Friday, November 30, 2007

Canada dances with wolves

International nuclear agreements end nation's silence
on deals with GNEP and Russia.

GNEP nations need Canada's uranium
Russia needs AECL nuclear reactors


Last summer when more than a dozen nations held a ministerial level diplomatic meeting in Vienna, Austria, on the Global Nuclear Energy Partnership (GNEP), Canada sat out the meeting sending an observer instead of the foreign minister or other cabinet rank member of the government. Gary Lunn, Canada's minister got way out in front of the headlights of Canadian Prime Minister Stephen Harper on whether that nation could commit to the GNEP program. Canada's government wasn't ready and also somewhat wary as a result of negative feedback from anti-nuclear groups who said Australia went too far at an Asian summit meeting the week of September 4th signing up for GNEP during simultaneous visits by U.S. President George Bush and Chinese leader Hu Jintao.

That all changed this week with Canada not only signing up for GNEP but also for a significant deal with the Russian nuclear industry. The first part will be an addition to the international nuclear fuel regime. The second part raises questions about the reasons why Russian needs Canada's uranium and reactors.

The ever energetic Mr. Lunns said that this week Canada has joined GNEP, "as the world's largest producer of uranium." Lunn said the reason for the belated change of heart is the nation's "responsibility to help shape the safe secure development of nuclear energy." Translation - with all that uranium in the ground, there is no way Canada could not join GNEP.

The program envisions an international consortium of reliable fuel suppliers to countries who forgo the development of uranium enrichment plants. Also, GNEP proposes to reprocess and recycle spent nuclear fuel as a way to deterring proliferation of plutonium for building nuclear weapons.

This world straddling view of nuclear fuel did not go down easy with opposition groups in Canada. Lunn denied charges from opposition leaders that said Canada had made arrangements, when they joined GENP, that meant they would have to store and reprocess the spent nuclear fuel of other nations. "We have absolutely, explicitly stated that under no uncertain circumstances will Canada ever be taking back spent nuclear fuel at any time from any country," Lunn said. Australia has also joined GNEP with the understanding that it would not be responsible for waste from exports.

AECL is in play

While top levels of the Canadian government were touting one nuclear deal, another part was signing up to sell off parts of Atomic Energy Canada Limited (AECL), a crown corporation. The federal government launched a formal review of Atomic Energy of Canada Ltd., the country's 60-year-old nuclear flagship, a process that could lead to its sale to private competitors.

After months of speculation about AECL's fate, Natural Resources Minister Gary Lunn announced the government will hire financial experts to advise it on what to do with AECL. "It is time to consider whether the existing structure of AECL is appropriate in a changing marketplace," Mr. Lunn said. "This review will give us the information we need to make the right decisions for AECL and the right decisions for Canadians."

Reuters reported that Gary Lunn did not explicitly state that he was ready to sell off part of AECL but he came close. The Toronto Star reported that the government is in advanced negotiations on selling a stake in AECL to Areva rival General Electric Co. That isn't good news for competitors.

In an interview with Reuters, Areva Canada President Armand Laferrere made it clear that Areva wants in on the action if foreign companies are being offered a role. "If this is what it is, we are definitely interested in partnership with all highly skilled nuclear companies in the world," Laferrere said, adding this could mean an equity stake or it could mean an agreement to work together. "We're a global player engaged in global competition. Each time we can find partners we'll be happy." Laferrere said Lunn met him and Areva chief executive Anne Lauvergeon on June 19th.

AECL is developing the Advanced CANDU Reactor to meet customer requirements for the emerging nuclear market over the next 20 years of sales. The ACR-1000 is an evolutionary, Generation III+, 1200 MWe class heavy water reactor. It is AECL's newest flagship product designed to project the firm's presence into international markets for decades to come.

Russia needs AECL's technologies & Canada's uranium

One of the early and interested investors in AECL, and its newest technologies, is Russia. This week a high level delegation from Russia's nuclear industry, including Sergei Kiriyenko, head of the Russian Atomic Energy Agency (Rosatom) signed an agreement with AECL on cooperative development of nuclear technologies. The Russians also signed a deal with Cameco, Canada's top producer of uranium to create joint ventures and prospects for and mine uranium in both countries.

The Russians have powerful motivations for showing up in Ottawa to sign these two deals. According to an analysis published this week in Fuel Cycle Week (subscription required) by Sovietologist Peter Zimmerman, Russian's plans for major improvements to their nuclear infrastructure are in deep trouble. Zimmerman writes that the Russians have problems everywhere they turn including a lack of machinery, money, and technical know how. Here are some examples.

