On Friday September 16, 2011, Chevron announced that it has struck a deal with Kyushu Electric Power Co. to provide them with 700,000 tons of liquid natural gas for potentially the next 20 years.[1] Chevron has invested a large amount of money to build plants and develop the Austrailian natural gas fields. The international energy company is on schedule to build it’s new facility in Wheatstone, which, when completed, will have a max annual output of 25 million tons of liquid natural gas (LNG).
Due to the recent earthquakes and natural disasters in Japan/Asia and their subsequent nuclear safety concerns, experts believe that there will be a surge in the demand for clean-burning fuels. The deal was ironically struck one day before another earthquake of 6.6 magnitude rocked northern Japan[2].
Australia has abundant gas reserves and is in a perfect location to supply the Northern Asian countries that will need it. As a result of the project demand influx, Australia may pass Quatar as largest supplier of LNG at the end of the decade.
This deal signing is just the first glimpse of changes the energy industry is likely to see as the result of the increased amount of natural disasters. If tornadoes, hurricanes, earthquakes, and tsunamis continue to damage states and countries, cleaner burning fuel energy will be in much higher demand.
It will be interesting to see how this change in demand unfolds and continues to influence the energy industry. Over the last few years the interest in green energy has risen[3], but now people are being forced to find cleaner energy for immediate safety reasons.
This is a very relevant news story in how the energy industry's economics. Due to these natural disasters occurring around the world, people are changing their preferences and demands for energy, which Chevron is noticing. By striking this deal with Kyushu and developing gas powered energy instead of oil, Chevron may satisfy those who are looking for greener options, in addition to adding to their bottom line.
ReplyDeleteThis article is interesting for a couple of reasons. For one, it provides details of an actual transaction Chevron made in the energy industry. This gives us an idea of some of the operations the larger energy companies run. On another note, we should continue to look in the earthquake/tsunami in Japan caused ripples in the energy industry. Natural disasters are a great example of how demand for natural resources can fluctuate. We should look into the disaster that happened in Japan this year and apply it to the economics of the energy industry or something else. Regardless, it was a significant event in the last year that we could build substantial research off of.
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