Storm-closed US nuclear power plants may boost natgas use

* Short-term gas demand lower on lost power generation

* Nuclear plants could face longer outages

* Gas heating to increase when weather turns cold

NEW YORK, Oct 31 (Reuters) - As the U.S. Northeast begins its recovery from Hurricane Sandy and power is slowly restored, natural gas may be one market that benefits.

The much-touted cleaner-burning fuel could be a replacement for nuclear power generation, which faces the highest level of outages since spring 2011.

Massive flooding and electric grid outages from the storm caused three U.S. nuclear reactors totaling 2,800 megawatts (MWs) to shut.

Those reactors and others that had already been offline could face longer inspections to check equipment following the storm. The United States last year initiated closer scrutiny of U.S. nuclear plants and their safety features following the earthquake, tsunami and subsequent flooding in Japan that caused a nuclear plant meltdown there.

That lost nuclear power would likely be replaced incrementally with gas-fired electricity, boosting demand for the fuel.

``If you reduce that demand, you could see a significant reliance on gas, especially in the east where coal generation isn't all that profitable anymore,'' said Eric Bickel, commodity analyst with Summit Energy in Louisville, Kentucky.


List of total nuclear power outages in the U.S. on Wednesday: nL1E8LV6RG


Sandy hit during a month when many nuclear reactors were offline for scheduled maintenance anyway.

But since March 2011, when the massive earthquake followed by a tsunami caused flooding and a meltdown at Tokyo Electric Power Co's Fukushima Daiichi nuclear plant, the world's nuclear power regulators have taken more precautions.

``That's been an influential factor since that happened. You do have more stringent safety precautions now and you want to make sure everything is sound before you embark on putting them back online,'' said Bickel.


On the flip side, Sandy has created a short-term vexing problem for an already oversupplied natural gas market: less immediate demand for the fuel and a short-term drop in prices until winter.

The lack of power demand translates to a decrease in natural gas usage of about 1 billion cubic feet per day (bcfd), analysts said, which could generate about 5,000 MWs of electricity.

At its peak, Sandy's fierce wind created tumultuous storm surges along the east coast that flooded power stations, caused transformers to explode and knocked out electricity to more than 8 million homes and businesses.

The loss of that electricity usage may lessen demand for natural gas-generated power.


Click for FACTBOX-U.S. power outages from Sandy from the U.S. Department of Energy:


Electric heat is not common in the Northeast, but gas heat for homes is. More than half of U.S. homes use gas as a heating fuel in winter, which is fast approaching, another factor that will increase demand.

``I expect prices for natural gas in the short-term to come down a bit before getting on a typical trajectory for winter,'' said Adam Bedard, a natural gas consultant with PA Consulting Group in Denver, Colorado.

Gas supplies have risen steadily over the last four years as technologies to recover hydrocarbons trapped between tight layers of shale rock have supported a boom in production. That has led to lower prices.

New York Mercantile Exchange natural gas futures prices have reflected this push and pull of demand expectation in the last two days as clean up from Sandy remains ongoing.

On Tuesday, the contract settled nearly 3 percent lower at $3.69 per million British thermal units (mmBtu).

On Wednesday, it rose to a high of $3.778 per mmBtu before losing some ground again by midday, trading around $3.73.

(Reporting By Jeanine Prezioso; Editing by Bob Burgdorfer)