  • Russia wants to build 10 new reactors doubling its generating capacity in the next eight years, but the current level of uranium mining won't cover even half of the needs of these new plants. The likelihood that the Russians will build 10 reactors in the next eight years is about the same as Disneyland opening a new theme park on the planet Jupiter. In the past 50 years the Soviets have built at a much slower rate.
  • Russia is blending down its nuclear weapons materials to make reactor fuel, but that's as finite source. Actual uranium mining is said to be about 3,500 tonnes/year while the Russians need about five times that amount. According to source documents in Russian reviewed by Zimmerman, "production capacities are clearly insufficient."
  • The Russians are trying to put all of their state-owned nuclear energy activities under a single government roof, but published reports translated by Zimmerman indicate the massive bureaucracy may not be up to the task. According to a Russian assessment reviewed and translated by Zimmerman, the Russians think there are "serious reasons to oppose massive atomic construction at this time." The most important reason is that the Russians can't do it. The assessment says the scale and timeframe of the proposed construction of [10 reactors in eight years] pose "alarming scientific and technological risks." Translation - if you want it bad, you'll get it bad.
  • The Russians have excluded foreign investment from their nuclear build out, including uranium mines, fuel fabrication plants, and a national grid of electric transmission lines, despite having an estimated need for 13 trillion rubles in funding over the next few decades, a currency that until last August wasn't fully convertible to western money. Oh yes, the 13 trillion rubles, which sounds like an incomprehensible amount of money, works out to US$520 billion. Over two decades that works out to about $26 billion a year. It's still a lot of money.
  • The Russians know they can't meet their needs for electricity solely from coal. Zimmerman's translations include a statement by First Vice-Premier Sergei Ivanov who gave a blunt assessment of the nation's short term needs for nuclear energy. He said, "there is no alternative [to nuclear energy]. Either we significantly increase it or in the very near future we will be facing an energy deficit." He said the share of nuclear energy in the national grid must grow from 18% in 2015 to 30% by 2030.

And that's why the Russians are in Canada this week. They are building the biggest nuclear company in the the world, which will research, design, build, operate, and maintain nuclear power plants. At the same time the same organization will mine, mill, and enrich uranium, make nuclear fuel, and sell the reactors and the fuel at home and abroad. The Russians need all the help they can get because it's clear they can't go it alone.

For their part the Canadians have signed up for GNEP and have put AECL in play offering to sell off at least a piece of it to investors. It was a damn interesting week up north.

Bruce Power to acquire Energy Alberta

Yet another try to supply nuclear energy to the tar sands region
[Update 03/14/08]

Bruce Power has signed a letter of intent to purchase the nuclear assets of Energy Alberta, which has been plowing the field in the tar sands region as part of a proposal to construct a nuclear power plant in Alberta. Problem was Energy Alberta didn't get very far. Bruce Power plans to finish the job.

Bruce Power owns and operates the Bruce nuclear power plant in Ontario and is itself owned by a group of partners including TransCanada and Cameco. Readers of this blog will recall a month ago I reported that TransCanada was nosing around the Alberta region to see if an acquisition made sense. Apparently it does. Note also that Cameco is one of Canada's biggest producers of uranium.

Is one man's baloney another's meal?

Last August Energy Alberta announced that it had chosen Peace River as the potential site for its nuclear power plant and had filed an application for a license with the Canadian Nuclear Safety Commission (CNSC). The firm said it had a "secret customer" who would use 70% of the nuclear plant's electricity on tar sands oil plants. However, the oil firm said to be the customer promptly denied it had any intentions of buying a nuclear power plant. Other tar sands oil companies say the time needed to build the reactors and get them running in northern Alberta far exceeds their planning horizons.

For its part Energy Alberta filed two applications with the Canadian nuclear regulatory agency. This bureaucracy set a new land speed record rejecting the first one in July calling it "a draft," which is government talk for "baloney."

The latest application from Bruce Power is for the siting of up to two of twin-unit plants, using AECL's ACR-1000 Advanced Candu reactors. This is the same setup Energy Alberta said that it planned to build involving one 2200 MWe twin-unit plant, with a start-up target of 2017. No buyer for the electricity from the plant has been identified. The expectation is one would be an oil company needing large volumes of power to extract oil from tar sands. As noted earlier so far these firms have shown little interest in such proposals.

Purchase announcement is no baloney

In a company press release Bruce Power said it would overcome Energy Alberta's reputation for giving the appearance it was peddling baloney.

"In 2006, Bruce Power became the first Canadian company in a generation to file a site license application with the Canadian Nuclear Safety Commission to consider building new reactors at its Ontario location. Since then, it has held extensive community consultations as part of what is expected to be a three-year Environmental Assessment process.

