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  1. By and large, natural gas boosters seem to rely on market arguments for why natural gas is a preferred fuel. However, these boosters demonstrate a shockingly naive view of the market. Natural gas SPOT prices are $4/MMBtu (actually, I’m clocking them at $3.50 today). However, natural gas FUTURES prices show a significant increase in price over time. My quote of January 2016 futures is about $5.50/MMBtu, and January 2020 is $6.40/MMBtu. And the decision of whether to build a nuclear plant obviously involves comparing cost of electricity about 5 years out, not today. The market clearly expects that natural gas prices will increase, and Rod makes a good case for why even the market is overly optimistic.

  2. So, he goes from arguing that nuclear can’t compete with $4/MMBtu gas in one comment to stating in the very next comment that there are people trying to increase natural gas demand to increase prices and that $5-6/MMBtu contracts can be had.

    Sounds to me like he basically made Rod’s point for him.

  3. Much of this nuclear-gas debate would seem to revolve around future costs of natural gas. If solely concentrating on the market for the next, oh, 3-7 years, then Bradley might have a point — one that seems to be taken by most utilities, especially those in competitive markets.

    Rod, your point takes in a longer time frame, and that seems to be a key difference between you and him. Of course, many people will straight-line today’s gas costs well into the future, but they seem to be setting themselves up for a possible fall. The expiration of drill-it-or-lose it leases, upcoming final EPA and state fracking rules, and the sheer lack of money to made in drilling and selling gas domestically in the short-term almost guarantee that gas drilling (which won’t be as cheap as it has been) will decline and that more gas players ultimately will move on to something else, such as shale oil.

    Beyond that, it’s odd that utilities — even those in competitive markets — don’t seem to worry about pursuing fuel diversity for the longer term, at least as a hedge. And it that diversity entails high reliability and low carbon, nuclear would seem a no-brainer — except for the daunting up-front capital costs associated with GW-scale projects. And hopefully that’s where the work of your company and its Pennsylvania and Oregon competitors will begin to make a difference.

  4. I guess I’m lukewarm on the long-term/short-term approach to this debate because it seems like anyone with an ox to gore can find a series of metrics that is convenient for their argument to straight-line. You can’t straight-line natural gas prices, or solar cell efficiency, or the cost per kWH of wind power.

    To me, the elephant in the room of this debate is that natural gas – like every other other carbon-based fuel – fails to bundle its externalities into the unit price. I sense Rod is trying to be on his best behavior with Robert, because ‘fracking shortcuts’ is an overly polite understatement about the damage being done upstream in the natural gas energy cycle. Even if you’re a climate change dead-ender like Robert appears to be, for gas to ‘work’, you have to ignore the horrendous environmental impact of getting it out of the ground. But of course, if you attempt to make *that* argument, too many people turn off…as if somehow 50 additional cases of juvenile leukemia in the town next to the fracking site / coal plant(or name your own slow-motion disaster) doesn’t translate into actual dollars that actual people have to spend.

    Keep fighting the good fight Rod. Someday they’ll figure it out.

  5. There is a considerable pressure for domestic natural gas producers to invest in LNG terminals with domestic prices being $4/MMBtu and international prices being $15/MMBtu. The international market is much larger and elastic than domestic consumption so the real price of natural gas is somewhere around the $15/MMBtu.

    The question comes in what is the cost of the infrastructure investment needed to produce LNG (cleaning, compressing and drying). Has anybody seen a number on this? The next number is the cost of transportation of a LNG tanker to Europe, which is where the demand will perhaps be the largest (maybe Japan if they are foolish enough to abandon nuclear power).

    Thus three large LNG terminals (Boston and somewhere on the West Coast, and the Gulf Coast) would handle the capacity. What would be the cost of a dedicated pipelines to do this? Henry Hub probably has the capacity. Not sure about New England, it would have to get gas from Pennsylvania and maybe New York to Boston. I’d love to see that fight! Massachusetts Democrats screaming for the jobs it would bring and the environmentalists protesting the environmental damage and rational people arguing against the very real safety risks! I love democracy!

    Short end of it the payback on the infrastructure investment for LNG exportation compared to building domestic consumption will provide a much faster and higher payoff for domestic natural gas.

    It is from this standpoint that I don’t see why the natural gas bubbas don’t like nuclear. If we power home with nuclear and hock natural gas to the rest of the world we can make a great deal of money. Nuclear and natural gas are not incompatible. They are actually very compatible form a market perspective.

    1. Cal, surely you’ve seen Chesapeake’s “declaration of energy independence”, right?


      Their plan has some merit, but you plan has enormously more potential, particularly if the liquid fuels from your proposed nuclear-powered-coal-to-liquids are essentially identical to present gasoline and diesel in terms of transportability and combustion aspects. Methane obviously differs considerably from our current transportation fuels.

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