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After the Japanese Disaster, A Reappraisal of Nuclear and the LNG Option

by | published March 14th, 2011

After the triple blow of a massive earthquake, aftershocks, and a tsunami, much of the infrastructure in northeast Japan is reeling, and the energy sector is descending into a significant crisis.

Already, a casualty has emerged: The resurgence of nuclear power as an alternative energy source worldwide has taken a direct hit.

Japan has now introduced electricity rationing, as more and more nuclear-generated power comes off-line.

As of Sunday morning, four of the six nuclear power plants in the district suffered damage from the natural disasters, while technicians lost the ability to cool six nuclear reactors at two of those plants.

Three of those units are at the Tokyo Electric Power Co. (Tepco, TYO:9501) Fukishima Dai-ichi power complex, where a hydrogen explosion occurred Saturday at Unit 1 and a separate explosion was feared likely at Unit 3.

Such explosions are in the outer building – not in the one surrounding the reactor core itself. The Japanese facilities have two complete structures separating the core from the outside world, unlike the 1986 Chernobyl disaster (where the plant had only a single encasement).

Nonetheless, the overriding concern in Japan is to prevent a meltdown at each facility.

If a full meltdown occurs, a huge, molten, radioactive mass would burn through both containments and all supporting structures, destroy the buildings, and release a mixture of highly radioactive particles to be spread by wind and rain.

How bad the aftermath would be depends on two things – how much radiation is released and the weather.

At least through Wednesday (March 16), the wind is blowing out to sea, rather than inland, toward population centers. That’s good.

However, reports yesterday about the detection of highly radioactive cesium-137 and iodine-131 outside the Dai-ichi complex means a small amount of dangerous radioactivity has escaped. Experts believe that the radiation problem is thus far localized and minor. Nonetheless, upwards of 200,000 people have been evacuated from the area surrounding the Dai-ichi complex.

To prevent the meltdowns – the worst scenario reminiscent of the cinematic treatment in “The China Syndrome” (1979) – operators have been pumping in seawater in a last-ditch effort to cool down the reactor core. Absent another significant tremor de-stabilizing the plants even further, most specialists believe this will be successful.

But there will be some major costs.

For one thing, seawater corrodes the reactors, making them unusable. There will be significant downtime for other reactors, as detailed technical examinations take place, to say nothing of the massive cleanup required at a number of plants.

The largest damage, however, is to the credibility of nuclear power in general.

Nuclear Expansion Plans Are Likely to Be Delayed

This calamity is not about inadequate company oversight or technical deficiencies.

This is all about how Mother Nature can undermine even the best-laid plans of mere mortals.

As the larger Asian region begins to ascertain the damage done to the nuclear-as-remedy approach, major nuclear expansion plans in China, India, throughout East Asia, and in Australia are likely to be delayed. The same goes for the two new reactors under construction in Japan and the 12 more currently in the planning stage.

The real impact, however, is likely to be felt well beyond Asia.

According to London’s World Nuclear Association, there are at present 442 reactors worldwide providing around 15% of global electricity. Plans are already announced to build more than 155 additional reactors, most of them in Asia, with 65 reactors currently under construction.

Back at the epicenter of the present disaster, the impact upon Japanese electricity volume is already wreaking havoc on factories attempting to jumpstart production.

In trading today throughout Asia, shares were tumbling on concerns that major companies would be unable to return to any normal level of production anytime soon.

The Tokyo Stock Exchange also suspended any trading in Tepco. The company is facing an avalanche of sell orders that would greatly exceed the exchange’s 24% limit in the decline of share price.

Yet, despite the current sourcing problems, energy needs will certainly not abate.

LNG Is the Immediate Alternative

Prior to the earthquake, 54 nuclear reactors at 17 plants nationwide produced more than 30% of Japan’s power. Japan has already requested additional electricity from Russia, but the rolling blackouts introduced today will continue throughout the country.

The immediate alternative source of power will be an accelerated usage of liquefied natural gas (LNG). Japan had traditionally been one of the two primary users of LNG (the other being South Korea).

More recently, LNG has been increasing in transport volume throughout the world, even establishing a northern European spot market to challenge long-term conventional pipeline prices from Russia and prompting Canada to revise the terminal under construction at Kitimat on the British Columbia coast to move LNG to Asia.

