Friday, November 9, 2007

Gunmen attack South African nuclear site

Confusion about shooting at Pelindaba nuclear facility

[Hat tip to John Robb at Global Guerrillas]

*** Updates ***

Second effort to break-in reported,
see below this post

New information 12/20/07 here

CBS 60 Minutes story on Pelidaba nuclear site raid to be broadcast Sunday Nov 23, 2008

An attack by three or four masked gunmen on the Pelindaba nuclear facility on Nov 8th in South Africa has left a senior emergency officer seriously injured. Anton Gerber, Necsa emergency services operational officer spoke to the Pretoria News from his hospital bed hours after the attack. He was shot in the chest when the gunmen stormed the facility's emergency response control room in the early hours of Thursday morning (11/8). The motive for the attack is unknown.It is believed the raiders were after highly enriched uranium (HEU) stored at the facility.

It isn't known at this time whether the gunmen were intent on damaging the nuclear materials area of the facility as part of a terrorist attack, wanted to steal nuclear materials, or had some other motive. Details on the attack are sparse due to censorship from the government. Portions of the original newspaper reports on the web have subsequently been taken down. For instance, one early report implied the gunmen were sent by a jealous rival for the affections of one of the nuclear plant's operators who was said to be romantically involved with Gerber.
[Update - there is no evidence to support this early report.]

According to the Pretoria News, Gerber said that he was sitting in the control room with his fiancée Ria Meiring when he heard a loud bang. Meiring, who was working night shift, is the supervisor of the control room. Gerber said he kept Meiring company. "I do not like it when she is at work at night and I go with her to keep her company and ensure that she is safe," he said.

The shooting comes four months after Necsa's newly appointed services general manager Eric Lerata, 43, was gunned down in front of his home after returning from a business trip in France. It is believed he was followed from OR Tambo International Airport. Two men were subsequently arrested for stealing his car. They were reportedly driving it at the time of the arrest.

Not secure anymore

Pelindaba was regarded as one of the country's most secure national key points. Apparently, not any more. It is reportedly surrounded by electric fencing, has 24-hour CCTV surveillance, security guards and security controls and checkpoints. Apparently these controls were of little use in thwarting the attack. According to limited details in South African press reports, it is believed that the attackers gained access to the building, then used a ladder from Pelindaba's fire house to scale a wall.

Police spokesperson Superintendent Louis Jacobs told newspapers that no arrests had been made. This means the gunmen got away after the attack. "A case of armed robbery and attempted murder are being investigated," he said. Government censorship is said to have limited further details of the attack from being published in South African newspapers.

Pretoria News reported it was phoned by a man identifying himself as a Necsa legal adviser, saying the newspaper will be breaching the National Keypoints Act by publishing the story. He reportedly claimed that the interview with Gerber was "unethical" as "he was under sedation and thus incoherent" when it was conducted.

The only thing that appears to be more-or-less certain is that Gerber was shot inside the nuclear facility by unknown persons and that he may have put up enough of a fight to drive them off.

Site has ties to prior nuclear weapons program

According to the South African nuclear site is remotely monitored by the IAEA, and is located approximately 25 miles West of Pretoria. In the 1960s it was home to the South African nuclear weapons program. The site includes the Safari-1 research reactor, a hot cell complex, a waste disposal site, and conversion and fuel fabrication facilities. It now serves the nation's civilian nuclear energy complex.

According to NTI, South Africa is the first and only country to construct nuclear weapons and subsequently voluntarily abandon its weapons program. In 1993, then-South African president F.W. de Klerk revealed in a speech to parliament that South Africa had pursued a "limited nuclear deterrent capability," to counter a perceived Soviet threat in Southern Africa. In the 1970s and 1980s South Africa constructed six nuclear weapons. Less than a decade after completion of its first nuclear weapon, South Africa dismantled its weapons program. It said the reasons were that it was facing diminishing security threats and it was part of an effort to shed its pariah status. Since that decision in the early 1990s, South Africa has been instrumental in promoting nonproliferation globally.

Questions remain about gunmen's motives

The question remains why armed gunmen shot and wounded a security manager at the former nuclear weapons plant in South Africa, how they got in, and got away, and whether the attack was designed to draw attention to the facility and its security measures or for some other as yet unknown purpose.

