Saturday, July 12, 2008

Singh's chances of a nuclear deal ?

060302_bush_india It's an election year and Congress can't even pass domestic spending bills

Indian Minister Manmohan Singh has bet the ranch on a nuclear cooperation pact with the U.S., but his chances of getting Congressional approval may be slim and none.

While he has saved his government from a parliamentary election, he still has to face several daunting hurdles to obtain access to reliable supplies of uranium for his civilian and military nuclear reactors. Half of India's civilian nuclear fleet is shut down because countries like Australia, a major supplier, will not sell uranium to India because it has not signed the nuclear nonproliferation treaty.

Three challenges no waiting

Three key challenges include a short-attention span in the U.S. Congress, the need for unanimous approval of the Nuclear Suppliers Group, and review of India's commitments to inspections of its reactors by the International Atomic Energy Agency (IAEA).

ElephantCritics of the deal have said, in blunt terms, that India wants to have it both ways. It wants access to U.S. nuclear technology, but to stifle critics at home it is planning to put some nuclear reactors off limits to inspections and asserts its right to conduct future underground nuclear tests. Both actions are clear deal breakers and will result in rejection of the 1-2-3 Agreement by Congress. Even if India wasn't appearing to be dealing cards from the bottom of the deck, it would still face obstacles in the U.S of a more practical political nature.

In the U.S. Congress is working a shorter than usual legislative calendar in order to get all of the House and a third of the Senate home in time to campaign for re-election. It is widely assumed that none of the 13 appropriation bills Congress is supposed to pass by September will be done, and that the federal government will be on a continuing resolution at least until a lame duck Congress returns after Thanksgiving. How a contentious nuclear deal with India will find a place on the legislative calendar in this environment is anyone's guess. Even more challenging will be the uncertain prospects the deal would face with a new President and Congress following the elections.

Singh finds a common fate with Merkel

singh-merkelDespite all these downsides to the deal, Singh went to the G8 meeting in Japan radiating confidence that his nation will soon be able to buy nuclear fuel and technology on the global market. While he was there he spent some time talking with German's Andrea Merkel who has her own nuclear story to tell. Interestingly, Ms. Merkel wants to save her nuclear power plants from the clutches of green groups, and seems frustrated at every turn in her attempts to do so. Mr. Singh wants to build his nuclear energy infrastructure, and also seems to be standing in shifting sands. Both want nuclear energy, and, paradoxically, for both it appears this objective is beyond their grasp. Both may lose their position and political power in their quest for nuclear energy.

Seeking a place in history and at the table

Still, the 1-2-3 agreement a big deal to India and some observers say that Singh's goal line push is intended to show critics at home he's capable of being a high profile actor on the world stage. President Bush is also seeking some positive place in history he ends his second term with public approval ratings at historical lows.

The 1-2-3 agreement has another set of supporters in the U.S. These are multi-national corporations who see huge opportunities for 'offset deals' involving trade in non-nuclear technologies, including conventional defense systems, in return for India's trade procurement of U.S. nuclear technologies. These firms will be lobbying Congress to pass the measure. Items of interest include aircraft and electronics.

Finally, The Bush Administration's insistence on a special case for India will likely undermine U.S. influence with other nations with regard to support for the nuclear nonproliferation treaty. Overall, it is a messy situation, and U.S. long-term interests may be preserved by the fact that Congress won't see the 1-2-3 deal as being of any interest to voters in their districts. It will be convenient for Congress to shove the decision to approve it or not into the future. With the election settled, a new Congress and President in the White House will be able to take a fresh look at what Singh is selling. Starting over with a clean slate and new governments in both places might be the best thing that every happened to U.S. cooperation with India on nuclear energy.

Ameren to move on a second Callaway reactor

First, it must convince Missouri voters to a pay-as-you-go construction plan

ameren logoThe St. Louis Post Dispatch reports that Ameren is planning a new nuclear plant at its Callaway County, Missouri, location and plans to make a decision whether to go forward by 2010.

The St. Louis-based utility, now called AmerenUE, and its partner, Baltimore-based UniStar Nuclear LLC, will this year seek a construction and operating license (COL) for a $6 billion, 1,600-megawatt plant next to the existing Callaway, MO, nuclear plant.

A decision on whether to go forward with the project won't be made until 2010. At the top of the job jar is the need to reverse a 1976 law that prohibits Missouri utilities from charging customers for power plants while they're being built. The case for more generating capacity isn't the issue.

Hit_in_the_headMissouri voters approved a law that prohibits payments for construction work in progress in 1976, by a 2-1 ratio. The law was the product of a grass-roots endeavor by anti-nuclear activists to halt construction of the first Callaway plant. The first plant was built anyway and opened in 1984.

Ameren estimates the cost of a new unit at Callaway would be at least $6 billion, or $9 billion with financing. The firm doesn't have the borrowing power to come up with that kind of investment. Unless Ameren can pay for the plant as it goes, by charging customers during construction, it won't get built, Chief Executive Thomas Voss said betting the entire company on one plant isn't the way to go.

"We just couldn't do it," he told the St. Louis Post-Dispatch. "The risk would be too great. We don't think people would lend us the money. We don't think our board of directors would approve it. And we don't think our stockholders would think it's prudent."

Voss has plenty of company in that point of view, but their idea of a path forward is radically different.

Opposition is focused on consumer costs

Anti-nuclear activist Kay Drey of suburban St. Louis, who helped push the 1976 ballot initiative, told the Dispatch she is pledged to challenge any effort to undo her work of 30 years ago.

nirslogo"I'm 75 years old, and I'm not looking for another statewide election fight, but I'll do it," she said.

Drey still works on national anti-nuclear campaigns and as recently as 2006 served as a member of the board of directors for NIRS, an anti-nuclear group which was founded in the 1970s as a networking center for environmental activists concerned about nuclear power.