In the U.S., a similar move to turn excess shale gas into LNG for export is also afoot (see “A Solution for North America’s Natural Gas Surplus,” November 2, 2010).

Closer to Japan, the Gorgon and other northwestern Australian projects, along with those in Papua New Guinea and on Sakhalin Island off of the Pacific coast of Russia, are gearing up a rising volume of LNG for export.

Much of that increase is bound for China, where five receiving terminals are right now at various stages of completion, and three additional ones are in planning. Still, there is more volume that can be brought to market, and Japanese utilities have been actively locking in additional LNG consignments governed by multi-year contract agreements.

Japanese energy needs are tailor-made for a transition to LNG as a rising fuel source for power generation. The country had already embarked on a robust project to expand existing LNG terminals and build new ones well before the earthquake occurred.

These are not coming on-line in short order…

But neither are the problems with the Japanese nuclear network going away anytime soon.

Sincerely,

Kent

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  1. Carol Ferguson
    March 14th, 2011 at 13:08 | #1

    Kent how will the japanese issues affect oil going forward?

  2. Frank OConnor
    March 14th, 2011 at 13:30 | #2

    Who is likely to be the frontrunner in providing LNG to Japan,

  3. Bullet
    March 14th, 2011 at 13:50 | #3

    Seems like just another reason in a long list to exploit NG in any form. The writing is truly on the wall.

  4. jack gordon
    March 14th, 2011 at 14:05 | #4

    one hopes that the jap LNG terminals will be earthquake proof and tsunami proof (is there such a thing?).
    > jack

  5. Jim D
    March 14th, 2011 at 14:30 | #5

    Kent, is the micro nuclear technology employed by Toshiba (TOSBF)subject to the same risks as the large scale plants in Japan?

  6. PHIL BEUTH
    March 14th, 2011 at 14:42 | #6

    COMPANIES PAYING 25 TIMES!!! . ETC WHERE ARE THE GAME CHANGING ENERGY OPPORTUNITIES PROMISED ?

  7. fallingman
    March 14th, 2011 at 15:08 | #7

    Good thing LNG’s perfectly safe. You wouldn’t want an enormous explosion and fireball just off your coast or anything.

  8. K.S.
    March 14th, 2011 at 15:14 | #8

    Seems like a good time to buy Nuke stocks to me. Nothing is going to slow China down on building their nukes. Current mining output does not cover existing demand for those plants already up and running to say nothing of the ones slated to come on line in the next 3 years. I have no doubt it will put the breaks on things in the US. 30 years after 3-mile island we still haven’t built a nuke plant. Meanwhile we import more oil of unstable parts of the globe and make plans to ship out LNG which we have in abundance here. Will we ever use LNG to power our cars?

  9. Chad Hatt
    March 14th, 2011 at 16:49 | #9

    Mar 14, 11
    Why aren’t the micro-nukes or ‘nuke-batteries’ being sought out?? they are safe and last 30 years!? There are several companies producing them. Seems that would be an ideal solution for Japan and other locations around the world. Are they a good investment option??

  10. BT
    March 14th, 2011 at 17:54 | #10

    “Already, a casualty has emerged: The resurgence of nuclear power as an alternative energy source worldwide has taken a direct hit.”
    Actually, over 3,000 casualties have emerged, but they don’t concern your bank account so I guess you’re not interested.

  11. john filmer
    March 14th, 2011 at 18:36 | #11

    Current and predicted electricity demand is unlikely to be satisfied without the help of nuke generating plants. When the gas and coal supplies have been exhausted wind, tidal and nuke remain.Just when you need extra heating for a cold spell the weather system usually results in a calm windless day. Tidal sites will be forever trying to keep place with dreging to remove buildups of silt. Only Nuke properly engineered with well trained staff and safety procedures has to be implimented. The siting and nearby storage of adequate water for cooling must also be intelligently thought thru.
    Kent! Are the pebble reactors capable of vitually instant shutdown?

