Natural gas to gain from nuclear crisis

BERLIN, March 22 (UPI) -- As nations across Europe begin to question their reliance on nuclear power, natural gas could become the fuel of the moment.

That's mainly because its competitors have suffered recently.

Offshore oil exploration was attacked after the accident on the Deepwater Horizon drilling rig in the Gulf of Mexico, which killed 11 workers and led to the worst oil spill in U.S. history. While Washington has since given the go-ahead for offshore drilling, European regulators remain cautious about granting new projects in the Mediterranean.

Coal, for decades the fuel of choice in Europe when it comes to providing stable base power, has come under scrutiny because it emits more greenhouse gases than any other fossil fuel.

Until a few weeks ago, nuclear power was seen as the solution to help ease Europe's transition into the age of renewable energy sources.

All major economies, even anti-nuclear Germany, had revived their reactors or were planning to build new ones, arguing they were providing cheap, secure and greenhouse gas-free electricity. That was before Fukushima.

It's unsure whether the Japanese nuclear crisis can bring the revival of nuclear power to a total standstill but it's undeniable that much of nuclear energy's momentum has been washed away by the tsunami.

As the disaster unfolded, officials from China, Germany, Switzerland, Finland and South Africa said they would review their nuclear policies.

German Chancellor Angela Merkel last week decided to temporarily shut down the country's seven oldest reactors to test their safety, adding that it was unsure whether they will be restarted. On Tuesday, she said her experts were looking into strategies how to phase out nuclear power much quicker than anticipated. Germany is home to 17 reactors that provide around one-fifth of the country's electricity.

All this leaves one fuel as the prime alternative -- natural gas, its proponents say, is cheap, readily available and significantly cleaner than oil or coal.

Some of the downsides of gas in the past -- price volatility and tight supplies -- have been overcome for now.

Reserves have increased by nearly 70 percent over the past two decades because of new finds, the shale gas revolution in the United States, the advent of LNG and Europe's own potential shale gas reserves, which are being explored at the moment.

A host of new pipelines is being planned or built from Russia and Central Asia to customers in Western Europe, opening new import routes the companies involves want to be filled.

Because of the oversupply, prices have been lower than they were for years, meaning that natural gas is also a commercially attractive option.

"Natural gas may end up having a much bigger role in power generation in Europe than people were expecting a couple of years ago," energy expert Daniel Yergin, the chairman of IHS Cambridge Energy Research Association, told The Wall Street Journal.

Of course a natural gas boom would drive up prices in the long run and markets are already factoring in an expected increase of demand. European prices for natural gas have climbed around 10 percent since the earthquake hit Japan.