Japan quake and nuke power crisis could hit US natgas

14 March 2011 22:07  [Source: ICIS news]

WASHINGTON (ICIS)--The earthquake and tsunami catastrophe in Japan and its related nuclear power plant crisis could put greater demand on natural gas in the US energy mix, a top energy and environmental authority said on Monday.

Michael Levi, senior fellow on energy and environment at the US Council on Foreign Relations (CFR), said that a consequence of the threatening melt-down at the Fukushima Dai-ichi nuclear plant in quake-ravaged northern Japan could chill prospects for a nuclear power renaissance in the US.

If the already struggling US nuclear energy sector were to lose still more ground because of fears of quake-related threats to existing and hoped-for US nuclear power plants, that could put more pressure on natural gas as a more climate-friendly power fuel, Levi indicated.

The availability and cost of domestic natural gas are of critical concern for US petrochemical producers and downstream chemical makers because they are heavily dependent on natgas as a feedstock and/or power fuel.

In addition, as chemical plants are high consumers of electric power, increasing costs for power-generating fuels such as natural gas would further raise their costs of doing business.

“One potential shift in terms of nuclear power prospects could be in the group of US environmentalists who would have compromised on accepting a broader role for nuclear power as part of a broader agreement on climate change policies,” Levi said.

“This [the Japanese nuclear disaster] will make them a lot less comfortable” with that sort of compromise, he said.

The Japanese catastrophe and its nuclear power implications, he said, also could raise new regulatory uncertainty about nuclear energy in the US and trigger still more public opposition to it.

Levi noted that one of the reasons that the US nuclear power industry was in trouble was the new abundance of continuing low-cost of domestic natural gas supplies due to shale gas plays.

“This was already making things tough for nuclear power in the US,” he said.

“So if you add anything on top of that,’ he said, meaning the Japan quake and nuclear power plant scare, “the burden on natural gas in the US energy mix becomes more intense, especially if you want to use gas to help manage climate effects.”

He also cited the growing uncertainty about US regulation of natural gas drilling. 

In the last year or so, federal and state regulators and environmental groups have been raising concerns about the impact of hydraulic fracturing - a drilling technique key to shale gas development - on drinking water supplies.

While even the US Environmental Protection Agency (EPA) has previously found no link between “fracking” and drinking water supplies, growing environmental worries and local opposition could reduce shale gas development just as nuke fears would be putting more demand on domestic US gas supplies.

EPA has begun a new, two-year study on the environmental effects of fracking.

Levi said he was certain that the Japan crisis would result in more calls in the US for denial of renewal permits for existing nuclear power plants and new nuke plant project permits, especially those that are near earthquake fault lines in the US West and Midwest.

But he said that the full impact of the Japan nuclear power plant failure would greatly depend on how the nuke crisis in that devastated region of Japan finally is resolved.

The Council on Foreign Relations is a 90-year-old, nonpartisan think-tank and publisher.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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