  12. butch t
    March 14th, 2011 at 19:40 | #12

    kent i love reading your articles , iam in the oil business up in springfield ma .for the last year ive been following your stories on the future markets, any way i did great, thanks , again i think your right , i predict 115.00 a barrel by sept 2011 keep it up kent you are the best butch

  13. Jim West
    March 14th, 2011 at 19:57 | #13

    Today’s nuclear power plants are simply scaled up Navy Reactors with fuel rods. I strongly support Nuclear Power, but I strongly support using different reactor designs that are inherently safe, such as the pebble bed reactor, or the molten salt reactor. The pebble bed reactor is made up of spheres of enriched uranium encapsulated in a graphite shell. The pebble bed reactor is cooled with inert gases. If the pebble bed reactor loses power, nature’s doppler broadening shuts down the reactor. A pebble bed reactor is inherently safe.
    In a molten salt reactor, uranium salt is in a molten state. It is very different kind of reactor, that should be considered. We need to look at other designs. The biggest problem with nuclear power today is the lack of creativity being used to look at other safer reactor designs.

  14. Jonathan
    March 14th, 2011 at 21:32 | #14

    I enjoy reading your tips on the opportunities presented world wide and wish I had the idea of how to go about investing in such companies. Would appreciate if you could give an outline of how I can go about investing.

    PNG

  15. Jonathan
    March 14th, 2011 at 21:40 | #15

    Massive discoveries of LNG worth billions of Dollars have been made in Papua New guinea. Shipment of first productions is expected by 2014 by Exxon Mobil-does that mean Japan’s disaster will have an impact on PNG Exxon Mobil’s shares? Japan will be a major importer for the PNG LNG as agreed.

    PNG

  16. Craig Hodkins
    March 14th, 2011 at 23:58 | #16

    Kent – Your current outlook on PowerSecure ?

  17. Burl
    March 15th, 2011 at 00:15 | #17

    K.S. makes a good point and one that I have been thinking about for quite a while. We should not be planning to export our natural gas, but should be converting all of our vehicles to run on natural gas. By doing so, we probably would not need to import any oil whatsoever. Converting more of our power generation to natural gas should be considered as well, particularly since many of our omniscient political leaders want to bring nuclear power generation to a screeching halt.

  18. Ellen Schug
    March 21st, 2011 at 23:00 | #18

    Thanks for a good article! Interesting there was not one mention (in the comments) of nuclear waste storage and those problems that are a part of every nuclear project. Washington State (where I live) is still paying fines for long term leaking storage tanks at Hanford and clean-up efforts that haven’t kept it out of the Columbia River. Puget Sound Energy learned that conservation can also make a significant contribution to reducing energy needs.

  19. Gicu Constantin
    April 28th, 2011 at 12:57 | #19

    @Frank OConnor

    I think The Russia can be!

  20. Sumflow
    May 13th, 2011 at 19:54 | #20

    Burl :
    Should be converting .. vehicles to run on natural gas. .

    .
    Using natural gas for transportation might upset the big boys making tons of money off of ethanol. If we go to natural gas instead of using corn, the price of food might come down.

  21. Malcolm Rawlingson
    June 2nd, 2011 at 17:09 | #21

    Fukushima will make very little difference to nuclear power in the long term. France is not going to change its nuclear infrastructure, Britain has already said full steam ahead for its new nuclear plants, Ruissia has not changed its plans, China has not changed its plans or deferred a single nuclear project, Finland is going ahead with its nuclear infrastructure as is India. United Arab Emirates are still going ahead with their 4 new units – and they have access to lots of natural gas. The reality is that the world needs both LNG and Nuclear to meet burgeoning energy demands of billions of people. The USA does not have the gas infrastructure to replace 102 operating nuclear plants. So Uranium stocks take a hammering, Uranium demand exceeds mine supply by 25%, the shortfall is made up by the conversion of warheads to reactor fuel program which ends in 2013. Sounds like the perfect storm to me. I’d be putting my dollars in Cameco and Uranium Participation Corporation both off about 30% which makes them bargains.

    Don’t listen to the noise – buy Uranium stocks while they are still cheap. In 2012-2013 you’ll treble your money.

