Sunday, March 20, 2011

N is for Nuclear, N is for Nitrogen

Updated at end

In the wake of the disaster at Fukushima, Japan is faced with an immediate short term energy deficit, which may become a long term energy problem should public sentiment force the Government to reconsider its current nuclear program. One immediate solution appears to be a rapid increase in the use of LNG.

LNG prices may rise by $5

Indian Express, Mar 19 2011

As Japan does not have reserves of gas and crude oil, it imports more than 80% of its energy requirements.

It is expected that 60% of the shutdown power capacities will be substituted with coal-based capacities, while LNG-based capacities will make up for the rest. The 40% substitution with gas-based capacities to boost the gas demand by 6 to 8 million tonne per annum which represents around 11% of the total global spot LNG trade in 2009. This would in addition to Japan’s substantial LNG imports of 63.9 MTPA, which account for 35% of total LNG trade during 2009.

RI ready to add LNG supply to Japan 

The Jakarta Post, /15/2011

BPMigas spokesman Gde Pradnyana said on Monday that Japan might turn to Indonesia to meet the surge in the country’s gas needs to generate electricity to compensate for the decline in the power supply from nuclear reactors.

He said that 20 cargoes of LNG from the Bontang Plant in East Kalimantan were still available for sale. At present, Japan is one of the main buyers of LNG produced at the Bontang Plant.

Tokyo Electric Power Corp. and other Japanese utilities may increase outputs of gas, oil and coal-fired power plants to replace production from the 11 nuclear reactors closed last week following the 8.9-magnitude earthquake that hit on Friday. About 30 percent of Japan’s power supply comes from 54 nuclear reactors.

Japan lost around 25 percent of its power supply following the disaster. As the crude oil price is more expensive now, it will buy more gas to generate electricity,” he said, adding that the recovery of the nuclear plant was predicted to take a long time.

Indonesia is the world’s second largest LNG producer with most of its production coming from three plants — the Arun Plant in Aceh, Bontang Plant in East Kalimantan and Tangguh Plant in Papua.

Torbjoern Kjus, oil market analyst at Oslo-based bank DnB NOR, said “The immediate direct effect on incremental oil demand for power generation will probably be about 150,000-200,000 barrels a day,” consisting of light-sweet crude for direct burning and low-sulfur fuel oil, assuming the grid is still able to distribute power.

LNG prices jump after disaster, March 14 2011

Natural gas prices have jumped as dealers are braced for Japan to step up its purchases to replace the large amounts of nuclear power capacity knocked out by Friday’s earthquake and tsunami.

Japan is the world’s largest buyer of liquefied natural gas, a form of super-cooled gas shipped in tankers from exporters such as Qatar and Algeria. Any abrupt change in its energy demand could therefore affect commodities markets.

The earthquake has shut down 9,700 megawatts of nuclear capacity, equivalent to about a fifth of the country’s total capacity. Analysts expect that Japanese utilities will scramble for crude, thermal coal and LNG as replacements. They fear that Tokyo may close more atomic reactors for inspections in coming months.

The cost of UK natural gas for delivery in a month, seen as an indicator of LNG as Britain is a large importer of super-cooled gas, rose on Monday by as much as 7.7 per cent, extending its gains since the earthquake to 12 per cent.

The contract traded as high as 64.5 pence per therm, a two-year high.

The other stop gap is of course our old friend coal. The Australian has an unusually (even by its standards) scathing attack on the situation in Japan. But then The Oz loves coal.

Japan's fading miracle

The Australian, 18 March 2011.

COAL is the only large-scale alternative to nuclear power.

The Greens' demand for a global phase-out of nuclear power as a "toxic and obsolete technology" in response to Japan's post-earthquake emergency has inadvertently highlighted the industry likely to be the major beneficiary of the crisis -- coal. South Korea, another big coal importer, is already predicting higher coal and LNG prices if Japan loses its nuclear nerve and invests in an alternative to atomic energy, which provides a third of its electricity.

[While] the earthquake and tsunami could not be avoided, the poor risk management that preceded it, and the appalling emergency response that followed it, could.

…the Japanese government and media have been reticent about demanding frank disclosures from the Tokyo Electric Power Co, which has a dubious record of accidents and lack of transparency.