It is worth noting, perhaps paradoxically, that last month the IAEA completed a conference in South Africa on "Response to Illicit Trafficking Incidents Involving Nuclear and other Radioactive Materials." No one knows if the gunmen took anything, or if they did, the South African government in Pretoria isn't talking about it.

Nuclear Smuggling Case Emerges

It is apparently a busy week in South Africa for nuclear incidents. According to a report by a Pretoria TV station, a nuclear smuggling case is ongoing. It isn't known whether the case is related to the gunmen's attack on Pelindaba.

A woman has appeared in Cape Town Magistrate's Court Nov 8th on charges of helping to smuggle parts used in manufacturing nuclear weapons from the United States to South Africa. Marisa Sketo, 46, allegedly also helped to export the nuclear weapon parts illegally from South Africa to Pakistan. She is facing charges under the Weapons of Mass Destruction Act. The trial has been rescheduled for January 23, according to a court official.

An unnamed US source reportedly told the TV station the parts she allegedly helped to smuggle to Pakistan were "rapid high-voltage electric switches". A nuclear weapons expert, who did not want to be named, said these switches "were used in nuclear weapons." Most likely he is referring to Krytron detonation switches or similar switches.

The nuclear weapons could not be manufactured without them, said the expert. "It's an essential part in making atomic bombs. The fact that they are so dangerous is why the import and export are forbidden." He said it was ironic that the same device was used in making medical equipment using high levels of radiation. The news report did not say where the woman is alleged to have gotten the switches in the first place.

Supplemental Notes

The 'Vela' incident resolved?

Although South Africa gave up its nuclear weapons in 1993, 14 years earlier it was right in the thick of a still unresolved controversy. Much of the U.S. information about it reportedly remains classified, and is therefore unknown as to content or even if it exists, so the following is a summary of open source speculation from some of the more credible analysts.

Also according to NTI September 22, 1979, a U.S. Vela surveillance satellite detected a "brief, intense, double flash of light near the southern tip of Africa." Due to its characteristics, U.S. nuclear weapons experts estimated that the flash could have resulted from the test of a nuclear device with a yield of 2-4 kilotons. South Africa emerged as the prime source, but the South African government denied that it had conducted a nuclear test. Subsequently, noting that South Africa did not supply a complete nuclear device with HEU until November 1979, AEC head Waldo Stumpf said that "this should put to rest speculations as to whether South Africa was responsible for the 'double flash' over the South Atlantic Ocean."

Non-denial denial

Other speculation alleged that Israel had conducted a nuclear test, either alone or in conjunction with South Africa. Additional speculation was that the blast was designed, in part, to test the capabilities of anti-missile radars to detect incoming MIRV warheads behind the electro-magnetic pulse (EMP) of the first upper atmosphere explosion. Significantly, U.S. experts assigned to investigate the explosion disputed whether the EMP detectors of the Vela satellite were operating at the time of the blast. If so then the EMP theory is just another wild idea about the blast.

According to, in an April 20, 1997 article the Israeli Ha'aretz newspaper, South African Deputy Foreign Minister Aziz Pahad confirmed for the first time that a flare over the Indian Ocean detected by an American satellite in September 1979 was from a nuclear test. The article said that Israel helped South Africa develop its bomb designs in return for 550 tons of raw uranium and other assistance. Assuming the ore was milled into yellowcake, the yield at four pounds per ton would have been 2,200 pounds. This doesn't make much sense. If the South Africans already had uranium enrichment facilities, why would they give the Israelis "raw" uranium?

In July 1997 Pahad denied in a statement to an Albuquerque, NM, newspaper he had made the original remarks to the Israeli newspaper. The significance of the location of the denial is that Los Alamos National Laboratory scientists, located in New Mexico, were at the forefront of open source attribution that a nuclear blast had taken place. The South Africans tried to blame the flash on meteorites entering the earth's upper atmosphere.

In his 2006 book On the Brink, retired CIA clandestine service officer Tyler Drumheller wrote of his 1983-1988 tour in South Africa:

"We had operational successes, most importantly regarding Pretoria's nuclear capability. My sources collectively provided incontrovertible evidence that the apartheid government had in fact tested a nuclear bomb in the south Atlantic in 1979, and that they had developed a delivery system [emphasis added] with assistance from the Israelis."