  22. October 7th, 2011 at 15:03 | #22

    It would seem that the truth can’t catch up with the media handling the Japanese disaster. As a scientist at what is now the Lawrence Livermore National Laboratory, I was asked to find a way to handle the zenon poisoning problem that is automatic when a reactor is shut down. There is no way. I takes about 2 weeks for that element to decay enough so that the emitted neutrons will result in a sufficient reaction in the uranium. I assume that, with the reactors in Japan providing about 10% of that countries electricity, there was great reluctance to shut the reactors down. A gamble was made and they lost.

    But, there is another truth. There is a company, Materion, that was started by scientists from the Manhattan project. Sixty years later, their descendants have generated a kind of metalergical (phonetic spelling) breakthrough invoving beryllium and the allows that it can be used to generate.

    One alloy results in dramatic heat flow. It has been formed into a sort of backbone or network that is the structure around which the uranium is placed. The alloy has sufficient area exposed to the coolant so that it conducts heat away from the core. It works most well. If there were no coolant, the meltdown could occur. But, the advanced technology makes a meltdown a much more abnormal situation. I have thought that, for many reasons, reactors should be placed off shore along the coasts where there is a sufficient, shallow bottom. The coolant would be there.

    This new uranium rod is on the market and is selling well. The TVA had stock piled a reactor being constructed (at least a decade ago). With this new rod, they have decided to complete it instruction.

    I have wondered why the media does not address this success, I have concluded that the greedy that make the paychecks for the media don’t want Americans to know that, for the U.S., there is no energy crisis. There is but the restraint from developing the energy that is available. Three Mile Island was the result of lousy engineering – their failure to use humans as backups for a computerized control system. I was at the lab when that event occurred. The physicists there (including Teller) were dumbfounded that while our local refineries were computer controlled, the reactor at Three Mile Island was not. In fact, the same can be said if the Japanese failure.

    Why aren’t American citizens provided the hope for such things. I am dumbfounded by the silence about the estimated 400,000,000,000 barrels of crude available in the Monterey Shale that runs up the state from north of LA to Sacramento and then out to sea. Shell and Oxy are most active here. They have too many employees involved to keep their finds a secret. They leaked it all to the local newspaper. It never even made to the local TV stations. Shell and Mobile are building a $200,000,000.00 hydrater (a huge well and purification processes) to supply the water for fracking the shale locally and well to the north. Even Monterey County has approved the use of fracking there. Incredible amounts of income will go to the land owners. But, the media remains silent about shale oil and its riches.

    I came across a number of wells in the Bakken that are producing 3,000 barrels a day of sweet crude. Of course, there are others that only produce 300 barrels daily.

    Sincerely,

    John W. Hardy
    84 yoa

  23. james harling
    February 13th, 2012 at 16:15 | #23

    One word,Thorium.

  24. Gordon Griesemer
    February 29th, 2012 at 18:35 | #24

    I am amazed that there still are strong advocates for the use of nuclear power. Given the nuclear disasters that occurred in the Soviet Union and Japan and the near-disasters that almost occurred at 3-Mile Island and at the Fermi plant on Lake Erie (one of two plants now entombed), I wonder what it will take to stop the expansion and eventually eliminate the use of nuclear power to supply energy.
    In addition, there is the ever present threat of severe consequences posed by the likelihood of leakage from storage of nuclear waste stored in concrete casks on the shores of our Great Lakes and by the same and other means, elsewhere. There also have been lesser accidents that have resulted in the release of radioactive material into the environment, such as the release of radioaactive water into Lake Erie that occurred at least once in the past 20 years.

    When the risk of a nuclear accident is so real and the potential of severe consequences so great, it is insanity to contine the use of the nuclear option, especially when there are alternative solutions for providing the energy needed.

    Greed, the seeking of financial gain regardless of the risks, and the overzealousness and blind ambition by a few to prove that disasters can be avoided, are the main drivers for continuing and expanding the use of nuclear power for peaceful means. It is time to put a stop to it! Besides there is not enough uranium being mined and found to meet the requirements of existing nuclear facilities. Why then make huge expenditures to build more nuclear plants when there will not be enough fuel to make them run? I was only eight years old when they exploded the first nuclear bomb. I knew then they had let the Evil Geni out of the bottle. It is time to put him back where he belongs.

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