Skip to main content

Some Thoughts on the Wall Street Journal Story on Natural Gas and Nuclear Energy

Cheap gas? Not last week in the Northeast.
Yesterday evening, the Wall Street Journal published a story by Rebecca Smith that asked the question, "Can Gas Undo Nuclear Power?" It's a question that's been asked often, especially in the wake of the announced closing of the Kewaunee Power Station in Wisconsin by Dominion last October. Here's what NEI's Richard Myers had to say about it at the time:
In 2005, when Dominion bought the plant: (1) power prices in the Midwest were in the $40-50/MWhr range; wellhead gas prices were in the $6-10 per million Btu range; and U.S. electricity demand was growing.

Today: (1) power prices in the Midwest are in the $30/MWhr range: gas prices are in the $2-3 per million Btu range; and (3) the U.S. has had 5 years of no growth in electricity demand, thanks to the worst recession in 80 years.
Near the close of 2012, NEI's President and CEO, Marv Fertel addressed the natural gas issue head on when it came to building new nuclear energy facilities. The following exchange with Steve Dolley of Platts came during an NEI-sponsored press briefing that took place in December (page 12):
Steve Dolley, Platts: Thanks Marvin, thanks for taking the time today. If you’re not expecting any new plants to be built over the next five or ten years, what are the industries other priorities with the nuclear regulatory commission? I know obviously plant safety is the number one priority for the industry and for NRC, but specific things that you’re hoping to accomplish with the commission over the next year?

Marv Fertel: Well first of all, news flash, we are building four. And we’re finishing Watts Bar, so there’s five new plants both in the pipeline being build. And one of the reasons on new plants, I don’t see us completing any beyond those five in the next - the rest of this decade. [A]s a nation we have not gotten back to 2007 electricity demand rates yet. So our demand is still down. We’re still in this recession. If you go over to financial whatever, we’ve probably increased the recession duration for a while.

So we need demand to come back. And as you all know because of the shale gas game changer (type) situation, we’re seeing low gas prices and low electricity prices right now. So everybody is looking to gas.

I would expect late this decade like into 2020 after we finish Vogtle and Summer that you could see new plants get started in our country. They just won’t be completed this decade. I expect demand will go up and there’s no question the price for natural gas will go up. I don’t expect it’s going to go to $12 or $14, but it will go up. It’s not going to stay at $2 or $3, it’s not even in the futures right now it’s almost $4 next year.

So we’ll see gas go up.
The message here ought to be pretty clear: while natural gas prices are at historic lows today, that can't last forever, especially if, as projected, America begins to export shale gas to international markets. In addition, we're already seeing evidence that industries that rely on natural gas as a feedstock that fled the U.S. during periods of high prices are now returning, driving additional new demand.

Finally, we need to remember that even in times of plenty, the price of natural gas can be awfully volatile. Just a few days ago during a cold snap in the Northeast, day ahead spot prices for natural gas reached $34.25 per MMBtu in New England and $36.00 in New York City.

Comments

Popular posts from this blog

How Nanomaterials Can Make Nuclear Reactors Safer and More Efficient

The following is a guest post from Matt Wald, senior communications advisor at NEI. Follow Matt on Twitter at @MattLWald.

From the batteries in our cell phones to the clothes on our backs, "nanomaterials" that are designed molecule by molecule are working their way into our economy and our lives. Now there’s some promising work on new materials for nuclear reactors.

Reactors are a tough environment. The sub atomic particles that sustain the chain reaction, neutrons, are great for splitting additional uranium atoms, but not all of them hit a uranium atom; some of them end up in various metal components of the reactor. The metal is usually a crystalline structure, meaning it is as orderly as a ladder or a sheet of graph paper, but the neutrons rearrange the atoms, leaving some infinitesimal voids in the structure and some areas of extra density. The components literally grow, getting longer and thicker. The phenomenon is well understood and designers compensate for it with a …

Missing the Point about Pennsylvania’s Nuclear Plants

A group that includes oil and gas companies in Pennsylvania released a study on Monday that argues that twenty years ago, planners underestimated the value of nuclear plants in the electricity market. According to the group, that means the state should now let the plants close.

Huh?

The question confronting the state now isn’t what the companies that owned the reactors at the time of de-regulation got or didn’t get. It’s not a question of whether they were profitable in the '80s, '90s and '00s. It’s about now. Business works by looking at the present and making projections about the future.

Is losing the nuclear plants what’s best for the state going forward?

Pennsylvania needs clean air. It needs jobs. And it needs protection against over-reliance on a single fuel source.


What the reactors need is recognition of all the value they provide. The electricity market is depressed, and if electricity is treated as a simple commodity, with no regard for its benefit to clean air o…

Why Nuclear Plant Closures Are a Crisis for Small Town USA

Nuclear plants occupy an unusual spot in the towns where they operate: integral but so much in the background that they may seem almost invisible. But when they close, it can be like the earth shifting underfoot.

Lohud.com, the Gannett newspaper that covers the Lower Hudson Valley in New York, took a look around at the experience of towns where reactors have closed, because the Indian Point reactors in Buchanan are scheduled to be shut down under an agreement with Gov. Mario Cuomo.


From sea to shining sea, it was dismal. It wasn’t just the plant employees who were hurt. The losses of hundreds of jobs, tens of millions of dollars in payrolls and millions in property taxes depressed whole towns and surrounding areas. For example:

Vernon, Vermont, home to Vermont Yankee for more than 40 years, had to cut its municipal budget in half. The town closed its police department and let the county take over; the youth sports teams lost their volunteer coaches, and Vernon Elementary School lost th…