John Coffman, an attorney for the Consumers Council of Missouri, said he is concerned about allowing the utility to charge customers for a power plant before it's built because it removes a powerful incentive to manage costs. He says that Ameren's efforts ignore the 1976 law.

Support grows to change the Missouri law

jeffdavis_missouriAmerenUE executives insist that reversing the law would benefit customers in the long run. They say it could save $3 billion in borrowing costs. Jeff Davis, (left) chairman of the Missouri Public Service Commission, agrees. He told the Dispatch changing the law could benefit consumers if drafted properly.

"If you pay cash, you're going to get a better price than if you put it on a credit card," he said.

The PSC chairman said he would support legislation to do so only if it included adequate consumer protections and preserved the commission's authority to disallow costs.

Ameren officials have met with some legislators and found support for reversing the Missouri law banning charges for construction work in progress, Voss told the Dispatch. The utility CEO also said he realizes that the November elections will change the makeup of the Legislature, and the state will have a new governor next year.

"I don't know if we'll get something passed next session, but we'd certainly want to get a feel for the Legislature," Voss said.

Part of Ameren's appeal to lawmakers is jobs, Voss said. The plant would be the biggest construction project in Missouri's history, generating as many as 3,000 temporary construction jobs and 500 permanent jobs. "It's a huge economic boon in a state that could use it," he said.

Skepticism runs deep in Missouri about something this big, and the public got a chance to show it on July 9.

NRC holds first public meeting

On July 9 the Nuclear Regulatory Commission (NRC) held a public meeting at Westminster College in Fulton, MO, to give the public a first look at the plans for the new reactor. Hundreds turned out for the meeting.

Reactor opponents offered a drastic assessment. In a news conference held before the public event, they called on Ameren Corp., the utility's corporate parent, to pursue alternative and renewable energy options.

mse"Nuclear power is a phenomenally expensive, dead-end technology," said Mark Haim of Missourians for Safe Energy, an environmental group. "It has failed the test of the marketplace. Its much touted revival is only conceivable with enormous subsidies right now from all taxpayers, and huge bills not far down the pike for Missouri ratepayers."

adamheflinAdam Heflin, (right) the Chief Nuclear Officer at Ameren,sees things differently. He perceives that people are more open-minded about nuclear power today than they were a few years ago.

“The conversations are different now,” Heflin said. “The receptivity is a lot higher now. More people are worried about the environment. People also know more about nuclear power, and our safety record has been quite good.”

Heflin added that the Callaway expansion has "a lot of legislative support now. I think it's the right thing to do from a customer's perspective and from an environmental perspective."

The second Callaway reactor would generate 1,600 MWe. The second reactor also would generate an estimated $115 million in tax revenue in Callaway County during the construction period, Heflin said, and about $17.5 million annually after it's operating. The 66 counties in Ameren's service area, including Boone, would split up about $72 million in annual property tax revenue, he said.

Ameren has agreed to work with UniStar Nuclear to build an Areva EPR as its technology of choice.

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Friday, July 11, 2008

Vermont Yankee relicensing hearings start up

The NRC and the State of Vermont are holding separate reviews on the license which expires in 2012

vermont yankeeEntergy is one of the nation's biggest operators of nuclear power plants in the U.S. delivering about 30,000 MW to over three million customers. Over the next year some unlucky souls at the company will have to worry about the future of just 620 of those megawatts at an aging nuclear plant located on the Connecticut River about 80 miles north of Hartford.

The plant, which entered service in 1972, has become the center of controversy over nuclear power in Vermont where it supplies more than 50% of the electric power used in that state. The NRC and the State of Vermont will hold licensing hearings starting July 21st which will determine the fate of the plant and the source of the cheapest electricity in New England.

Both the Nuclear Regulatory Commission (NRC) and the State of Vermont Department of Public Service are planning hearings on a request by Entergy to extend the license for another 20 years from 2012 to 2032. During these hearings Entergy will have to make the case that the plant can be operated safely and without mishaps.

VYcoolingtowercollapseThe failure of a wooden cooling structure in August 2007 set off concerns throughout the state even though the failure itself was not a safety issue according to the NRC.The New England Coalition, a Brattleboro-based anti-nuclear citizen group, filed an emergency petition shortly after the tower collapse. NRC officials dismissed the petition, saying the coalition's concerns had been addressed by Entergy in its post-collapse investigations and reports. The NRC instead issued the plant a "noncited violation" for not following nuclear industry recommendations for preventing the problems that led to the collapse.

"We looked at it in terms of nuclear safety, and there was no real significance involved," said Neil Sheehan, spokesman for the NRC. However, the NRC also required it to take action to prevent future issues with the cooling tower. The NRC asked for the company to do a root-cause analysis of what was behind the collapse.

[Update 07/12/08] New problems came to light this week with the cooling tower structures prompting strong criticism of plant operations. Vermont Yankee reduced power to less than half its regular output. The NRC said the only portion of the cooling towers that is key to the immediate safety of the plant appeared to be unaffected by the problems.

Shumlin Ambitious state legislators, all Democrats, have used the relicensing process, and frequent reports of operational problems, like the failure of a crane moving a cask of spent nuclear fuel, to create fear, uncertainty, and doubt about the nuclear plant as a way to draw attention to it as an election issue. State Senator Peter Shumlin (D-Windham) (left) has been in the forefront of these efforts and is unapologetic about the potential economic impacts of losing the cheap electricity provided by the plant even though it keeps thousands of jobs in Vermont. Major manufacturers, including IBM, have petitioned the legislature to support the 20-year license extension.

Vermont's public operating review

The State of Vermont actually has a two-tier process for reviewing Vermont Yankee's license. The state Department of Public Service, which represents consumers, will have its work reviewed by a citizens oversight panel with joint appointments by the Governor and the State Legislature. The citizens panel has already drawn criticism due to the appointment of anti-nuclear activists to it by Shumlin.

The Department of Public Service must decide whether the continued operation of the reactor is in the best interests of the state. While this process is taking place, Entergy is also negotiating new power purchase agreements with Vermont utilities that buy electricity from the reactor.

