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Gas vs. nuclear

PETER O’CONNOR
Contributing Columnist
oconnor@lbknews.com

A few years ago we here on Longboat were quite interested in natural gas, and its price.  The importation of the stuff was all the rage.

We, the LBK Town Commission had engaged in a two year effort to find accessible sand for use in our beach management program.  We found suitable beach quality sand offshore, in both Florida State waters and in Federal waters.   Florida’s seaward boundary in the Gulf of Mexico is 3 marine leagues or 9 nautical miles, and is 3 nautical miles in the Atlantic.  A league = 3 nautical miles (5.6 km).

A liquefied natural gas terminal was proposed, with the unloading portion of that deep water port in Federal Waters approximately 28 miles offshore Tampa Bay in 100 feet of water.  From here pipelines lying on the bottom would bring the LNG to a new facility to be built at Manatee County’s Port Manatee.  These pipelines would traverse our (LBK’s) sand source.  Port Dolphin was willing to negotiate with the Town to reimburse us to remove the beach sand earlier than the Port Dolphin schedule might have dictated.  This was all dependent on the price of the natural gas in U.S. markets.  At the time these prices were high enough to justify the transport and processing of the imported gas for further pipeline transit from Port Manatee.  The price of natural gas has fallen.  I reported in these pages in a piece on Windmills in January 2013 that this price was $3.29 per million BTUs.  This might mean the end of local interest.

On to the bigger picture; “ Back in the 1950s, nuclear power held out the promise of abundant electricity ‘too cheap to meter’, or almost free.  But today, U.S. Utilities are encountering something they never expected: Some natural-gas-fired power plants are cheaper to run than nuclear units.  And that is leading some companies to consider shuttering their nuclear facilities.”  ( Can Gas Undo Nuclear Power? by Rebecca Smith ) The Wall Street Journal  1/30/13

“In much of the U.S., nuclear plants compete head to head with power plants fueled by natural gas, whose price remains at historic lows.  That is giving gas-fired plants a cost advantage over some smaller nuclear plants facing costly repairs.  About 40 % of U.S. nuclear reactors sell power into deregulated markets, where coal-fired plants are also struggling to compete against natural gas.”  Two plants, both currently idle, facing costly repairs are Edison International’s San Onofre plant in Southern California and Duke Energy’s Crystal River Plant here in Florida.  That Crystal River Plant is 80 miles north of Tampa, was licensed in 1976.

Update:  The owners have announced the retirement of the Crystal River Plant.

Smith adds, “Low electricity prices benefit energy consumers, but they’re hard on those selling electricity.  Small nuclear plants make less electricity than big plants, so their relatively high overhead is harder to cover when prices drop.”

“Fixed costs run about $15,000 per megawatt of capacity for modern gas plants, about $30,000 for coal plants and $90,000 for nuclear plants, according to Federal estimates.”

“Though fuel costs have been rising  for nuclear plants, fuel isn’t a big factor in their expenses,” the Journal piece goes on.  “But at gas plants, fuel is the biggest single expense, and its cost has been plunging..  When market prices for electricity were higher, nuclear plants could cover their overhead costs and still make a lot of money because they typically ran all the time, shutting down only every 18 months to take on fresh fuel.”

According to Ms. Smith, “Nuclear output is already showing signs of weakness, logging a 2.5% decline in the first 11 months of 2012 compared with a year earlier. Output from plants fired by natural gas jumped almost 24%, according to the EIA.

Cheaper prices for natural gas depressed power prices, which fell between 15% and 47% in the U.S. markets last year, with California at the low end and Texas at the high end.  Wholesale electricity prices fell 27% in New York last year to the lowest level since the State deregulated its wholesale electricity market a dozen years ago.

State officials said wholesale electricity cost half as much in 2012 as in 2008, before gas production boomed.”  The consumer is benefitting some, but higher costs for items like transmission have blunted the impact.

Of course there is another side to all this.  Should a significant number of nuclear plants shut down due to economics in the next few years, it is likely that the electric power industry will have a harder time continuing to reduce emissions of greenhouse gases.  Coal-fired plants produce the most carbon emissions, while modern gas-fired plants produce about half as much carbon dioxide as coal.  Nuclear plants, which still produce a fifth of the nation’s electricity, are the biggest single source of carbon-free electricity.

This will certainly bring on continued debate over the public policy of power generation.  Here in Florida, a consumer of power, costs will take center stage against the environmental interests.  In our corner of Florida that LNG terminal might give way to a natural gas exporting facility.

That fine beach sand might still be in jeopardy.

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