Some Coal-Fired Plants Brought Back Online


TOKYO—A major unit at one of Japan's largest coal-fired power plants was brought back online early Saturday, helping ease power shortages that have crippled Japan's industrial activity and hampered cleanup efforts since the March 11 earthquake.

Electric Power Development Co., also known as J-Power, has restarted commercial operations at its 600-megawatt No.1 unit at the nine-year-old Isogo power plant west of Tokyo, a spokesman said. J-Power, an electricity wholesaler that operates seven coal-fired power plants, had already restarted the twin No.2 unit at Isogo, which was automatically halted when the earthquake hit.

However, damage to several other major coal-fired power stations and ports in northeastern Japan—and choke points in the country's grid network—mean the sector will struggle to provide its normal 21% of Japan's electricity for an indeterminate period.

Apart from dealing with the immediate crisis and starting on what could be extended checks and repairs at some thermal power stations, Japan's utilities and coal importers now face a complicated period of negotiations with suppliers.

Among Tepco's supply agreements is a 10-year contract for Australian coal, which expires at the end of this month. Though negotiations for a renewal haven't been completed, supplies are expected to continue to arrive, with price and possibly volume adjustments to be made later.

Talks last week on Australian coal prices for the April 2011-March 2012 term between Xstrata PLC, Tohoku Electric Power Co. and other Japanese utilities were postponed.

While coal prices agreed upon in Japan-Australia negotiations are a regional benchmark, Indonesia—the world's largest exporter of thermal coal—looks well placed to meet any near- or mid-term extra demand from Japan, partly as some Australian mines are still suffering from flood damage.

The effect of the Fukushima Disaster will be global.

Fallout of Japan nuclear crisis

Business Standard, March 20, 2011

Many corporates have disaster recovery and business continuity plans in place. So do many nations. However the Japan disaster will stress-test the global economy's disaster recovery mechanisms. A triple whammy of earthquake, tsunami and nuclear disaster hitting the world's third-largest economy is bad enough. It doesn't help that there's a civil war in Libya.

Looking beyond the human dimensions of the tragedy is tough with thousands dead and lakhs homeless. But a realignment of the global energy mix is now almost guaranteed. There has already been a surge of anti-nuclear opinion. Nuclear projects in India (and elsewhere) may be shelved, calling into question the economic logic of the US-India nuclear agreement.

The concerns are genuine. It's natural for crude-poor nations like India to develop nuclear capacity as part of the energy mix. It is also natural to wonder how large the butcher's bill would be, if a disaster like this hits an Indian nuclear plant.

Nuclear accidents are rarer than accidents in conventional plants. But the damage potential is exponentially higher. And nuclear accidents have happened in Canada, US, UK, Russia and Japan. Apart from plants, waste disposal involves landfills designed to contain radiation for thousands of years. Those sites are also vulnerable.

India experiences quakes, floods and tsunamis, quite apart from possessing relatively low safety standards. Fukushima could cause widespread NIMBY ("not in my backyard") attitudes with politicians and citizens opposing any plans to locate plants or landfills in their vicinity. It is NIMBY that has forced the US nuclear industry to seek overseas markets.

This increased demand for gas may further increase the price of nitrogen fertiliser.

Middle East unrest may drive up nitrogen fertilizer costs

Escalating unrest in the Middle East is not only going to continue to drive gasoline and diesel fuel prices up to 2008 levels, but there's a good chance it will do the same to the costs of fertilizing pastures, according to a Texas AgriLife Research expert.

"The cost of ammonium nitrate today is $460 per ton, or about 68 cents per pound," Rouquette said. "Last year about this time it was 53 cents per pound."

Though nitrogen fertilizer is made from natural gas, all fuel prices are linked, he explained, so the increase in one leads to a rise in others. There's also the associated cost of transporting and applying fertilizer as the cost of diesel rises.

Spring fertiliser prices on the increase

With imported AN at £310-315/t and, despite turmoil in the Middle East, urea dropping back by $50/t FOB to about £300/t on-farm, it is doubtful much Nitram will be sold at £350/t.

The new season could also be affected by market upsets brought about by recent events, both natural disaster and insurrection.