JVolzThere is a lot going on and James Volz, (right) chairman of the Public Service Board, which will conduct the hearings, told the Rutland Herald, he expects it to take some time to get everything done. In a classic understatement, he said,

"This is an important case. I'm sure the public will have a lot to say about it.."

Some critics of the process question whether the agency is up to the job. The Rutland Herald reports various studies of the plant will not all be completed before next year, and some may not be final before the Board completes the task of taking evidence on Vermont Yankee's permit.

"The studies will not be done in time to meet this schedule," said James Matteau of the Windham Regional Commission. He also questioned whether there will be enough manpower for the assignment. However, department lawyers said it is a common practice to hire experts when needed to add to their own expertise.

NRC's baroque process

The NRC's grandly named Atomic Safety & Licensing Board (ASLB) will open its proceedings on July 21 focusing on three "contentions" filed by the New England Coalition and the State of Vermont. The ASLB is a quasi-judicial arm of the NRC that handles and decides challenges to proposed nuclear licensing matters.

In a press release issued July 9, the NRC said the contentions concern metal fatigue and the aging of the steam dryer and piping in the reactor.The three contentions that NEC and the State of Vermont have raised, and that will be litigated during the hearing beginning on July 21, allege the following:

Metal Fatigue Contention: The analytical methods employed in Entergy’s environmentally corrected cumulative usage factor (CUFen) reanalysis were flawed by numerous uncertainties, unjustified assumptions and insufficient conservatism, and produced unrealistically optimistic results. Entergy has not, in its reanalysis or subsequent confirmatory analysis, demonstrated that the reactor components will not fail due to metal fatigue during the period of extended operation.

Steam Dryer Contention: The license renewal application does not include an adequate plan to monitor and manage aging of the plant’s steam dryer during the period of extended operation. (The steam dryer, a component located inside the top of the reactor vessel, removes moisture from steam produced in the reactor before it flows to the turbine to generate electricity.)

Flow-Accelerated Corrosion Contention: The license renewal application does not include an adequate plan to monitor and manage aging of plant piping due to flow-accelerated corrosion during the period of extended operation.

NRC hearing set for July 21

nrc logoThree ASLB judges will hold the hearing at the Windham County Courthouse in Newfane, VT, which is 10 miles north of Brattleboro. According to the relicensing information published on NRC's website, the agency has recycled a whole bunch of electrons assembling electronic documents about the process. Whether the public will have time to read all of it is questionable. Certainly, lawyers on both sides are burning at least some of those 620 MW keeping the lights on late at night going over the agency's reports.

The New England Coalition says it will present the case that vital reactor piping and internal reactor components cannot be safely depended on past their 40-year design life.

entergynuclear Entergy, which owns and operates Vermont Yankee, submitted an application to the NRC on Jan. 27, 2006, seeking a 20-year renewal of the current 40-year operating license for the facility, which is located in Vernon, Vt, about five miles south of Brattleboro. The plant’s current license is set to expire on March 21, 2012.

At the end of the process the ASLB will then rule approving, attaching safety conditions to, or denying renewal of Vermont Yankee’s federal license beyond 2012. A lot weighs in the balance. Stay tuned.

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Western Lands Uranium Gopher for July 12, 2008

Mining uranium exploration press releases for useful stuff

(An occasional column on money and mining news items)

gopherThe rise of nuclear energy, a second act if ever there was one, has given uranium a shot in the arm in western states in the U.S. Interest in uranium mining is growing and with it comes another growth industry - the production of press releases about the uranium mining industry. The purpose of this occasional column is to separate the really interesting stuff from promotional fluff.

The choices of the subjects is based on what looks interesting mostly in states that are "west" of the 100th meridian, but this isn't hard and fast. The states of interest are WY, CO, UT, TX, NM, AZ, & NV. For this reason the series is titled the "western lands uranium gopher." These are news notes and the content is not to be considered investment advice.

URI dumps Rio Algom mill deal

Uranium Resources Inc. (NASDAQ:URRE) backed out of a $127 million deal on June 26 with Rio Algom to purchase a uranium mill, which last operated in 2002, near Grants, NM. Rick Van Horn, URI VP, told a conference call of Wall Street Analysts on June 26 the decision was based on a combination of changes in financial markets and the drop of the spot price of uranium from $120/lb to $60/lb. He termed the decision to back out as “a temporary setback,” but confirmed in response to an analyst’s questions that URI would not be able to bid again on acquisition of the mill under the same terms.

Van Horn said changes in equities markets made, “going out and raising $180 million next to impossible. If we had come to market 9-12 months ago, there is no doubt in my mind this deal would have been consummated. It’s not anybody’s fault. In the end I think it was pretty much bad timing.”

The time-to-market advantage of the existing mill site is that it has an NRC license which would have cut two years off the process of entering revenue generating operations with a new mill. The new 3,000 ton/day facility would have cost at least $200 million to build. The deal with Rio Algom involved payment of $110 million for the current facility and another payment of $16.5 million once the NRC license was transferred to URI. [FCW 251] The deal for the Rio Algom mill would have also involved mineral rights on 14,000 acres and water rights of 9,700 acre feet per year for the site.

Horn said one of the ironies of the current situation is that the NRC had just announced a public hearing date for transfer of the license. A new mill on a ‘greenfield site’ would take more time to get a license and would cost more to build because ground could not be broken until the license was in hand.

In terms of feeding the mill, Van Horn estimated New Mexico holds 92 million pounds of uranium in reserves of which half would require milling operations and the rest from ISR. A 3000/ton a day facility, extracting 4-6 pounds per ton of uranium, could produce 1,200-1,800 pounds per day of uranium or, at 300 days per year of operation, about 360,000 to 540,000 pounds of uranium per year. This rate of production would give the mill a long life assuming all the conventionally mined uranium ore in the region went solely to this mill. Last October URI CEO Dave Clark told analysts, the bet is that, "there is going to be one primary site for a regional mill in New Mexico," and this one is it.

