less-than-favorable in British Columbia.

Stratas Advisors’ Global LNG Service anticipates that this trend towards skepticism in western Canada will continue and that much of North America’s capacity will come from the U.S., namely the Gulf Coast. Despite several dozen proposals slated for development by energy majors and entrepreneurial startups alike, Stratas foresees only a handful of terminals being able to secure gas supply, sales and purchase agreements, financing, and regulatory approvals before the window for North American LNG passes.

As skepticism toward LNG continues in western Canada, much of North America's capacity will come from the U.S., namely the Gulf Coast.

After all, LNG project developers are racing toward export capacity against the competition of Australia and East Africa. While demand for LNG in Asia continues to grow, particularly in China, there are a limited number of customers to compete for, especially when given the already established terminals in Qatar, Australia, and Malaysia that have been supplying East Asia for decades.

As more projects come online and there is a greater amount of global supply, the owners of these liquefaction terminals will need to be mindful of the effect on LNG prices. North American project developers face a critical next couple of years for their proposals—without significant movement, the moment could pass the continent by.

The Global LNG Service from Stratas Advisors, a Hart Energy company, contains key insights, analysis and forecasts for export and import terminals, the future of the carrier business, and other aspects of the LNG industry. For more information, see stratasadvisors.com.