The $178 Solution

Last summer, ammonia fertilizer was $420/ton, and in late January it was $787/ton: an 87% increase in six months.

Which if it feeds thru to food prices?

And the first reports are that very low levels of radiation have been detected in domestic Japanese food.

Japan's nuke leak reaches food chain

Hiroshi Hiyama March 20, 2011

The government of the world's third-biggest economy has been insisting that there is no widespread threat of radiation, but has confirmed that fresh foodstuffs are now showing signs of contamination.

Tainted milk was found in Fukushima prefecture while contaminated spinach was discovered in neighbouring Ibaraki prefecture, chief government spokesman Yukio Edano told reporters.

The milk was found more than 30km from the plant, beyond a government exclusion zone.

But Edano urged consumers to remain calm, saying that even if a person were to drink the contaminated milk for a year, the radiation level would be the equivalent of one CT hospital scan.

"The government will do its utmost... to avoid health hazards and to resolve this problem," he said.

Abnormal levels of radioactive iodine were found in the water supply in Tokyo and several prefectures near the power plant, a science ministry official said.

Traces of radioactive caesium were also found in tap water in Tochigi and Gunma prefectures, but the levels of both elements were well below the legal limit, the official said.

These are very low levels and have minimal (negligible?) effect on a persons chance of developing cancer… but it adds to the fear and uncertainty that people feel. A loss of confidence in the government and domestically produced food could see Japan making a greater call on globally stretched supplies. Which brings us back to the trigger for the spate of Middle East revolutions - ongoing.

Maybe also see.

Networked Resources, Declining Quality and the Peak Oil Argument.

Economic aftershocks from the N Pacific
Aljazeera, March 20

The narrow view of the catastrophe's economic impact is that Japan does not really matter anymore. The disaster may produce some disproportionate supply-chain effects in autos and information-technology product lines such as flash drives, but any such disruptions would tend to be transitory.

Japan accounts for only five per cent of America's exports and eight per cent of China's. Under the worst-case outcome of a complete disruption to the Japanese economy, the direct repercussions on the American and Chinese economies would be small...

Australia has the largest direct exposure to Japan – the destination for about 19 per cent of its total exports. The eurozone is at the opposite end of the spectrum, with Japan accounting for less than two per cent of its exports.

Among emerging markets, the Philippines and Indonesia are the most exposed to Japan, which absorbs about 16 per cent of their total exports. South Korea, the third-largest economy in East Asia, is at the other end of the scale, relying on Japanese demand for only about six per cent of its exports.

[The] Japan shock is not the only negative factor at work today. The impacts of sharply rising oil prices and ongoing sovereign debt problems in Europe are also very worrisome. While each of these shocks may not qualify as the proverbial tipping point, the combination and the context are disconcerting, to say the least.

'Exhausted traditional ammunition'

Alas, there is an added complication that makes today's shocks all the more vexing; governments and central banks have exhausted the traditional ammunition upon which they have long relied during times of economic duress. ...unconventional – and untested – policies such as "quantitative easing" have become all the rage among central bankers.

But, just as the post-Kobe rebuilding did little to end the first of Japan's lost decades, a similar outcome can be expected this time. The upside of rebuilding – beyond the urgent restoration of normal life for thousands of people – is only a temporary palliative for an impaired economy.

Japan restores power to nuclear reactor

The Independant, 20th March

The unprecedented crisis will cost the world's third largest economy up to quarter of a trillion dollars and require Japan's biggest reconstruction push since post-World War Two.

It has also set back nuclear power plans the world over.

Economics Minster Kaoru Yosano put the economic damage at above 20 trillion yen ($248 billion), which was his estimate of the total economic impact of the 1995 earthquake in Kobe.

Government spending was likely to exceed the 3.3 trillion yen Tokyo spent after Kobe, which up to now has been considered the world's costliest natural disaster.

Japan's crisis spooked markets, prompted rare intervention by the G7 group of rich nations to stabilize the yen on Friday, and fuelled concerns the world economy may suffer because of disrupted supplies to auto and technology industries.

Encouragingly for Japanese transfixed on work at the Fukushima complex, the most critical reactor - No. 3, which contains highly toxic plutonium - stabilised after fire trucks doused it for hours with hundreds of tonnes of water.

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