Natural Gas Demand Increases

Japan’s electrical grid is currently down about 22 gigawatts. That’s roughly 40% of the capacity of Texas. That includes a number of coal-fired plants taken offline on top of the crippled Fukushima Daiichi.

But the earthquake and tsunami that touched off Japan’s nuclear emergency left the country’s gas-fired plants largely untouched. The same holds for its oil-fired capacity and its liquefied natural gas terminals. Robert Ineson is with energy consulting firm IHS CERA.

“If approximately half of that were to be served by gas, that would be about a 13% increase in their imports. What this does for the global market is it tightens it somewhat, and this was a market that has been in the processing of tightening over the last year in any event.”

Ineson says global gas markets do have the flexibility to meet stronger Japanese demand for LNG. Accomplishing that will mean diverting LNG imports from Europe. It also may mean the re-export of LNG from import terminals on the Gulf Coast.