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Politics : Peak Oil reality or Myth, of an out of Control System

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From: dvdw©	10/23/2014 7:30:30 AM
	of 1580

Japan / LNG...a subject of interest for some time... RBN from Bruce's blog has this; RBN Energy: how coincidental. Just after the long post on LNG last night, RBN Energy has a post on Japan's long, expensive marriage to LNG: The increased use of fossil fuels for power generation post-Fukushima resulted in a huge uptick in LNG imports (more than 95% of Japan’s gas comes from LNG). According to the Japanese government, in 2010 the LNG equivalent of about 9 Bcf/d of natural gas was imported (with electric utilities accounting for more than 5 Bcf/d of the total). By 2013, LNG imports had soared to the equivalent of 11.5 Bcf/d (with utilities accounting for an even greater share—7.4 Bcf/d—in part because of new gas-fired plants coming online), and in the first eight months of 2014, LNG imports averaged 11.8 Bcf/d. Japan has a stellar LNG import/regasification infrastructure (30 terminals with a total gas send-out capacity of 23 Bcf/d) and can handle the flood of LNG—that wasn’t and isn’t the issue. The problems for Japan are that 1) the fossil-fired units it now depends on for almost all its power (wind, solar and other renewables provide only a sliver) can barely meet demand on days or nights with high power demand, and 2) oil and gas (particularly when it’s supplied as LNG, as it needs to be in Japan) are way more expensive than nuclear fuel (uranium). Japan has been smart over time in diversifying its LNG sourcing—a US Energy Information Administration pie chart (at the link) shows just how diversified its supply is, and now it’s planning on buying LNG from the US and Canada too. As we noted earlier, the problem (or at least one of the problems) for Japan is that LNG has become very pricey, not only because of all the spot-market, premium-price buying Japan utilities have had to do the past three years, but because prices for the vast majority of the LNG the utilities buy under long-term contract continue to be based on a historical oil priced index formula and not on something more favorable—say, Henry Hub gas prices. rbnenergy.com

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