That experience, tied to its successful track record of safe and reliable operations, positions Bruce Power well to complete the work begun in 2005 by Energy Alberta founders Wayne Henuset and Hank Swartout."

In effect, Energy Alberta, founded by Calgary businessman Wayne Henuset and oil field veteran Hank Swartout, founder of Precision Drilling Trust, is handing its project off to Bruce Power. And both executives sound very relieved.

"Hank and I started Energy Alberta with the goal of building a nuclear power plant in Alberta," Mr. Henuset said in a release. "We have done a tremendous amount to position the project for the next phase and having Bruce Power Alberta take over, with their experience as an operator, will ensure our dream becomes a reality."

No price was announced for the transaction. Bruce still has to do due diligence on the deal. Mr. Henuset will stay on as an advisor to Bruce Power Alberta once the transaction is complete.

Reactor design needs approval

As part of the announced agreement, Bruce Power will acquire exclusive rights to use Candu technology in Alberta and as a qualified proponent will advance the licensing process for the ACR-1000 design. The ACR-1000 is a new reactor technology. Bruce Power is taking on the costs of getting the design certified by CNSC. That's a big financial commitment. Obviously, Bruce wants to make sure it has a place to build one once the regulatory approvals are done.

Reserving the exclusive right to build the plant in Alberta knocks Areva out of the picture and prevents them from striking a separate deal there while Bruce is tied up with the regulators. Earlier this year Areva had expressed interest in taking a stake in AECL. The firm also explored the potential to build a reactor in Alberta.

Translating corporate press releases

Public relations flacks must wonder if anyone reads their stuff. Sometimes it pays to read the stiff prose because underneath it is sometimes hysterically funny. Here are some examples.

Flack - Duncan Hawthorne, President and CEO of Bruce Power, said: "Energy Alberta deserves great credit for progressing the dialog around nuclear energy to the point where we feel it's worthy of further exploration."

Translation - Energy Alberta could deliver the sizzle but not the steak when it comes to building a nuclear reactor in the tar sands region. Wait for it . . . but Bruce Power knows what it is doing and can deliver the goods.

Flack - "In the Peace Country region, where an application has already been made to site a nuclear plant, we have a community that wants to learn more about our technology."

Translation - Wayne Henuset scared the socks off the locals with his wild claims. We'll show them the jobs and economic benefits from our reactor outweigh any scare tactics the environmentalists can throw at us.

Flack - "Our partners are serious investors and we are a proven operator."

Translation - We know Areva has been up here and wants a piece of the action, but we got here first. That's the kind of initiative our stockholders expect from management. Plus, Wayne's first application for a license got tossed out, but we're so much more credible the outcome is a slam dunk.

Are the locals restless? A field trip is the answer!

OK, here's more flackery. Energy Alberta knows the deal is coming, and to grease the skids with the locals, arranges an all-expenses-paid tour for a group of worthies from Peace River to the Bruce Power station in Ontario. The flack at Energy Alberta writes,

"Energy Alberta Corp invited a group of people from the Peace Country to travel to the Bruce Power nuclear facility in Tiverton, Ontario. The group consisted of elected and administrative officials from a number of area towns, business leaders, aboriginal representatives and environmentalists."

According to an EA press release, "The group experienced, first hand, the enormous scope of the Bruce Power facility, the dedication to safety and security that is top-of-mind with the 3,700 workers at the facility. The plant hosts 8 reactors, producing net 6,200 MW of electricity which supplies 20% of Ontario's power needs. The site also hosts the Ontario Power Groups western waste management facility which the group was able to see first hand."

That should settle down any restless local opposition and keep them out of Bruce Power's hair. Right.

Regardless of flackery or politics, Alberta currently consumes some 9000 MW of electricity, but increased demand, particularly within the oil sands sector, is expected to push demand up to around 14,000 MWe by 2016. Someone needs to do something soon or the lights are going out. It looks like Bruce Power is the latest player to come to the fore. As the flack says, "we are a proven operator." That's true. Let's see what they can do in the wilds of the Peace River region of Alberta. Meanwhile, there are lots of other people who have their eyes on the tar sands region.

China could play a hand or two

The nuclear option for China’s potential involvement in the tar sands looks like this. Chinese engineers have reportedly visualized a scenario in which a string of prefabricated small PBMR reactors would power the extraction of bitumen by using heat to make steam, and electricity; and, also produce the hydrogen necessary to “sweeten” it before export.

The advantage of the smaller PBMR package plants is that the components can be shipped by rail to the remote tar sands region, assembled quickly, and go operational far sooner than a single 1,100 MW CANDU pressurized water reactor. Also, the PBMR plants don’t need a containment building. The helium-cooled, graphite covered “pebbles” don’t have the same potential for a “melt down” as conventional fuel rods.

