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To: Jacob Snyder who wrote (147875)	3/21/2011 1:30:33 PM
From: Jacob Snyder	Respond to of 206330

Nuclear Slowdown Could Aid Push Into New Gas Frontiers A slowdown in the expansion of new nuclear power plants across the world following the crisis in Japan could assist the push of natural gas developments across new frontiers, according to industry analysts. Companies eyeing commercially uncertain green field liquefied natural gas projects in Russia, Australia and Africa may find it easier to move forward if the slower nuclear expansion that analysts expect following the Japanese crisis leads to natural gas-fired plants making up a bigger portion of the global electricity mix. "The Japanese tragedy could lead to a setback for the world's nuclear renaissance, leaving gas as the fuel of no choice in OECD countries where voters might decide against the nuclear option," said Societe Generale analyst Thierry Bros. By 2020 global gas markets, excluding North America, which should remain largely self-sufficient, could need an extra 100 billion cubic meters of supply a year because of the shift away from nuclear in the wake of the Japan crisis, Bros said. This is roughly equivalent to the current gas consumption of France and Germany combined. Given that the fastest growing economies in Asia have little access to pipeline gas, much of this extra supply would have to come from LNG. However, many of the established LNG suppliers today--Qatar, Indonesia, Nigeria, Egypt--have limited scope for expanding output, so this extra demand could support investment in untapped areas. There are three regions in particular that have the potential to significantly expand their LNG production in the next five to ten years--Australia, East Africa and the Arctic. Of these, Australia is probably the least affected as it was already an established LNG exporter that was garnering significant investment. However, there is also a bevy of projects that do not yet have the green light whose prospects would be improved if Asian gas demand were to increase more rapidly. "Certainly [LNG] projects such as Icthys, Wheatstone and Prelude will move forward," in Australia if gas demand increases, said Beveridge. "It also gives more impetus to projects such as Browse and Australia-Pacific LNG, which we had previously considered to be more marginal." The Prelude project in particular could have important ramifications, as it would be the first test of Royal Dutch Shell PLC's (RDSB.LN) new floating LNG production technology. Shell hopes that proof of this concept will allow many more current uneconomic gas discoveries in remote locations to be developed. It will decide later this year whether to proceed with Prelude. East Africa is however far behind Australia in terms of development. Anadarko Petroleum Corp. (APC) and BG Group PLC (BG.LN) have made several significant gas discoveries offshore Mozambique and Tanzania this year. While the area nicely located to feed Indian gas markets, the lack of infrastructure means development could be long and costly. Anadarko said last month it had started conceptual work on an LNG production facility in Mozambique. BG Group has yet to say whether it has found enough gas to justify an LNG development. "East Africa is a hot topic at the moment, but still has a long way to go," said ING analyst Jason Kenney. Commercializing discoveries there will require a lot of work on the fiscal regimes and infrastructure in Mozambique and Tanzania, but their prospects would clearly benefit if Asian buyers are on the hunt for more long-term supply, he said. However, Russia's Shtokman project could perhaps gain most from a big increase in long-term LNG demand. This huge gas field in Russia's harsh Arctic environment was discovered in the 1980s, but several attempts to develop it have come to nothing. The latest Shtokman incarnation was originally slated to start up in 2016, but that has been delayed until at least 2018 as the partners, OAO Gazprom (GAZP.RS), Statoil ASA (STO) and Total SA (TOT), have debated whether there is sufficient gas demand to justify the investment after the boom in shale gas production in the U.S. largely eliminated the project's target market. Shtokman remains the riskiest bet of the three. However, the ramifications of events in Japan, "should push Gazprom and Statoil, the main gas providers in Europe, to fast track some of their new projects in an attempt to meet this new gas demand," said Bros. online.wsj.com