* * *

Update Nov 13th - Second Break-in attempt reported

Wire service reports from South Africa are saying that not one but two groups of intruders managed to breach security at South Africa's Pelindaba nuclear research facility last week, when armed robbers stormed the control room and shot and injured a worker

Briefing the media on the embarrassing security breakdown which occured at Pelindaba, near Pretoria last Thursday, South African Nuclear Energy Corporation (NECSA) head Rob Adam revealed that the western section of the plant had also been breached.

A security officer spotted a second group of intruders on the plant premises and fired at them, causing them to flee, he told reporters. Adam also said that the first group managed to steal a computer.

The Times in Pretoria says the site was subjected to a "coordinated military-style attack" bent on obtaining computer information about bomb making processes.

Pelindaba is home to South Africa's former nuclear weapons program and still stores enriched uranium and bomb making components that are left over from that era.

Update Nov 14th - details of break-in reported

Rob Adam, chairman of the Nuclear Energy Corporation of South Africa (Necsa), which runs the 2300ha facility near Hartbeespoort, told a newspaper in South Africa that the armed men clearly had prior knowledge of one of the most elaborate security systems in South Africa. The admission comes after reports of attempts to censor news media coverage of the incidents.

Both groups fired on security personnel who tried to stop them. One group of four cut through the outside fence and bypassed the 10 000 volt security fence and electronic alarm.

“I am not saying it is an inside job, but that whoever did this knows these systems very, very well. My sense is that the two attacks must have been coordinated, but there is no evidence of that yet.”

The raiders deactivated several layers of the security, he said, which was why no alarm was transmitted to the facility’s security control center.

Adam said the first group of raiders was caught on surveillance cameras, but a security operator had failed to notice them.

Pelindaba has suspended its general manager of security, head of security, chief security officer and three officers who were on duty that night until it completes an internal investigation of the raid and of its security systems.

Wednesday, November 7, 2007

Abstract - Prospects for new uranium mill in New Mexico

Uranium Resources places a big bet in New Mexico
Does it have the cards to play the hand?

By Dan Yurman, Contributing Reporter
Fuel Cycle Week 11/06/07 V6 N253

Why do small companies place big bets? The answer is to become big companies. That's the objective of Uranium Resources (Nasdaq:URRE) as part of its acquisition of Rio Algom from BHP Hilton gaining 14,000 acres containing an estimated 20 million pounds of uranium, water rights, and most valuable of all, an NRC site license for a uranium mill 20 miles north of Grants, NM in the Ambrosia Lake District.

Uranium Resources definitely has big plans. It wants to become a 10 million pound-per-year producer by 2014 and build its uranium asset base to two-or-three hundred million pounds.

What's missing? Well for starters there is $110 million needed to buy the property, and another one in Utah, $35 million needed to finish the reclamation of the primary mill site, and another $16.5 million due to BHP when the NRC license is transferred. A new mill in New Mexico, capable of processing 3,000 to 8,000 tons per day, will cost $200-350 million. The total tab will be close to half a billion.

Where will the money come from? In a Oct 12 conference call to financial analysts, Dave Clark, CEO, said joint venture development agreements with uranium companies are among the options. Clark's bet is that, "there is going to be one primary site for a regional mill in New Mexico," and this one is it.

* * *

Publicly traded stock is a starting point

Clark's firm needs help from new investors. With 121 employees and $16 million in cash on hand, it can’t fund the project internally. Will current stockholders invest in the new venture? A majority of the company’s stock (57%), total market cap at $633 million (52.3 million shares), is held by just 16 investors all financial institutions. Among major institutional holders, 26% of outstanding shares are owned by two private banks. Two other investment banks with similar investor profiles, serving high net worth individuals, own another 13% of the stock for a total of 40% of stock held by four institutional investors. A dozen mutual funds own another l7% of the stock.

The good news is the stock is listed on NASDAQ which makes it accessible to a broader range of potential new investors. On Nov 3 the stock closed at $12.11 against a 52-week high of $12.57 recorded Oct 29 and a 52-week low of $6.90 recorded last August. The surge in the stock price may mean new investors are paying attention. Is that enough?

* * *

Competitive advantage to the miller

The cost of a new mill to process 3,000 tons as day is $200 million, and Clark estimates an 8,000 ton per day mill could cost $350 million. Assuming the mid-point of six pounds of uranium per ton of ore and a mid-point of processing of 5,500 tons of ore per day, the mill would produce 33,000 pounds of uranium per day. Assuming 300 days of production per year, the mill could produce, in this scenario, about 10 million pounds of uranium a year. Over a 20-30 year operating life, that fits Clark’s estimate that the mill could produce 200-300 million pounds of uranium.