Van Horn said a number of other factors contributed to a delay in closing the deal. He said one month after the deal was announced the due diligence process ran into a problem with an audit of Rio Algom’s financials. He said the auditing firm would not stand behind the numbers requiring a new analysis that wasn’t completed until February 2008. This is a very unusual admission and one that could come back to haunt both companies in the future. It could deter other firms from bidding on the property or going into a joint venture with URI in a new deal for the mill.

Van Horn reserved his strongest words for the “free fall” of the spot price of uranium as the single most significant reason the deal did not go through.

“The low spot price defies description, “ Van Horn told the Associated Press. He added, “the long-term price is $90, but utilities – the ultimate purchasers of uranium – zero in on the spot price.”

  • Challenges right from the start

URI’s ability to close the deal was a challenge right from the start. In addition to the $127 million to close the deal just to acquire the mill site, it would have taken another $35 million to complete an NRC approved plan for reclamation of the old mill site. A review last October of the firm’s financial position showed, with just $16 million in cash on hand, that new investors, likely other uranium mining companies, would be needed in joint venture agreements to finance the deal and build the new mill.

On November 12, just one month after the deal was announced, URI stock hit a 52-week high of $13.12/share. Since then the stock price has been falling to its current price at market close on June 27, when the deal was ended, of $3.27/share. What this means is that market capitalization, at 52 million shares outstanding, dropped from $676 million to $170 million virtually tying the firm’s hands and preventing it from attracting new investors.

Rio Algom Mining did not respond to inquiries from the news media, and referred all of them to URI. The Grants, NM, area once had five operating mills, but now has none. Opposition to new uranium mining on or near Navajo tribal lands may also have been a factor in the inability of URI to attract other uranium companies to invest in the mill.

  • More bad news may be pending

URI has another uranium battle pending before the 10th Circuit Court of Appeals in Denver. EPA asserts that URI subsidiary Hydro Resources' Crownpoint Uranium Solution Mining Project should be treated as being located on 'Indian land.' The key issue to be decided by the 10th Federal Circuit Court of Appeals is, in terms of this specific property, whether EPA or the State of New Mexico has jurisdiction to issue a permit for URI's planned ISR mine.

EPA maintains that the land is located with the Church Rock Chapter of the Navajo Nation, which opposes uranium mining on or near tribal lands. In February 2007, EPA issued a decision finding that the Church Rock property is 'Indian country' and that the EPA has the sole authority to issue the UIC permit.

Also, in 2005 the Navajo tribal council passed a ban on mining or processing uranium in "Navajo Indian country," a term that embraces both the reservation and nearby communities such as Crownpoint and Church Rock. Federal District courts have recognized "Indian country," as defined by EPA, as extending beyond the reservation's boundaries.

URI, through a subsidiary, holds a NRC license to a proposed ISR mine near Crownpoint, a town of 3,000 Navajos that reportedly sits on one of the largest known undeveloped uranium deposits in the U.S. Mark Pelizza, VP at URI, told the LA Times in October 2006 "these uranium deposits are the biggest prize of all - the Saudi Arabia of uranium."

For their part the Navajo Nation is adamantly opposed to any new uranium mining until the legacy of abandoned uranium mines from the 1950s on tribal lands is cleaned up.

URI officials are seeking permission to begin mining on a test basis. If results they convince New Mexico regulators that the project is environmentally sound, the company wants to be allowed to start operations in Crownpoint. Mining in both places is expected to yield 42 million pounds of uranium over 20 years according to URI officials.

Strathmore enters race for New Mexico uranium mill

Strathmore Minerals Corp. (TSX VENTURE: STM) released an update on progress for design and location of its planned 3,500 ton/day uranium mill being carried out for its uranium projects in northwestern New Mexico. The company and its joint venture partner, Sumitomo Corporation of Japan, said they have made considerable progress in the evaluation of designing and identifying a possible location of a regional uranium mill and tailings disposal facility for its primary Roca Honda uranium development project.

The 30% Design Report incorporates a uranium throughput capacity of 3,500 tons per day that could be expanded to 7,000 tons per day. This expansion capability is incorporated to accommodate toll milling opportunities from other uranium mining operations in the area without requiring major facility revisions.

The initial phase of an "Alternative Sites Analysis" as required by the NRC for licensing a uranium mill and tailings disposal facility has been completed. The company continues to develop the data necessary to submit a license application to the NRC, including completion of a preliminary mill design, capital and operating cost estimates for the milling facility, and the development of baseline data documentation for various environmental media.

In early 2008, an Alternative Tailings Disposal Technical Report was completed that assessed alternative tailings disposal technologies. Preliminary analyses indicate the existence of several viable sites, including one of the sites owned by Strathmore.

Juan Velasquez, VP Govt., Environmental, and Regulatory Affairs for Strathmore, stated,

"We have made significant strides in pursuing our permitting and production goals since we started this project, particularly as it relates to identification of an appropriate site for licensing, constructing and operating a much needed regional mill. We have developed a good working relationship with both the state and federal regulatory agencies, and anticipate submitting our permit applications for regulatory review in the near future."

Pennoni Associates Inc., an engineering firm headquartered in Philadelphia, PA, and Minerals Engineering Company of Tucson, AZ completed a 30% Design Report in April 2008. The 30% Design represents a target milestone document that presents the preliminary layout and equipment configuration. It is suitable for permit review and approval. Subsequent design phases (60%, 90%, 100%) typically represent draft, pre-final and final construction-level documents. Engineering efforts are currently under way for the 60% Design milestone.

John DeJoia, Strathmore's Senior VP, New Mexico Operations, commented,

"Our engineers have developed a design that can easily accommodate production capacity of up to 7000 tons per day without major changes to our proposed facility. This design/production flexibility will allow us to meet the future needs of Strathmore and other producers when those needs arise."

