As Japan struggles to cope with the aftermath of last week's devastating earthquake and tsunami, one area which could give it some relative comfort is oil-fired power generation, where it has more than enough spare capacity to offset the nuclear plants currently off line, according to analysis by the International Energy Agency.
Earthquake damage caused the shutdown of 11 nuclear reactors with a total generating capacity of 9.7 GW, which would have normally been expected to generate some 60 TWh of power per year, the IEA estimated March 15.
Even though an additional 3.8 GW of oil-fired power plant capacity has also been idled, Japan still has plenty more up its sleeve. In 2009, the country only used 30% of its oil-fired capacity, but this was enough to generate around 100 TWh of power. This required the use of some 360,000 b/d of oil, principally fuel oil and crude (Japan is one of the few countries which regularly burns crude directly).
Based on this precedent, Japan should be able to make up the entire nuclear shortfall by burning an additional 200,000 b/d of oil for power generation, the agency said.
Perhaps more likely, however, is that some of the outage will be covered by coal and LNG in addition to oil.
And even if there is some incremental demand for oil for power generation uses, this is almost certain to be outweighed, at least in the short term, by a sharp drop in consumption across other categories.
Several refineries and ports are either shut down or in disarray, some factories are shut and the transport infrastructure is in tatters in parts of the country. For the time being, the IEA says it is too early to revise its estimate of oil demand in Japan this year, which stands at 4.3 million b/d. But don't bet on it staying unchanged for long.
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