One logical customer for this product is the National Enrichment Facility now under construction in Eunice, NM, 400 miles southeast of Grants. It gives New Mexico’s uranium miners a nearby customer assuming there is a mill to convert their ore to yellowcake.

* * *

Uranium Resources will need more investors who think big. Whether the contrarian nature of the rest of the industry will support proposals for joint ventures in a uranium mill in New Mexico, the future of such a plant is now in their hands.

* * *

Please contact the publisher for a sample copy or to purchase the full text of this issue at:

International Nuclear Associates, Washington, DC Tel: 202-547-8300 Web:

Tuesday, November 6, 2007

Russia to build two new reactors in China

And also build a uranium enrichment plant to fuel them

China and Russia signed a multi-billion dollar deal this week for nuclear reactors and a uranium enrichment plant all to be built by the Russians at Chinese sites. The deal comes just two weeks before French President Nicolas Sarkozy is scheduled to go to China on Nov 25th during which time he's expected to sign a deal for two AREVA EPR reactors to be built there.

Russian nuclear builder Atomstroyexport signed a deal with China's Jiangsu Nuclear Power this week to build two reactors and double capacity at the utility's Tianwan power plant, Atomstroyexport said in a statement to Bloomberg wire service. Atomstroyexport completed the building of two units this year at the Tianwan plant under a 1997 contract with Jiangsu Nuclear.

Associated Press reported that the agreement for the nuclear reactors at Tianwan is preliminary and does not set a time frame or price for the reactors, but it is potentially worth over $5 billion dollars.

Each Russian nuclear reactor is worth about $2 billion and takes about five years to build, but China could get them for less because Russia has already built two reactors there. The first 1,000 MWe reactor began commercial operation in May and the second in July of this year.

Russia's Techsnabexport atomic fuel firm also agreed to work with China on expanding uranium enrichment by helping to build a fourth line of gas-fired centrifuges. China already operates two uranium enrichment plants of Russian design.

The new line will have a annual capacity of 500,000 separative work units, or SWU, a Tenex spokesman said. With all the reactors China is building and plans to build, they're going to need more nuclear fuel. The question is whether the demise of India's 1-2-3 agreement with the U.S. will stop it from buying uranium from Australia opening that supply line to China. India was hoping a nuclear energy deal with the U.S. would drive an opening for it with the Nuclear Suppliers Group. That's unlikely to happen now. India's loss is likely China's gain.

Last year China ordered four Westinghouse AP1000 nuclear reactors which vindicated Toshiba's record setting purchase price for the American firm.

Nuclear energy and power generation provide "great potential'' for cooperation with Russia, Chinese Prime Minister Wen Jiabao said during the joint economic forum held in Moscow.

No kidding.

Nuclear Energy Advocacy in Idaho

This OP ED appeared in the Idaho Statesman today. Since the paper doesn't rack outside of the Boise area, and content rolls off its web page, I'm posting the full content here with the author's permission.

November 06, 2007

Lane Allgood, Executive Director
Partnership for Science and Technology

Gov. Otter's recent statement supporting nuclear energy has put the nuclear option back into the public eye here in Idaho. We applaud the governor's support for nuclear energy as a way to bolster economic growth and curb greenhouse gas emissions.

Idaho is growing rapidly, which is driving up our demand for energy. Yet our nation is becoming ever more dependent on foreign sources of supply to meet our rising energy needs. Nuclear energy can help reduce this reliance on foreign energy supplies.

In the near term, the use of nuclear energy can help cut our reliance on natural gas imports by reducing the amount of natural gas used for electricity production. About 20 percent of U.S. electricity comes from the burning of natural gas. Substituting nuclear power plants for gas-fired plants can decrease our natural gas consumption.

In the coming years, nuclear energy can also help reduce our consumption of imported oil. We could soon see widespread use of plug-in hybrid vehicles, and if nuclear energy is used to produce the electricity to charge the batteries in these vehicles, we can reduce our use of oil as a transportation fuel (while at the same time reducing the emission of carbon and air pollutants that come from gasoline-powered engines). Looking to the future, nuclear energy can be used to produce hydrogen, a clean fuel that can be used in a fuel cell-powered vehicle.

