Japan’s disaster could lead to long term increase in US natural gas demand

28-Mar-11

The ongoing nuclear power disaster in Japan’s tsunami-devastated north could in the long term increase US natural gas demand, creating feedstock issues for US petrochemical producers, as per ICIS. Jim Cooper, vice president for petrochemicals at the National Petrochemical & Refiners Association (NPRA), said that the unfolding crisis at the Fukushima Daiichi nuclear power complex could chill recently improving support for a new US nuclear power expansion program. There is a chance that this could push more US utilities to natural gas rather than a nuclear option, and that is a concern”. US petrochemical producers and downstream chemical makers are heavily dependent on natural gas as a feedstock. Also abroad range of chemical companies in US also depends largely on natgas as energy fuel. Anything that increases demand on domestic US natural gas could in turn raise availability and pricing issues for companies that use natgas as a feedstock. There are various measures pending in the US Congress that would mandate broader use of natural gas to generate electricity, and others that would require high volume transportation operators - such as municipal bus services and private companies with multiple service vehicles - to switch from gasoline to natural gas to fuel their fleets. At the same time, US energy and chemical sector officials have been critical of Obama’s administration for what they say is an agenda to limit domestic US production of oil and natural gas in favour of renewables such as bio-ethanol, solar and wind power. The White House also supports expanded use of nuclear power and has pledged loan guarantees and other financial support to help rekindle US development of new nuclear power plants. However, in the aftermath of the 1979 Three Mile Island nuclear power plant accident at Harrisburg, Pennsylvania, nuclear power has been in broad disfavour, and no US nuclear utility has been built since. In addition, according to polling by CBS News, US popular support for nuclear power fell to 43% in the wake of the Fukushima crisis - a level lower than that seen shortly after the Three Mile Island accident more than 30 years ago.