Strathmore said it has long believed that a regional mill is necessary for the revitalization of the uranium industry in New Mexico. It is central to the Company's long-term uranium plan, and is strategic to other potential uranium producers who have demonstrated interest in collectively participating in this process. A company spokesman said the initiative is being made available to other companies interested in participating, and "it will provide the foundation for rebuilding the uranium industry in northwestern New Mexico."

Cameco requests expansion of Smith-Highland mine

Cameco Resources Inc. (NYSE:CCJ) has asked the Bureau of Land Management (BLM) to expand its permit boundary by 8,700 acres for its ISR mine north of Douglas, Wyo. Company officials reportedly said their initial expansion would be 325 acres of which 120 are on BLM land. The existing mine has been cited for environmental violations. Tom Foertsch of the BLM Casper office said his agency will work with the Wyoming Department of Environmental Quality to address the violations.

“We’re working with DEQ on that,” Foertsch told the Casper Tribune. “I’m sure we’ll get more public comments because of the negative publicity.”

Last April the Wyoming Department of Environmental Quality issued a notice of violation against Power Resources which operates the Smith-Highland Ranch ISR uranium mine. Power Resources is a subsidiary of Cameco Corp. The notice lists problems with groundwater contamination, multiple surface spills of chemicals, and an inadequate bond for restoration.

Cameco Corp. spokesman Gord Struthers told the Casper Tribune in April the report “is not a good reflection of our environmental performance.” He said the company will update its plans for groundwater protection and increase the funds set aside for site restoration. DEQ reportedly estimated Cameco needs to set aside $150 million to cover reclamation of existing facilities, but has only asked the firm to increase its bond to $80 million. The gap is a source of controversy with area ranchers.

BLM said it will prepare a new environmental analysis to evaluate the potential impacts of Cameco’s proposed expansion which the company calls “Reynolds Ranch Uranium Mine.” It will take place under the existing NRC license through a single assessment prepared by both agencies. It is one of the first of a planned series of joint assessments by BLM and NRC for ISR uranium mines.

In 2006 the Smith-Highland Ranch mine produced 2 million pounds of U3O8, and is expected to continue to produce at this level for the next few years.

Cameco gets $900,000 Fine at Smith HIghliand

Power Resources, Inc., a subsidiary of Cameco, will pay $900,000 in penalties to the state to settle a long list of violations at its Smith-Highland Ranch in-situ leach uranium mine in Carbon County.

In addition, the company will provide $500,000 to the Wyoming Department of Environmental Quality for "special environmental projects" related to in-situ uranium mining in the state, according to DEQ.

On March 10, DEQ issued a notice of violation to Power Resources Inc., detailing a long list of alleged violations pursuant to two permits, including delayed restoration of groundwater and a seriously inadequate bond to cover restoration.

"The settlement agreement satisfies the DEQ's compliance concerns specified in the Notice of Violation," said Don McKenzie, administrator of Wyoming DEQ's land quality division.

Under the agreement, Cameco Resources, which owns Power Resources, agreed revise its wellfield restoration schedule to accelerate restoration and reclamation activity on its permit area. The company also agreed to increase its reclamation bond from $40.7 million to $80 million.

Exploratory drilling underway in the Dakotas

Formation Resources Inc. of Bismark, a new unit of PacMag Metals (ASX:PMH) of West Perth, Australia, has started exploratory drilling in Billings County and in Slope County after receiving a permit from the State of North Dakota in April. This is the first new uranium prospecting in North Dakota in more than two decades. Between 1962 and 1967, the last years there was uranium production in the state, a total of 592,000 pounds of uranium were taken out of the ground.

Ed Murphy, the state geologist, said the drilling is taking place near in an eight-square mile area near the Fritz Mine which produced uranium in the 1960s. PacMag is scheduled to drill 800 holes as part of the current program. So far 150 test holes have been drilled as part of the “Sentinel Project.”

Jim Guilinger, of World Industrial Minerals of Arvada, Colo, which is the firm doing the drilling, says of the results, “So far we’re interested enough to keep drilling.” He said the test holes have turned up uranium and molybdenum, but that it will be next winter before all the results are in and the data reviewed to see if it makes sense to open a mine. Guilinger said the most likely operation will be an open pit mine, but he also said if there is enough uranium the firm might consider also building a mill.

Formation Resources Inc., which is already coring for uranium on private land in those same counties now wants to look on public land to see if it can detect the metals there. It wants to prospect for uranium on the Little Missouri National Grasslands in Slope and Billings counties in western North Dakota. Formation wants to prospect on 18,000 grasslands' acres - most in Slope County - by walking through the area with a radium detector and taking a grid of soil samples under peeled and replaced sod.

This application and the active coring on private land, are also part of its North Dakota Sentinel Project. The company has said because of geology it would mine in open pits for uranium. It will look for uranium and molybdenum. Starting last month, the company has drilled hundreds of samples on the private land and those were positive for both uranium and molybdenum.
The Forest Service will take public comments for 30 days and hold a public meeting before taking any action on the application. The public meeting on Formation's prospecting application will be held at 6:30 p.m. July 15 at the Memorial Hall in Belfield. ND.

Forest Service project manager Mark Sexton said depending on the comments and any other considerations, the company could start prospecting late this summer. If the prospecting is positive, the company would have to return to the Forest Service for permits to drill and core for uranium. That permitting would require a detailed environmental analysis. For some parts of the grasslands, the grasslands management plan would have to be amended because removal of minerals and ground disturbance are prohibited there. It would take four to five years before any mining could be approved, Sexton said.
South Dakota News

Meanwhile, Powertech (TSE:PWE) is drilling near Edgemont, SD. It also hopes to benefit from a new state law that designates old geology reports as public records. A spokesman for the firm said valuable information can be found in the records. The new law makes prospecting information available to the public within six months, but firms can apply for exceptions that keep the information confidential for up to five years.

