4:03:00 PM ET|
RPT-US nuclear power snags may drain oil/natgas
(story originally filed on
NEW YORK, May 5
(Reuters) - Extended summer shutdowns at U.S. nuclear power plants
threaten to push up oil and natural gas prices this summer by
straining already tight fossil fuel supplies, analysts said on
News of degraded
reactor vessel heads at two more U.S. nuclear units fueled concern
that the problem could sideline several of the nation's 103 nuclear
power plants, which generate about 10 percent of the nation's
futures on the New York Mercantile Exchange rose 8 percent on Monday
after news that large nuclear power units in Florida and South
Carolina were found with reactor vessel head
The June natural gas
contract <NGM3> on Monday finished up 43.4 cents at $5.689 per
million British thermal units (mmBtu).
"The nuclear plants being out helped push natural
gas up because of worries that if natgas use has to make up for a
large number of nuclear snags, then natgas injections (into
underground storage) for winter will suffer," said Mike Fitzpatrick,
analyst for Fimat USA.
Southeast reactors are expected to return from their scheduled
outages, the U.S. Nuclear Regulatory Commission told Reuters on
Oil prices rose too, as
the higher natural gas prices threatened to force utility users to
switch to oil for burning.
crude on the New York Mercantile Exchange <CLM3> settled up 82
cents at $26.49 a barrel, nearly $1.50 above last week's five-month
"It's definitely helping
to support crude," said Kyle Cooper, oil and natural gas analyst
with Citigroup. "Clearly those nuclear issues remain
price-supportive for fossil fuels."
Industry inspectors have been aware of cracking
around some reactor vessel head nozzles several years ago, but the
problem took on added urgency in 2002 when FirstEnergy Corp.
found that its Davis-Besse reactor in Ohio had a leak that went
through the vessel head, eating a hole through six-inch
Another large nuclear
unit in Texas, owned by Texas Genco Holdings Inc. (nyse: TGN
may also be closed until late summer, months past its original
return date, the company said last month.
Nuclear capacity was 4 percent below where it was a
year ago, Cooper said.
Energy Information Administration storage data released last
Thursday showed U.S. gas storage stood at 54 percent below last year
and 43 percent below the five-year average.
The loss of 1,000 megawatts of electrical
generation requires roughly 200 million cubic feet a day of natural
gas to replace it, according to Cooper.
For some locations the replacement power would come
from oil-fired generators burning distillate fuel or residual fuel
Increased demand for
distillate fuel could prevent the U.S. from replenishing depleted
inventories of heating fuel for next winter.
After one of the coldest winters in recent years,
the EIA said in a recent report that U.S. heating fuel inventories,
including heating oil (high-sulfur distillate fuel) and propane,
"plunged to near historical low levels at the end of
Preliminary March data
show heating oil inventories ended the 2002-03 heating season at an
estimated 36.6 million barrels, a near-record low for March, while
at the same time inventories of propane fell to an estimated 19.5
million barrels, the lowest March level in more than 30 years.
Copyright 2003, Reuters News