Skip to main content

Hurricane Katrina and Natural Gas Supply

By Eric McErlain
Our friend Rod Adams takes note of how Hurricane Katrina is disrupting America's domestic natural gas supply at a particularly inopportune time:

This is supposed to be the beginning of the "storage" season when demand from air conditioning begins to fall and heating demand has not yet picked up. It is the time of year when the salt caverns that serve as storage facilities for methane are filled up so that there is adequate capacity to respond to those cold winter days. Because of the lowered demands in the electricity market, prices during this time of year are traditionally a bit lower, thus helping to keep the cost for gas in the winter lower than it would have been.

This cycle is being disrupted. Not only are prices high, but there is limited production and transportation available for the gas that would be stored. It might become a very cold and expensive winter for some people, a prospect that seems almost hard to contemplate right now.
All too true. Since 1992, America has built an abundance of natural gas-fired electric capacity, and that's put tremendous pressure on natural gas markets. The disruption of supply from Hurricane Katrina is sure to hurt this Winter.

Technorati tags: Hurricane Katrina

Comments

Kevin McCoy said…
Supply disruptions are always a problem, but Rod's comments remind me of one of the strengths of nuclear: There is a large inventory of fuel in the core. Most U.S. plants operate on 18-month refueling cycles, so a disruption in fuel supply, even for a month, will usually not cause the plant to go down.
September 2, 2005 at 12:22 PM
Post a Comment

Popular posts from this blog

Fluor Invests in NuScale

By
You know, it’s kind of sad that no one is willing to invest in nuclear energy anymore. Wait, what? NuScale Power celebrated the news of its company-saving $30 million investment from Fluor Corp. Thursday morning with a press conference in Washington, D.C. Fluor is a design, engineering and construction company involved with some 20 plants in the 70s and 80s, but it has not held interest in a nuclear energy company until now. Fluor, which has deep roots in the nuclear industry, is betting big on small-scale nuclear energy with its NuScale investment. "It's become a serious contender in the last decade or so," John Hopkins, [Fluor’s group president in charge of new ventures], said. And that brings us to NuScale, which had run into some dark days – maybe not as dark as, say, Solyndra, but dire enough : Earlier this year, the Securities Exchange Commission filed an action against NuScale's lead investor, The Michael Kenwood Group. The firm "misap...
1 comment
Read more

Wednesday Update

By
From NEI’s Japan micro-site: NRC, Industry Concur on Many Post-Fukushima Actions Industry/Regulatory/Political Issues • There is a “great deal of alignment” between the U.S. Nuclear Regulatory Commission and the industry on initial steps to take at America’s nuclear energy facilities in response to the nuclear accident in Japan, Charles Pardee, the chief operating officer of Exelon Generation Co., said at an agency briefing today. The briefing gave stakeholders an opportunity to discuss staff recommendations for near-term actions the agency may take at U.S. facilities. PowerPoint slides from the meeting are on the NRC website. • The International Atomic Energy Agency board has approved a plan that calls for inspectors to evaluate reactor safety at nuclear energy facilities every three years. Governments may opt out of having their country’s facilities inspected. Also approved were plans to maintain a rapid response team of experts ready to assist facility operators recoverin...
Post a Comment
Read more

Nuclear Utility Moves Up in Credit Ratings, Bank is "Comfortable with Nuclear Strategy"

By
Some positive signs that nuclear utilities can continue to receive positive ratings even while they finance new nuclear plants for the first time in decades: Wells Fargo upgrades SCANA to Outperform from Market Perform Wells analyst says, "YTD, SCG shares have underperformed the Regulated Electrics (total return +2% vs. +9%). Shares trade at 11.3X our 10E EPS, a modest discount to the peer group median of 11.8X. We view the valuation as attractive given a comparatively constructive regulatory environment and potential for above-average long-term EPS growth prospects ... Comfortable with Nuclear Strategy. SCG plans to participate in the development of two regulated nuclear units at a cost of $6.3B, raising legitimate concerns regarding financing and construction. We have carefully considered the risks and are comfortable with SCG’s strategy based on a highly constructive political & regulatory environment, manageable financing needs stretched out over 10 years, strong partners...
Post a Comment
Read more