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* Slow rate of N.America development mutes impact on Asian markets
* Only a few projects out of dozens likely to be built -analysts
* Emerging markets such as East Africa to give buyers more options
By Julie Gordon
SINGAPORE, Nov 3 (Reuters) - North American liquefied natural gas projects, once believed to be the panacea that would save Asia from paying top dollar for the super chilled fuel, are proving to be less of a gamechanger than originally expected.
High costs, gruelling regulatory processes and mounting social opposition have slowed the development of new capacity in Canada and the United States, tempering early hopes that a flood of cheap western gas would drive down prices.
A sudden rise in demand for LNG after the Fukushima nuclear disaster in March 2011 created a tight market for the commodity, pushing Asian prices to new highs and sending buyers scrambling to make deals with fledgling producers in North America.
Three years later, the majority of projected U.S. and Canadian volumes are still as much as a decade from first shipment, making it difficult for them to spare Asia from LNG prices that have been up to twice as expensive as natural gas in European markets this year.
"A few years ago, there was a kind of enthusiasm that U.S. LNG would solve everything, that is the 'Captain America' story," Ken Koyama, chief economist at Japan's Institute of Energy Economics, told Reuters on the sidelines of the Singapore International Energy Week conference.
"As we gain a better understanding of the U.S.'s possible role in LNG in Asia, we are still very much interested in it, but we are not so excited."
North America's first LNG export terminal, Cheniere Energy Inc's Sabine Pass, is currently under construction, with initial LNG cargoes expected by late 2015.
Shovels hit the ground this month on a second U.S. Gulf Coast terminal, Sempra Energy's Cameron LNG project, with two further projects approved by U.S. regulators for non-free trade exports, and numerous more under review.
In Canada, Malaysia's Petronas is expected to make a final investment decision on its Pacific NorthWest LNG project by mid-December and could potentially start building the U.S. neighbour's first ever LNG export terminal in 2015.
But last month state-owned Petronas threatened to delay that project by up to 15 years unless a favourable tax deal was reached, and this week BG Group pushed back an investment decision on its Canadian project by a year to 2017.
While the promise of North American LNG exports has had an effect on Asian markets, helping drive a shift to new hybrid price contracts and flexible delivery models, the slow rate of development has muted the overall impact.
"There's a lot of gas reserves in Canada and the U.S.," said Hoe-Wai Cheong, Executive Vice President at Black & Veatch Corp. "But if you look at the pace by which that's coming out and the amount of gas that will ultimately be exported, I don't believe it will have a significant impact on the global LNG pricing."
Demand for LNG is expected to increase by 40 percent through 2025 to roughly 350 million tonnes per annum, according to data from GDF Suez. Driving that growth are new markets in China, India and Southeast Asia.
At the same time, dozens of projects have been proposed for Canada and the United States, as energy companies look to tap into cheap North American gas to feed rising Asian demand.
But experts say the vast majority of those export terminals will never be built, with just a handful expected to proceed on either side of the border.
And while initial volumes from the Gulf Coast of the United States are expected next year, there are questions around how much will actually end up in Asian markets.
"It's probably a misconception that U.S. LNG is all going to Asia," said Nicholas Browne, an analyst with Wood Mackenzie. "If you look at the companies involved in certain projects, such as Corpus Christi, it's predominantly European utilities."
Cheniere has signed sales contracts with Asian buyers like Indonesia's Pertamina and South Korea's Kogas , but concerns remain on the ultimate cost of shipping that gas through the Panama Canal, especially as the spot prices for LNG deliveries into Asia have fluctuated in a broad range this year.
LNG spot prices dropped from a multi-year peak at $20.50/mmBtu in February to a post-Fukushima low at $10.60/mmBtu in August, as demand growth slowed and as a run-off in global oil benchmarks pulled energy values lower.
Canada, on the other hand, benefits from far shorter shipping distances to Asia, though the cost of building new pipeline and liquefaction infrastructure is high, making it hard to justify the initial investment if prices stay low.
Adding to that risk is a slow regulatory process, difficult negotiations with Aboriginal communities and new taxes. In some cases, sales margins are proving to be razor thin, putting the ultimate feasibility of projects at risk.
"If the fundamental economics do not work, these projects will not happen," Aaron Engen, Managing Director at BMO Capital Markets, told an industry audience at the conference.
Despite the challenges, Canada is attractive to integrated trading companies who want exposure to more of the value chain, said Nick Kouvaritakis, a lawyer with Herbert Smith Freehills.
By taking stakes in both upstream developments and export terminals, proponents can hedge themselves against fluctuations in the North American gas price.
"I think that's really the fundamental advantage of the Canadian projects," he said, adding that if risks are managed, there is potential for a significant upside.
With much of the new capacity in North America now expected to come online in the 2020s, that supply could prove to be attractive to emerging buyers like China and India, rather than traditional markets in Japan, South Korea and Taiwan.
Still, competition from other emerging regions like East Africa will be fierce - particularly from frontier fields in Mozambique - and North American projects could be hindered by political and regulatory constraints.
"Gas exports in U.S. are still in a grey zone. Not forbidden, but not encouraged," said Chen Wei Dong, Senior Economist with CNOOC Energy Economics Institute. "In Canada, there's a lot of waiting ... it's slow, no hurry like China." (Additional reporting by Jacob Gronholt-Pedersen and Florence Tan; Editing by Tom Hogue)