Some critics like to claim that nuclear energy is not pollution-free. Well, when you look closely at the energy technologies available to us today — even solar and wind power — there are no energy production technologies that are pollution-free.

All of our energy choices carry some environmental penalty, whether from the fossil fuels needed to make the concrete and steel to build a plant, or from the land that must be disturbed to site new electrical generation.

But study after study has shown that nuclear energy ranks as one of the best technologies for producing large amounts of electricity without emitting significant amounts of air pollution or greenhouse gases. In fact, on a life-cycle basis, nuclear energy is responsible for less carbon emissions per kilowatt-hour than solar or wind power. That is why groups like the Progressive Policy Institute, Third Way and the Pew Center for Climate Change are urging our leaders to embrace nuclear energy as a way to meet growing energy demands while reducing greenhouse gas emissions.

A Sept. 25 Reader's View by Peter Rickards in the Statesman also tried to link nuclear power plants with serious health impacts. Again, studies have shown that this is simply not the case. For example, Illinois hosts the largest number of nuclear plants (12) of any state in the United States. So the Illinois Department of Health studied this issue and in 2006 released a report that found that "there was no evidence of increased trend in cancer incidence rate after start-up of nuclear power plants." A nationwide study conducted by the National Cancer Institute in the 1990s found no increased cancer mortality for people living near more than 60 nuclear facilities in the United States.

Obviously, Gov. Otter's comments will not sit well with the anti-nuclear crowd, but it's refreshing to have a leader who doesn't get caught up in the misrepresentations and exaggerations of activists groups.

The bottom line is that nuclear energy is one of our most promising energy options. The fact that nuclear energy is back on the table here in Idaho is a big step in the right direction.

Lane Allgood of Idaho Falls is the executive director of Partnership for Science and Technology
151 N. Ridge Ave. Suite 260
Idaho Falls, ID 83402
Phone: 208-313-4166

Monday, November 5, 2007

Canned media coverage of nuclear energy

Why can't the press use it's head?

Over at We Support Lee Ruth Sponsler has an analysis of how the news media covers the nuclear energy industry. Her focus is coverage in New England of the Yankee Atomic Energy Plant. She explains that the article discusses "what would happen" if Vermont Yankee were to be shut down and makes a set of faulty, biased assumptions based on the fact that the journalist likely only talked to opponents of Vermont Yankee.

Ruth writes, "There is no balance between a discussion of the views of supporters along with those of the opponents." The Associated Press article, which was published in the Boston Globe, notes the following.

Vermont Yankee, which opened in 1972, currently produces about 650 megawatts of electricity with a bit less than 300 megawatts flowing to Vermont. A megawatt can power about 1,000 homes. Christopher Dutton, president and CEO of Green Mountain Power Corp., one of the two major in-state customers for Vermont Yankee power, said Vermonters would miss the state's lone reactor if it shut down. "The fact is that Vermont Yankee has been a very, very reliable source of base-load power for us at a very advantageous price for the last several years," Dutton said.

Dutton points out "If we replaced Vermont Yankee with the mix (of power sources) in New England, our carbon footprint would increase to something like 320,000 tons, more than 10 times greater than what it is now," he said.

OK, so now you've got that right? Scratch the reactor and add 320,000 tons of CO2 to the atmosphere. It should be a no brainer for any environmental group to see which way the wind is blowing. Wrong. Here's what the local green group had to say.

"For the average Vermonter, little to nothing would change," said James Moore, energy advocate with the Vermont Public Interest Research Group. "It shuts down on a regular basis, both planned and unplanned outages, and our lights don't go out."

Nice logic. It reminds me of what the late Rep. Helen Chenoweth used to say about salmon in Idaho. When asked about the jurisdiction of the Endangered Species Act to control Forest Service land use plans that filled salmon spawning streams with sediment from clear cut slopes, Helen used to reply, "I don't understand the problem. I can buy salmon in a can at the supermarket anytime I want to."

I'm sending a can of Idaho salmon to Mr. Moore as a protest over his fishy logic. For good measure, I'm also sending one to the AP office in Boston. If you agree, buy a can of salmon and mail it to them along with a copy of this blog post.

