Quake’s effect on nuclear plants could increase LNG demand

This October 2008 photo shows the Fukushima No. 1 power plant of Tokyo Electric Power Co. in Okuma, Japan. The country issued a state of emergency at the nuclear power plant after its cooling system failed. (AP Photo/Kyodo News)

While Japan has barely begun to assess the demand from the massive earthquake off its northern coast, analysts at Houston-based Tudor, Pickering, Holt & Co. note that major Japanese earthquakes historically have affected the country’s nuclear power plants.

Japan gets about 25 percent of its power from nuclear generation. If those plants are out of service for several months, it will increase demand for other energy sources such as oil and natural gas.

Several years ago, an earthquake shut down most of Japan’s nuclear generation, and the country began buying large amounts of liquefied natural gas. Because Japan was willing to pay more for LNG, little LNG arrived on U.S. shores. That crippled companies such as Houston-based Cheniere Energy, which had major investments in LNG terminals.

Earlier today, Japan declared a “state of atomic power emergency” after the quake caused the shutdown of one plant and fire broke out briefly at a second one. Residents near the Fukushima Daiichi Nuclear Power Plant in north-central Japan were evacuated after workers reported having trouble cooling the reactor, CNN reported. The evacuation was a precaution, authorities said. There were no reports of radiation leaks.