Strathmore Minerals Corp. announced that it has entered into a Letter of Intent ("LOI") with Great Bear Uranium Corp. granting it an option to acquire a 100% interest in the Chord Uranium Property located in South Dakota. The Chord Property comprises twenty-two claims totalling 440 acres and is located approximately 15 miles north of the town of Edgemont, South Dakota. Uranium was first discovered at Chord in the 1970s and extensive drilling by previous operators Tennessee Valley Authority and Union Carbide outlined a historical uranium resource estimate totalling 3.8 million lbs U3O8 at an average grade of 0.11% U3O8 (not NI 43-101 compliant).

Bluerock sells Mongolian mine for $2.6 million to advance Colorado and Utah properties

Bluerock’s (BRD.V) Mongolian arm has been sold to New Dehli-based conglomerate Jindal Steel & Power for $2.6 million. Bluerock CEO Michael Collins said the proceeds will be used to for production operations on its Colorado and Utah properties. Bluerock had a 60% share of the Mongolian parcels. The rest was owned by Uranerz. In late June Bluerock announced the first shipment of uranium ore from the J-Bird mine in Colorado.

Uranium Energy raises $13 million for Goliad project

Uranium Energy Corp (AMEX:UEC) announced it completed a non-brokered private placement offering at a subscription price of $2.40 per Unit for gross proceeds to the Company of $13,086,597. The net proceeds from the Offering will be used to advance the Company's Goliad ISR Uranium Project, for other exploration and development activities, for land and project acquisitions and for general corporate purposes.

Bayswater files for SEC listing

Bayswater (BAY.V) announced it has filed with the U.S. Securities & Exchange Commission to register its common stock in this country. The company said June 11 it undertook this step due to its large shareholder base in the United States and to provide greater access to its equity market for its shareholders and investors in the United States. The registration statement is subject to SEC review. The firm also announced it had completed acquisitions of the Carol R Mine and Holiday Mine located in Mineral County, Nev., and the Green Monster Mine in Clark County, Nev. Bayswater said is now has a 90% interest in these properties.

Golder to assess abandon uranium mines in New Mexico

The State of New Mexico has hired a firm to help the state Mining and Minerals Division with the cleanup of abandoned uranium mines around New Mexico. The state estimates there are more than 15,000 unreclaimed mine hazards scattered throughout New Mexico.

The agency says Golder Associates will conduct field assessments of more than a dozen abandoned mines northwest of Grants to measure the extent of contamination so cleanup plans can be developed for the sites.

Bill Brancard, director of the Mining and Minerals Division, says abandoned uranium mines have left a legacy of dangerous mine openings and, in many cases, contaminated soil and water. Brancard says the project is an important step to reduce public exposure to the health and safety hazards associated with abandoned uranium mines.

NRC hearing on Lost Creek, Wyo, ISR mine

The Nuclear Regulatory Commission has announced an opportunity to request a hearing on the license application by Lost Creek ISR, LLC, to construct and operate an in-situ leach uranium recovery operation at the Lost Creek site in Sweetwater County, Wyo. The firm is a subsidiary of Ur-Energy Inc (TSX: URE)

Lost Creek initially submitted the application Oct. 30, 2007, but withdrew it Feb. 29 in order to revise its radiation protection program. The company resubmitted the application March 31. The NRC staff has completed its initial review and determined that the application is sufficiently complete for the staff to docket the application and begin its detailed environmental and safety reviews. Docketing the application does not indicate approval of the proposed operation, nor does it preclude NRC from requesting additional information from the applicant to aid in performing the review.

In-situ recovery of uranium involves injecting a leaching solution, typically water mixed with oxygen and sodium bicarbonate, through wells into an underground ore deposit to dissolve the uranium. The leach solution is pumped back to the surface and sent to a processing plant, where ion exchange is used to separate the uranium from the solution.

A notice of opportunity to request a hearing was published July 10 in the Federal Register. The notice provides detailed instructions on how to file a request using the NRC’s new E-Filing system. The deadline to request a hearing is September 8. The notice and the license application are available on NRC’s Web site.

Colorado western slope uranium leases awarded

Sixteen 10-year leases were granted on 7/10 by the U.S. Department of Energy for uranium and vanadium exploration and development on plots of land between Gateway and Egnar, Colo.

The leases began on June 27, after a public bidding process in Denver in May. Each bidder was evaluated by the DOE for financial stability, production capabilities and its status as a U.S. company, according to a government press release.

Seven leases were awarded to Golden Eagle Uranium, four leases went to Energy Fuels Resources and U.S. Uranium Corp., and Zenith Minerals was awarded one lease. Thirteen companies submitted 59 bids for the tracts of land.

The DOE is evaluating the bids for two additional leases, while a third tract received no bids and is inactive. In addition to the lease money, the DOE will receive a royalty percentage from each bidder.

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Wednesday, July 9, 2008

Idaho lab funding looking up in the Senate

Craig's final acts on Energy & Water Appropriations bring welcome increases

moneywheelThe Idaho Falls Post Register reports that the Senate Energy & Water Appropriations subcommittee responsible for nuclear energy R&D funding this week has given the Idaho National Laboratory (INL) something to cheer about.

According to the newspaper, the Senate subcommittee funding for lab follows FY2009 funding requests the House subcommittee approved last month. The requests still must make it through the full House and Senate. A vote by the full appropriations committee is expected soon.

Neither funding bill is a done deal, but typically the two chambers split the differences in either a conference committee or, more likely, via an Omnibus funding bill that will come in a lame duck session after the November elections.

craig senateSen. Larry Craig, R-Idaho, (left) announced a number of the INL funding items. He's a member of the committee and this is his last year on it. He retires after this term. Craig said,

"The Subcommittee has clearly recognized the importance of the INL's mission to develop an advanced nuclear energy system for use across the nation and to develop the next generation of nuclear scientists and engineers," Craig said in a news release.