Message: Environmental logic that promotes CO2 emissions over nuclear energy is fishy!

Vermont Public Interest Research Group
141 Main St., Ste 6
Montpelier, Vermont 05602

Associated Press
184 High St.
Boston, MA 02110

That ought to do it. If they don't get it (the message), they can still enjoy a delicious meal.

Sunday, November 4, 2007

TransCanada checks out nuclear energy in Alberta

The owner of Bruce nuclear might jump on the bandwagon
[Update 11/30/07 here]

TransCanada Corp. says it is cautiously looking to join the short list of companies interested in Alberta's soaring power needs and seeking to meet them with nuclear energy. The Calgary-based company allows that it is doing "detailed homework" to assess whether to pursue nuclear energy. They're not alone. Rivals in the nuclear energy business have also been active most notably Energy Alberta. In fact, there's a game of nuclear energy musical chairs being played out in the tar sands region of the province.

TransCanada, in addition to owning a fleet of gas-fired power plants, holds a stake in the Bruce nuclear power plant in Ontario. In December 2003, TransCanada, together with Cameco and BPC Generation Infrastructure Trust, agreed to buy 79.8% of Bruce Power, the owner of the Bruce plant, from British Energy.

Last year the firm dismissed the notion of nuclear power being used any time soon as an energy source to develop Alberta's vast oil sands resource. Now, after a summer of excitement with Energy Alberta in hot pursuit of that objective, TransCanada has changed its mind, and thinks it could leverage its expertise at Bruce, in which a multi-billion-dollar refurbishment is underway.

Where do you plug this thing in?

Greenfield nuclear plants are a huge challenge, and building one in Alberta has a fistful of them including a well-documented shortage of transmission capacity within the province and the absence of transmission lines from Alberta connecting to major North American markets. Without the wires to lower the risk of pouring billions into an Alberta-based nuclear facility, who will buy the electricity? Montana's governor has been trying to get any utility in Canada to send its wires across the border.

There are efforts underway to build the transmission link from Alberta to Montana, but not from the tar sands region. Montana Alberta Tie Ltd. is preparing to construct a privately funded or "Merchant" transmission line between Lethbridge, Alberta and Great Falls, Montana - the first direct power transmission inter-connection between Montana and Alberta. MATL is a wholly owned subsidiary of Tonbridge Power Inc., a public company traded on the Toronto Venture Exchange under the symbol TBZ. This new transmission line will be a 215 mile, 230 kV AC line. A nuclear plant built in the tar sands region could tie into the MATL transmission facility at Lethbridge and not have to build a line all the way to Montana's markets.

Alberta consumes about 9,000 megawatts of electricity and expectations are growth, especially from the rapidly expanding oil sands sector, should drive demand to about 14,000 megawatts by 2016. Energy Alberta Corp., a private Calgary-based firm, is planning a $6.2-billion nuclear plant in the province's northwest region. Last August it filed an application with the Canadian Nuclear Safety Commission for a licence to prepare a site. The 2,200-megawatt, twin-reactor facility would be built by 2017 by Energy Alberta's partner, Atomic Energy of Canada Ltd. (AECL), using its CANDU technology. The company has an exclusive contract with AECL for any CANDU plant built in Alberta.

Reactor? We don't need no stinking reactor!

The problem is the tar sands oil companies say they don't need an nuclear reactor and get all the energy they need burning natural gas and the bitumen itself. The oil companies sound downright uninterested in Energy Alberta's proposed plant. Mostly, their reasons are it is too far in the future. Greg Stringham, VP at the Canadian Association of Petroleum Producers, said the oil companies in the region have been courted for years by people with the idea of building a nuclear power plant there. At this time, he said, “nuclear is further out in the future than the planning cycle for oil sands projects.”

Jon Lau, CEO of Husky Energy Inc. backed off of previous media reports that his firm is actively interested in a nuclear power plant. His firm was widely reported as being the "secret customer" Energy Alberta said would take 70% of its reactors electrical output. He told wire services the firm’s interest “has been largely overstated.”

Last January he said nuclear energy was an option the firm might consider and more recently he said his firm was providing input to a design for one. The company is now pulling back from “buy” to “neutral.” Graham White, a spokesman for Husky, told wire services, “We are no more or less interested in nuclear as an alternative than any other company in the oil sands.”

