TEPCO to Buy More US Shale Gas

Tokyo Electric Power Co. (TEPCO) has decided to increase the amount of U.S. shale gas it will purchase from 2017 to 1.5 times its initial plan, or 1.2 million tons a year, reports The Yomiuri Shimbun.

The move comes as a part of company’s cost cutting exercise.

Shale gas is 30 percent cheaper than the liquefied natural gas (LNG) that the utility currently uses. Converting 1.2 million tons of its fuel to shale gas is expected to save TEPCO more than ¥10 billion ($0.10 billion) annually on fuel, according to The Yomiuri Shimbun.

According to the newspaper, TEPCO plans to increase its procurement of shale gas in the future, purchasing 10 million tons in 2023 and saving ¥130 billion ($1.33 billion), the equivalent of 5 percent of its annual fuel costs.

It intends to use shale gas for 40 percent of its annual fuel use in 2023.

In February this year, TEPCO agreed to buy LNG from the US through Mitsui & Co and Mitsubishi Corporation.

The Japanese utility will be buying approx. 800,000 tons of LNG per year from 2017 for the period of about 20 years. The LNG will come from U.S. Cameron Project, which is an LNG project being planned in the State of Louisiana by Cameron LNG, a subsidiary of Sempra Energy. 

However, it has decided to increase that amount by 400,000 tons. TEPCO is expected to reach a deal with both companies on the new amount within this year, the newspaper adds.

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