The Idaho projects include:

  • $70 million for the Next Generation Nuclear Plant.
  • $119 million for Idaho Facilities Management, including $15 million more than President George W. Bush requested for the Advanced Test Reactor User Facility.
  • $3 million to conduct a pilot program to bolster academic infrastructure for nuclear education at the Center for Advanced Energy Studies in Idaho Falls.
  • $463 million for the Idaho Cleanup Project -- $31 million more than the president's request.

Projects approved in the Senate subcommittee are similar to those passed three weeks ago in the House subcommittee, where Rep. Mike Simpson, R-Idaho, is a member.

House has INL $200M up

The newspaper's analysis indicates the FY 2009 Energy and Water Development Appropriations Bill, already approved in the House, would allocate about $200 million more to INL than proposed by Bush. Some of the differences in the House version include:

$150 million for infrastructure at INL. The Post Register reported the site would have the flexibility to spend the money on new buildings, renovation of existing buildings or equipment purchases. That's a $46 million increase over the Bush proposal. In prior years capital equipment money wasn't there.

A $130 million increase for the Generation IV Nuclear Energy Systems program. The vast majority of this funding would be used to build the Next Generation Nuclear Plant at the INL. it also includes $10 million for upgrades to the Advanced Test Reactor. A $40 million increase over Bush's request for cleanup activities at INL, bringing total funding to $472 million.

Jam today but what about jam tomorrow?

John Revier, Simpson's legislative director, told the Post Register that "We usually both get what we ask for."

That's true this year, but next year Craig will be gone and a new senator from Idaho with no seniority will be there, but most certainly won't be on the appropriations committee. Idaho Senator Mike Crapo, who sits on the Senate Finance Committee, reportedly isn't interested in seeking a seat on Appropriations.

INL, and its supporters in the region, will need exceptional communications skills and capabilities on the ground in Washington, DC, to tell its story in Congress if it wants to continue sustain the funding levels it is likely to receive in 2009.

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Sunday, July 6, 2008

Europe's G8 giants divided on nuclear energy

Germany and France remain far apart on how to generate electricity

Foreign policy wonks are participating this weekend in an annual exercise of watching and reporting on the major western powers try to solve the world's problems. It is called the G8 conference and is a yearly gathering of the U.S., U.K. France, Germany, Japan, Canada, Italy, and Russia.

Climate change and nuclear energy are on the top of the agenda. AP reports the G-8 leaders agreed at last year's summit in Heiligendamm, Germany, that they would set a goal of a 50 percent cut in the world's greenhouse gas emissions by 2050. Japan hopes to transform this long-term goal into an actual agreement during this year's summit.

bush g8At a press conference in Washington before leaving for the meeting, President Bush (left) repeated the U.S. position that it will not be possible to reach an effective agreement unless China and India are included in it. His remarks underscore the U.S. argument that any agreement reached only among the G-8 nations would be meaningless.

So, what's up with China and India? It turns out the answer is quite a bit.

China doubles its nuclear bet and then some

For its part China told Westinghouse this week it wants to buy 100 AP1000s from the company. This request came as a surprise to new Westinghouse CEO Aris Candris who said the firm had been expecting orders for up to 40 reactors.

The AP1000 generates up to 1,150 MWe, but Candris said work is underway to design a new reactor that will generate 1,700 MWe and will be targeted at China and India as key markets. The unit is clearly designed to compete with the Areva EPR which is roughly the same size. Areva sold two to China last November.

India's nuclear deal on again?

With regard to India, Reuters reports Indian Prime Minister Manmohan Singh left for Japan on Monday for a G8 summit where he may formally press ahead with a civilian nuclear deal with the United States. He finally convinced one of the political parties opposing the deal to support it.

The deal would be one of Singh's most important achievements, giving India access to U.S. nuclear fuel and technology and moving the country's trade and diplomatic relations closer to the West. It is potentially worth billions of dollars to U.S. and European nuclear supplier companies and would give India more energy alternatives to drive its booming economy.

France plans second EPR

Sarkozy 2nd nuclearWhile all the high level hand waving was going on in Tokyo, French President Nicolas Sarkozy (right) announced just before his departure for the G8 meeting that a second Areva EPR would be built in France. He made the announcement while visiting the Creusot site (photo) in eastern France owned by steelmaker Arcelor which makes large forgings for nuclear plants. Anne Lauvergeon, CEO of Areva, came with Sarkozy to visit the plant. A new EPR is under construction in Flamanville, France, and another is being built in Finland.

Germany still conflicted over nuclear energy

Germany is the last of the G8 nations to sign on for the use of nuclear energy as an alternative to fossil fuel. It is still politically divided over the issue with Social Democrats this week proposing to tax existing plants out of existence. In response the Christian Democrats have launched a massive public relations drive to revive Germany's use of nuclear energy and stop a plan to close and decommission the existing reactors.

AngelemerkelGerman Chancellor Angela Merkel (right) finds herself in an awkward position as one of Europe's biggest polluters in terms of greenhouse gases as she arrives at the G8 summit. The Social Democrats are exploiting German unease with rising fossil fuel costs and propose to tax nuclear plants charging them with "profiteering" during the current energy crisis.

A proposal seen by Reuters would raise $1.6 billion Euros. The wire service reported the proposal showed the party is ready to play on divisions within German society over the advantages and risks of nuclear energy. The logic of the proposal seems to be upside down.

The paper said, "Electricity production in nuclear power stations enjoys unjustified privileges." The SPD paper charged the largely written-off equipment at nuclear plants was highly profitable, and that nuclear operators did not have to pay any carbon avoidance costs benefiting from favorable arrangements for insurance and decommissioning costs. "Electricity production in nuclear power stations enjoys unjustified privileges," the SPD paper said according to Reuters.

Reuters also reported that the SPD wants to stick to Germany's nuclear phase-out program for its 17 reactors by 2021, while Chancellor Angela Merkel's Christian Democrats (CDU), with whom the SPD shares power, wants the plan scrapped. The CDU argues the national economy needs cheap power for longer and that more coal, of which Germany has an abundance, is not the answer in a world facing the threats of global warming.