Enthusiasm waxes like a harvest moon

That level of skepticism isn't stopping TransCanada. "We think Alberta is in an interesting situation just because the long-term supply/demand fundamentals are good in Alberta, there is certainly demand for power," TransCanada's CEO Hal Kvisle said during a conference call with financial analysts to discuss the company's results for the third quarter of 2007.

TransCanada also seems to be affected by the bravado usually expressed by Energy Alberta. "We've got an exceptionally competent team at Bruce Power that has done a very good job of guiding the refurbishment of the Bruce A plant, which in many ways is a complete new build," Kvisle said. "We have confidence that team would do a very good job of pursuing nuclear projects in Alberta if they make sense."

Who will build Alberta's reactors?

This means that if TransCanada wants to jump into the nuclear market in Alberta, it needs a different partner for the reactor. Since August, Areva Canada, the Canadian arm of France's state-owned nuclear energy conglomerate, has also made overtures and talked of building nuclear plants at the town of Whitecourt, about 100 miles northwest of Edmonton. Will the two team up?

Don't hold your breath waiting for a competitive race to the finish between AECL and Areva. There is too much money on the table. Instead, Areva may choose to take a stake in AECL. That move would position the firm to win either with Energy Alberta or TransCanada.

French nuclear energy giant Areva is interested in a partnership with Atomic Energy of Canada Ltd that could include part ownership, Areva Canada president Armand Laferrere told the Toronto Star in July.

Natural Resources Minister Gary Lunn and other federal officials met with Areva CEO Ann Lauvergeon and Laferrere on June 19 to discuss Areva's role in the Canadian nuclear industry and its willingness to invest in AECL, the newspaper cited a source connected to the meeting as saying.

This gets even more interesting. The Star said the federal government is also in advanced negotiations with General Electric Co to sell a large share of state-owned AECL. Lunn has been leading the privatization discussions along with AECL's new chair Michael Burns, according to the report.

There are lots of moving pieces in the nuclear energy game in Alberta. No one is guaranteed a chair when the music stops.

Abstract - NRG files for two ABWRs as 1st mover

Federal loan guarantees and risk insurance are expect to help
by: Dan Yurman, Contributing Reporter
Fuel Cycle Week 10/23/07 V6 N251

NRG Energy (NYSE:NRG) and the South Texas Project Nuclear Operating Company said Sept 24 it will file a Combined Construction and Operating License Application (COLA) with the NRC to build and operate two nuclear units at the current reactor site. NRG filed its letter of intent with the NRC in June 2006 using a team of GE-Hitachi and Bechtel. Toshiba will lead the design and construction activities to build the plant.

The total capacity of the two new units is expected to be 2,700 MWe. NRG CEO David Crane said the plants will cost $5.5 billion which brings them in at $2,000 per kW. NRG is the primary investor in the two new plants with a 44% stake. CPS Energy, San Antonio's municipally owned natural gas and electric company, owns another 40%, and Austin Energy owns the remaining 16%.

* * *

NRG expects to take advantage of two provisions in the Energy Policy Act of 2005 to reduce costs.
  • The plant expects to apply for and receive federal loan guarantees for 100% of the cost of loans and 80% of the cost of the plant. This will leave approximately $1.1 billion in private equity at risk.
  • Because NRG is a "first mover," it expects substantially more federal risk insurance coverage for any regulatory delays than the next four plants that file for NRC COLAs.
  • The firm will receive production tax credits for the first 6,000 megawatts of electricity generated by two new plants.
Competition faces “First Mover” advantages

NRG's application is expected to add urgency to other "first mover" competitors including NUStart Energy's application for two AP1000s at TVA's Bellefonte site where two PWRs have been planned but never built, and for Constellation Energy's new EPR unit for its Calvert Cliffs plant. AREVA's EPR are not yet certified by the NRC which adds to COLA review time. NRG's use of a certified design based on the GE-Hitachi Nuclear Energy reactor, and the construction experience it is buying from Toshiba, give it a huge competitive advantage compared to other first-of-a-kind projects.

* * *

NRG's Crane told the Reuters Global Environment Summit it will be riskier to build the fourth or fifth new plant rather than the first or second. "Whether you are talking about labor or widgets there's enough capacity in the country to build the first three [new plants]," Crane said adding that shortages of labor and equipment will be the limiting factors for new plants that come later in the construction pipeline.

