American Frackers May Soon Power Japan, Too

In the wake of the devastating 2011 earthquake and tsunami, the Japanese government shuttered the nation’s nuclear power plants (at the moment, all of them are closed), which had been generating 30 percent of the nation’s electricity.

Consequently, electricity prices in the country have doubled, while electricity providers have scrambled to meet energy needs with the only viable alternatives: coal, oil, and natural gas. Fossil fuel consumption has skyrocketed in the country, already the world’s largest importer of liquefied natural gas.

In July, Japanese paid nearly $16 per million British Thermal Units (mmBTU) for gas. In contrast, during this same month, North American natural gas futures traded at just over $3.50 mmBTU. Given this enormous difference in cost, executives of Tokyo Gas Co, Japan's largest natural gas utility, began the process of importing gas from the United States.

In April, the U.S. subsidiary of Tokyo Gas Co purchased a 25 percent interest in the Texas Barnett Shale assets of Quicksilver Resources. Meanwhile, in Maryland, Tokyo Gas Co. signed contracts (through its subsidiary) to purchase gas from the planned Dominion Cove Point Liquefied Natural Gas Export Terminal. If this terminal is built, it will load ocean tankers with gas from the Gulf of Mexico, the Rockies, the Appalachians, and elsewhere, and send it to Asia.

Energy wise, the Japanese are clearly in dire straights. Whether this is due more to natural disasters or to statist policies, the Japanese people are fortunate that American energy producers—operating in relative freedom—have revolutionized the technologies of horizontal drilling and hydraulic fracturing (fracking), thereby radically expanding production of oil and natural gas, such that they can supply the East with the fruits of the West.

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Creative Commons Image: Kondo Atsushi

About David Biederman

David Biederman enjoys a career as a production engineer for a independent oil and gas producer. He earned a diploma in petroleum engineering technology in Canada and a petroleum engineering degree in the United States. David is also a researcher and writer for the Center For Industrial Progress.

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