Picasa Album photo storage

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http://forums.androidcentral.com – While completely out of range for WiFi I discovered that my Picasa Albums are available for viewing as slideshows in the Gallery App. I was totally surprised as I think the photos would have to be stored somewhere on the Nexus 7 for that to happen. Does anyone know where the photos are stored on the Nexus 7? Or am I touching the cloud without WiFi? (HowTos)