Risk mitigation measures are key to NRG’s success

NRG will face multiple regulatory, engineering, market, and financial risks associated with the new plant. The key regulatory risk is whether the NRC will be able to deliver an expedited regulatory review of the COLA under its new procedures.

* * *

The key engineering risk is whether the plant can be built on time and within budget. On Aug 9 NRG announced it had signed a project services agreement with Toshiba to build the plants. Under the agreement Toshiba will support NRG in design, engineering, construction, and procurement. NRG said in a press release the agreement provides access to Toshiba's advanced construction methods for Advanced Boiling Water Reactors (ABWR).

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GE-Hitachi and Bechtel will be part of the engineering, procurement, and construction contract (EPC). Near-term activities include acquiring long-lead time components, site-specific design work, and preparation of the COLA. Crane said the EPC would come with a warranty for performance. NRG expects to cut expenses by building the two new plants next to the existing units 1 & 2 saving about $500 million as a result.

The long lead time for large forgings will test Toshiba's promise to deliver the plant on time and within budget. U.S. plants will be competing for manufacturing capacity with China who wants it for their plants. China has issued orders for four Westinghouse AP1000s. ARVA expects to sign deals with China for nuclear reactors during the state visit of French President Nicolas Sarkozy at the end of next month. During Mr. Sarkozy's visit to China, AREVA will ink a $5 billion deal to supply the country with two 1,600 MWe EPRs and the nuclear fuel for them for the next two decades.

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A key market risk is the need to lock in long-term contracts to sell power from units 3 & 4. The power from the two new nuclear units will be sold exclusively in Texas market. Traditional utilities must gain approval from state regulators before passing on the construction costs of new nuclear plants to ratepayers. NRG is a merchant energy company and not a utility. It doesn't have captive ratepayers in deregulated Texas. As a ‘merchant” plant NRG’s costs cannot be passed on to the utility’s customers. Risks of cost overruns are borne by shareholders.

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To mitigate financial risks NRG is working in obtaining support from the Japanese government. CEO Crane told a Merrill Lynch analyst meeting a recent change in Japanese policy may allow the government to extend export credits to NRG. Crane said support from Japan in the form of export credits could take pressure off to obtain federal loan guarantees for the full amount of the loans needed to built the two new units.

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Nuclear opponents aren’t caught napping

Opponents of nuclear power have already attacked NRG’s announcement because it is a "first mover." If they can knock it off the market pedestal it is currently perched on, that outcome may discourage other utilities from pursuing the nuclear option.

U.S. Rep. Edward Markey (D-MA) said in a statement the same day NRG made its announcement that the NRC's contracting efforts to support nuclear power plant licensing may be illegal. Markey charged the NRC was "outsourcing" its decision making to contractors.

Like all federal agencies, there are only so many things it can do in-house, and many support functions are contracted out. Markey's attack has the clear objective of trying to slow down the NRC’s review of license applications and create financial problems for new reactors due to schedule delays. If he can gum up the works enough, other new reactor project sponsors may be discouraged from trying to build new nuclear power plants.

In response to Markey's statement, an NRC spokesman denied that the agency will let contractors make the agency's decisions for it. "The NRC has not, and will not, delegate any decision making authority in the licensing of potential new U.S. reactors."

While Rep. Markey was targeting his opposition tactics on the narrow field of regulatory issues associated with federal contracting law, a group of famous rock stars sought to build a mass political base to oppose new nuclear power plants with a campaign using Internet video and new rock albums. Musicians Bonnie Raitt, Jackson Brown, and Graham Nash said Oct 11 that they were starting a national effort to stop construction of new nuclear power plants.

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FPL’s CEO - new reactors are a “big bet”

NRG's application to the NRC and the risks its is facing brought a comment from Lewis Hay, CEO of Florida Power & Light, who told the Miami Herald on Sept 28, "I think some nuclear power plants will be built. I don't think it is going to be this giant wave that some people are talking about."

That said Hay noted FPL will propose upgrading its existing reactors in Florida by 2012 and build two new reactors by 2020. Hay said 3,000 new MWe of capacity will cost $15 billion at current rates. "That's a big bet to take to your board," Hay said.

On October 16 FPL joined the nuclear renaissance with NRG. Despite all risks it said it filed its plans with the Florida Public Service Commission to build two new nuclear power units at its Turkey Point generating complex.

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