Andrew Kadak, a professor of nuclear engineering at MIT, says China plans to build PBMRs in the range of 200 MW and one of their expected uses will be to help extract and refine heavy crude oil from tar sands. In 2006 Kadak told the MIT Energy Research Council, “You might see oil companies building the next nuclear power plants.” He added the design of the next generation nuclear plant might come from Idaho.

Hydrogen potential updated

Bruce Power intends to work with the Canadian Hydrogen Association to study the potential of converting electricity generated by nuclear reactors during off-peak hours into hydrogen. A similar study is being conducted at the Bruce nuclear power plant. Hydrogen can be used by tar sands oil companies to break down the heavy crude bitumen oil refining it into a more usable product.

Last November the New York Times reported that researchers at the Idaho National Laboratory (INL), in eastern Idaho, and a high-tech materials company in Salt Lake City, have developed new technologies to produce hydrogen using a nuclear reactor. Stephen Herring, an INL scientist, and developers at Cerametec Inc. claim the new process shows the “highest-known production of hydrogen by high-temperature electrolysis.” Their goal is to build a high-temperature, gas-cooled reactor (HTGR) operating at 800-1,000 C that produces 2.5 kilos of hydrogen per second.

The INL is the U.S. Department of Energy’s lead lab for development and construction of a prototype Next Generation Nuclear Plant (NGNP). Herring told the New York Times his process could recover oil from the Athabasca Tar Sands in Alberta. The new reactor, he said, could produce both steam and hydrogen, which is just what the oil companies are asking for.

Wednesday, November 28, 2007

Dominion Files COL with NRC

New plant will use GE's ESBWR

Reuters reports that Virginia-based utility Dominion Resources (NYSE:D) has submitted an application to build a new nuclear reactor. Dominion's application is the third request by a U.S. utility to build a new nuclear reactor this year,

The NRC has already approved an early site permit to allow Richmond-based Dominion to build a new reactor at its North Anna Power Station in Louisa County, Virginia.

Dominion's announcement was confirmed by NRC Chairman Dale Klein during a conference hosted by the Center for Strategic and International Studies according to Reuters.

Dominion has already signed a contract with General Electric Co. (NYSE:GE) to secure components for an Economic Simplified Boiling Water Reactor (ESBWR) at the site.

The 1,834 megawatt North Anna station is located in Mineral in Louisa County about 50 miles northwest of Richmond, Virginia. There are two units at the station, the 924 MW Unit 1 and the 910 MW Unit 2, which entered service in 1978 and 1980.

Dominion also has a cooperative agreement with the US Department of Energy (DOE) to share equally the cost of the COL. The company expects it will cost about $500 million to complete all of the necessary pre-construction work to be able to build the unit. The maximum expense to Dominion will be $60 million.

Additional details are available from the World Nuclear Association.

Sunday, November 25, 2007

Flash - Areva seals $11.9 B China Deal

Two 1,700 Mw reactors
will be built at coastal sites


Bloomberg wire service reports Areva SA has won an 8 billion euro ($11.9 billion) nuclear reactor agreement from China, a record deal for the French company and twice as large as expected. The deal includes two reactors, uranium enrichment, and separate work, which is potentially larger than the reactor deal itself, for nuclear fuel reprocessing. Areva also committed to transferring nuclear reactor technologies to state-owned Chinese nuclear companies.

China Guangdong Nuclear Power Group Co. will order two nuclear reactors Areva Chief Executive Officer Anne Lauvergeon said in Beijing on 11/26 during President Nicolas Sarkozy's visit to the Chinese capital. Guangdong Nuclear will also gain access to 35% of production from Areva's uranium unit.

"It's a record contract,'' Lauvergeon said. "There will be technologies transferred in the ventures'' to Areva's Chinese partner. Contracts for the accord were signed in Beijing on Monday 11/26. Electricite de France SA, Europe's largest power generator, will own 30 percent of two nuclear power reactors Areva will build in the city of Taishan in southern China's Guangdong province. The reactors will each have capacity of 1,600 MWe.

The French and Chinese governments will sign a separate cooperation contract involving China National Nuclear Corp., the nation's biggest nuclear reactor builder, to study building a E$15 billion spent nuclear fuel reprocessing facility in China, Lauvergeon said.

Areva and China Guangdong Nuclear may change the location of two reactors proposed for southern China to fit in with the region's energy plans, Chu Pinchuang, senior engineer at the Chinese company said last August. The reactors were planned for Yangjiang in the province of Guangdong. China has plans for multiple reactors in the coastal province.

References
* Areva's (28 page PDF file) press kit
* Areva's press release and links to videos; portal page