Demand for liquefied natural gas, or LNG as it's commonly known, is surging around the world. But with many megaprojects, such as Royal Dutch Shell's (RDS.B) jointly owned Gorgon LNG project, not scheduled to come online until at least 2015, prices are rising -- good news for Golar LNG (GLNG 1.94%) and Teekay LNG Partners (TGP).

In particular, rapidly rising demand for LNG paired with constricted supplies is already having an effect on the market, and prices are surging. LNG prices hit a record high at the beginning of February as Asian demand rises and importers struggle to meet demand.

Extra supply is costly
Royal Dutch Shell is certainly aware of the rising price of LNG and the profit potential. The company owns a 25% share in the Gorgon LNG project, which is majority-owned by Chevron (CVX 1.54%). Unfortunately, the cost of getting Gorgon into production has spiraled out of control, from an initial estimate of $37 billion, projected back in September 2009, to a current figure of $52 billion. This extra $15 billion is not small change, even for Chevron and Shell.

These high costs, according to some, are due to the high cost of labor within Australia along with a strong Aussie dollar. Poor rates of productivity have also seen the first expected date of export from the site pushed back to the first quarter of 2015 instead of late 2014.

Nonetheless, with demand for LNG set to rocket, major integrated oil and gas companies would be silly to let this opportunity pass them by. So, Shell is being creative and going offshore.

Innovating to drive profits
Shell is constructing the world's first floating liquefied natural gas facility, Prelude FLNG, off Australia's northwest coast. The scale of this project is, in a word, huge: The Prelude vessel is almost 1,640 feet long and 246 feet wide, making the vessel one of the largest ships ever constructed. Once moored at its site, Prelude is expected to operate for 25 years, producing almost 3.6 million tonnes of LNG each year. To put this production into some perspective, Prelude's output is enough to meet Hong Kong's annual natural gas demand. Prelude is the first of many FLNG vessels and should allow Shell to participate in the LNG boom while cancelling, or scaling back, some of its expensive onshore LNG projects .

According to analysts at Deutsche Bank, a conventional onshore LNG plant would cost around $3.6 billion to build for every million tonnes of output per year. In comparison, a floating project would only cost $2.9 billion to construct for a similar output.

Transport
With demand rising faster than supply, it is likely that buyers will want their cargoes delivered quickly and before those of their peers. To some extent this is already occurring as buyers in Asia started stocking up on the super-cooler natural gas for winter supply as early as October last year; usually deals would be signed closer to December. This is good news for Golar and Teekay as their transportation services are in demand.

Teekay reported rapid growth during the fourth quarter with distributable cash flow expanding 18% year on year. The company benefited from the acquisition and fixed charter-back of two LNG carriers with Awilco LNG in late 2013, as well as the partnerships investment in European company, Exmar LPG. Teekay has acquired a 50% share of Exmar.

What's more, it would appear as if Teekay's growth is set to continue as the company has five new LNG vessels for delivery during 2016 and 2017. With the rising demand for LNG around the world, coupled with the start-up of major LNG projects in the next few years, there should be a strong demand for these vessels, implying that Teekay should notch an impressive growth over the next few years.

Meanwhile, Golar, which also reported a set of strong fourth-quarter results, is planning its own FLNG vessel, which it expects to have a decision on during the second quarter of 2014. Still, due to the size of the project and costs, Golar is seeking a strategic partner on the deal, increasing the risk that the project will fall by the wayside. But Golar's management believes the company's existing fleet of ten modern LNG transportation vessels combined with the FLNG facility will be an attractive package for customers and partners.

Foolish summary
So, with the demand for LNG rising faster than supply it would appear that the best way to play the market is through transport. Both Golar and Teekay have reported a surge in demand for their services, and this trend is likely to continue as customers demand more and more gas to meet their power needs.