Part of the reason is the expense in building the vessels. An LNG ship cost about $210 million in March, compared with $99 million for a supertanker and $57 million for a capesize, according to the UN. Gas carriers need equipment to hold about 155,000 cubic meters of liquid that expands to 95 million cubic meters in gas form, equal to about 25 percent of peak daily winter demand in the U.K., Europe's biggest gas market.

LNG tankers are often the only option to connect producers and consumers. All pipeline projects into Europe combined wouldn't be enough to meet anticipated demand, according to Clarkson. Qatar, the biggest LNG supplier, is about 5,000 miles away from Japan, the largest consumer.
"By 2020, we will need another 100 ships and by 2035 the fleet has to double," said David Glendinning, president of Teekay Gas Services, a unit of Hamilton, Bermuda-based Teekay Corp. that provides LNG transport for energy companies and utilities.

And

Global LNG demand will increase to the equivalent of 31.1 billion cubic feet a day in 2011, according to Barclays Capital.
China, the world's biggest energy consumer, bought 87 percent more LNG in 2010, customs data show. While Asia led growth in demand last year, it will be Latin America and the Middle East this year, Barclays estimates.

Natural gas will account for 25 percent of global energy supply by 2030, rising from about 20 percent, Irving, Texas- based Exxon said last month in its Outlook for Energy: A View to 2030 report, used to guide the company's investment decisions.

"Global demand for natural gas as a clean fuel will keep increasing," said Oyvind Hagen, an analyst at Oslo-based ABG Sundal Collier Holding ASA. "You have a much better market outlook in LNG than crude tankers because you still have oversupply in crude tankers."

Eoin Treacy's view Natural gas remains a game changer for the energy industry. Shale gas has so far been exploited only in North America. It is logical that it will also be accessed in Europe, Asia and elsewhere. Therefore, there is unlikely to be a supply shortage for the foreseeable future.

To date, natural gas has been a highly localised market. This is because most gas is transported by pipeline and a good deal of the global market is fixed on long-term contracts. The increased supply of unconventional gas in North America has helped to depress US prices. On the other hand, the UK contract is performing more in line with other energy commodities.

A number of European utilities are pushing for a change in how natural gas prices are set and favour allowing prices to float independently of oil. LNG is a growing business and will help to make natural gas a global market. This additional article from Bloomberg on the European gas market may also be of interest.

Natural gas is abundant and significant new sources of demand will need to emerge to put a dent in the quantity of this commodity that could potentially hit the market over the coming decades. This means that the companies most likely to benefit from the natural gas revolution are those leveraged to either cheap gas as an input cost, such as fertiliser and chemical companies, or companies that benefit from transporting gas.

I last reviewed chemical companies in Comment of the Day on February 10th. Here are some relevant tanker and pipeline shares:

Teekay LNG Partners LP has a solid record of increasing it dividends and despite an impressive advance still yields a competitive 6.56%. The share has sustained a progression of higher major reaction lows since late 2008 and a sustained move below $35 would be required to question medium-term upside potential.

Natural gas pipelines such as Enterprise Products Partners, Targa Resources Partners and Williams Partners have comparatively similar patterns and yields. Atlas Pipeline serves the Anadarko and Permian basins and yields 5%. It remains in a medium-term uptrend and a sustained move below $25 would be required to question the consistency of the advance.

Golar is a relatively newly listed Norwegian LNG tanker company. It does not pay a dividend but has rallied impressively over the last year. The share remains in a step sequence medium-term uptrend and a sustained move below $17 would be required to question the consistency of the advance.

Exmar is also an LNG tanker company. It cut its dividend aggressively during the financial crisis and the share price collapsed. However, it has increased its dividend over the last year, yields 6.9% and is currently rallying from the lower side of its base. A sustained move below €5.50 would be required to question medium-term scope for continued higher to lateral ranging.