Fuel for Thought – Jan 27th

27 Jan, 2012

The case for US LNG exports:  A recent report by the EIA on the potential impact of US LNG exports increasing domestic gas prices has fuelled debate as to whether the US government should grant further export approvals.   There is a strong commercial case for development of US re-gas infrastructure, given spot Asian LNG prices have increased to levels around five times US spot gas prices.  Development timelines mean that US exports will not have much impact on global pricing before 2015, but by the end of the decade they could support substantial global price convergence towards regional transport differentials.  John Kemp from Reuters presents a strong argument for the US government allowing LNG exporters to proceed on the grounds of protectionism.

Risks around Australian LNG: The emergence of Australian LNG export projects over the last five years has propelled Australia from a journeyman contender to compete with Qatar for the heavyweight title.  But the pace of evolution of the industry has come with an increase in project risks.  The unprecedented strength of the Australian dollar combined with a resource boom driven skills shortage is threatening the viability of LNG project development.  Some projects are also facing increasing environmental resistance, both for development of re-gas infrastructure and for ground water issues associated with the extraction of coal seam methane.   The delivery of Australian export projects will dominate the expansion of global supply over the next five years, but beyond these projects Australian exports face an increasingly uncertain future, not least from the prospect of much cheaper US exports.

In defence of nuclear power:  The debate around nuclear power as a low carbon generation technology has unfortunately been dominated by politics and emotion.  The Fukushima disaster is a nasty reminder of the risk to both human life and the environment associated with nuclear generation.  But the magnitude of the challenge that Europe faces in decarbonising its power sector by 2050, warrants the level headed consideration of all optionson both the supply and demand side.  This involves an assessment of cost, technology maturity, delivery risk and timeline, resource potential and scalability.  Despite the safety and regulatory challenges associated with nuclear generation, it is a proven, baseload technology that can be delivered in scale on to conventional transmission networks.  The debate around renewable vs nuclear fails to recognise that both technologies are needed if there is to be any hope of achieving decarbonisation targets, as Mark Lynas set out recently.

Picture of the week:

A schematic diagram of the Searaser water pump technology that Ecotricity is looking to develop off the coast of Cornwall.  The technology involves pumping seawater using a vertical piston between two buoys, sending it through a pipe to an onshore turbine.  Searaser is the brainchild of British engineer Alvin Smith from Dartmouth who came up with the idea while he was playing with an inflatable ball in a swimming pool.