This seems to be a case where political ambition and 'green' ideology have combined to throw out common sense along with a commitment to slowing the pace of global warming. If Ms. Merkel succeeds in overturning the planned phase out of nuclear reactors in Germany, it will unravel the ruling coalition and force new elections with nuclear energy front and center as the key issue.

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Stacking the deck over Vermont Yankee

Granola politics rules in the green mountain state

It's drop your jaw time in Vermont, again, in response to the latest antics of Vermont State Sen. Peter Shumlin (D-Windahm) over the Vermont Yankee nuclear power plant. The Rutland Herald reports Shumlin, working with Democratic gubernatorial candidate Gaye Symington, jammed two anti-nuclear critics on to what is supposed to be an impartial state oversight panel.

railroad crossingHostility to the Vermont Yankee plant runs deep among "green" politicians in Vermont. It's got all the momentum of a runaway train and there are perils for those who fail to heed the warning signs. The most significant one will be the sky high fossil fuel prices Vermont citizens will pay for electricity if the reactor is shut down.

The two new appointees are Arnold Gundersen of Burlington, a former nuclear industry executive, now a critic, and Peter Bradford, of Peru,VT, who is a former member of the Nuclear Regulatory Commission and board member of the Union of Concerned Scientists (UCS). The UCS is hard over in its campaign against current and new nuclear power plants.

Gundersen and Bradford join Lawrence Hochreiter, a former Westinghouse nuclear engineer, and now on the faculty of Pennsylvania State University.

The selection of two high profile, anti-nuclear activists, to the state panel drew an immediate protest from Vermont Governor James Douglas. Gov. Douglas said through a spokesman, Stephen Wark, of the Department of Public Service, that the appointments of Gundersen and Bradford "are needlessly political."

"These appointees clearly have a bias against nuclear power. This [panel] is not a referendum on nuclear power."

Wark added that Gov. Douglas purposely chose someone with technical expertise who was politically neutral.

A special inspection is being organized of Vermont Yankee to help the state legislature make a decision whether to endorse continued operation of the plant. It's license expires in 2012. The panel must submit its report by January 2009. While the State of Vermont has no legal authority over Vermont Yankee's NRC license, it has taken upon itself a review capacity as if it does.

Panel's tilt may be unrecoverable

Gundersen rejected Stark's complaint and said he is a nuclear engineer first.

"I predicted the cooling tower collapse. I predicted the decommissioning fund would be short, and I predicted cracks in the barrel. If that makes me anti-nuclear I don't know what to say."

He also criticized the appointment of Hochreiter for not having experience with the type of reactor at the Vermont Yankee plant.

granolaThe three panelists are to choose a fourth member, which, with the deck stacked by Shumlin and Symington, doesn't look good for dispassionate analytic skills. Gundersen said he expects to work full time on the inspection panel.

All of this may be moot when it comes to the NRC's decision about Vermont Yankee's license to operate. State government can't legally trump the federal authority. Legal issues aside, thumping Vermont Yankee makes for great partisan politics, and Shumlin and Symington see the plant's future as grist for the granola mill from now until the election next November.

Stay tuned.

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Indian Point gets a passing grade from NRC

Entergy will spend $600 million on regulatory compliance

entergynuclearThe Indian Point Unit 2 & Unit 3 each got a passing grade from the NRC last week for safety, but plant officials also got a two-hour grilling by federal regulators about what they need to do to keep that rating.

The Poughkeepsie Journal reports plant officials have promised to spend a whooping $600 million at Indian Point over the next eight years to correct issues raised by the NRC. That's as much money as Entergy Nuclear spent when it bought the plants in 2001. The sum is a clear indication there's lots of work to do at the plant.

Joseph Pollock, the top plant official, said about the NRC review,

"Our job is to correct issues before they rise to the level that requires the NRC to take action. Clearly, that did not happen. We are committed to go forward to implement corrective actions to fix our problems."

The "corrective actions" include upgrades to computer systems, replacement of certain cooling water pipes, electrical transformers, and repairs to generators. According to the NRC the two reactors came under increased scrutiny because of trace amounts of radioactive water leaking into the Hudson River from the site, a new emergency siren system that is more than a year behind schedule and a work culture regulators think doesn't adequately promote safety-first attitudes among the company's 1,200 workers.

Sirens call attention to the plant

entergysiren The emergency sirens have gotten the most public attention. According to an August 2007 report in the New York Times, the sirens are meant to alert residents within 10 miles of the plant of an emergency. The company is replacing its existing system, built in the 1970s, with a higher-tech model.

The 155 new sirens, part of a separate $15 million upgrade, have four-way speakers and backup batteries and can be activated by cell phone, radio signal or through the Internet. Despite the fact that there are a huge number of them, if just a few fail in a routine test, local newspapers put the news as a headline above the fold.

NRC will keep its eye on Indian Point

For its part the NRC made it clear, failing sirens or not, the agency is keeping its eye on the plant. Samuel Collins, the top regional official for the federal nuclear regulator, reportedly told Pollock,

"The NRC will continue to follow your actions and progress. We understand the high stakeholder interest and involvement, not only in plant performance, but also in impact on the area."

Safety-Logo-for-the-webThe Journal reported that two areas of concern by NRC's resident engineers are adequacy of safety procedures as well as problem identification and resolution. Regulators said they have not seen enough progress in either area and pushed plant officials for specifics of what they've done and what they plan to do soon.

Members of the public attending the hearing complained to the NRC about the regulatory and technical jargon used in the public dialog with plant officials. However, unlike some earlier public meetings, this one had an unexpectedly small audience, about 50 people, and no incidents involving political protest.

Earlier this year New York State officials, led by then Gov. Elliot Spitzer, had demanded that the plant be closed due to safety concerns. However, Spitzer had his own political meltdown over a call girl scandal and resigned from office. Since then the State of New York has apparently dropped its demand to close the plant.