Saturday, January 10, 2009

Areva files for Eagle Rock uranium enrichment plant

A license from the NRC is expected in 2011

Areva logoAn application was filed Dec 30 by Areva with the U.S. Nuclear Regulatory Commission (NRC) for the Eagle Rock uranium enrichment plant to be located 18 miles west of Idaho Falls, ID. The application is for a combined construction and operating license.

The NRC license review process is expected to take just under three years which targets the first shovel of dirt being moved in summer 2011. The plant is expected to generate 800 construction jobs and 300 permanent jobs when it is fully operational in 2014. Areva said that at full capacity the plant will produce 3 million SWU a year.

Areva said in a prepared statement . . .

"The submission of the license application marks a significant step forward in the development of AREVA’s Eagle Rock Enrichment Facility and again demonstrates our commitment to the revival of America’s nuclear energy infrastructure," said Jacques Besnainou, President of AREVA Inc.

Areva has also applied for federal loan guarantees for the $2.4 billion plant as provided for in the Energy Policy Act of 2005. It is competing for the federal insurance with USEC which also plans to build a new uranium enrichment plant in Ohio. Areva is also benefiting from significant tax incentives from the State of Idaho and an overwhelmingly supportive political climate.

Idaho Falls stands up for Areva

laflinAt the NRC's kick-off public meeting on the licensing process, held in Idaho Falls on Dec 10, more than 400 people turned out packing a hotel conference room to standing room only in a show of support for Areva's planned $2.4 billion 'Eagle Rock' uranium enrichment plant.

In the emotional highpoint of the meeting, Steve Laflin, (right) CEO of International Isotopes (OTC:INIS), turned from the microphone and asked the crowd, "will everyone who supports construction of the plant in Idaho Falls please stand up." The room lifted off as one. Laflin's firm is planning to develop a uranium deconversion plant to recover high purity fluorine gas from depleted uranium wastes from enrichment plants like Areva's.

The NRC said they wanted to know if there was strong community support in Idaho for the plant. It appears they received a clear signal about community support for the site. Community economic development agencies, including Grow Idaho Falls, told the news media that with a world class company like Areva coming to Idaho Falls, others will want to come as well.

Sam-ShakirAlso, AREVA announced on Dec 12 the formation of AREVA Enrichment Services, LLC (AES) a new subsidiary responsible for U.S. enrichment services and the future owner and operator of the Eagle Rock Enrichment Facility. Areva also named Sam Shakir (right) as President and CEO of AES.

Competition comes in threes

Areva isn't the only firm building a new uranium enrichment plant in the U.S. A race is on to build uranium enrichment capacity and bring it to market by 2013 when the U.S. Russian Megatons-to-Megawatts HEU downblending agreement comes to an end. The Megatons to Megawatts Program is a commercially financed government-industry partnership in which bomb-grade uranium from dismantled Russian nuclear warheads is being recycled into low enriched uranium (LEU) used to produce fuel for American nuclear power plants.

USEC's (NYSE:USU) plant slated for Piketon, Ohio, is targeting production of 3.8 million SWU/year and will cost $3.5 billion when completed in 2012 according to a statement from the company.

competition-4In addition to the plant being developed by USEC, Louisiana Energy Services, the U.S. subsidiary of URENCO, has an NRC license and a plant under construction in Eunice, NM, in the far southeastern corner of the state near the Texas border. There the company has just announced that it is doubling the size of the plant with startup planned for 2011. At that time it will produce 3 million SWU/year. By 2014 the plant expects production to achieve 5.9 million SWU/year.

Finally, General Electric is developing a new laser enrichment process at its Wilmington, NC, facility. So far the technology is untried at full scale. Completion of a test loop is the next step for the firm. Company officials have previously said the firm will have a commercial plant in operation by 2012. Earlier this year CAMECO, the Canadian uranium mining giant, made a $125 million investment in the new facility.

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Progress puts the juice in Florida's nuclear future

Utility inks a $7.65 billion EPC deal for twin AP1000s

OrangesProgress Energy (NYSE:PGN) has entered into an engineering, procurement and construction contract with Westinghouse for two 1,105 MW AP1000 nuclear reactors to be built on 5,100 acres in Levy County, FL, 130 miles west of Orlando.

Once approved and built, the project will be among the first nuclear plants in the country to be constructed on a new site in more than 30 years, and it will involve development of one of the single largest transmission infrastructure projects in Florida's history. Progress Energy said in a news release that the two units will have hot starts in 2016 and 2018 respectively.

westinghouse logoWestinghouse Electric Co. LLC and Stone & Webster Inc., a subsidiary of The Shaw Group Inc. (NYSE:SGR), will provide design, engineering, procurement, and construction services for the two nuclear electric-generating units, Progress Energy said in a filing with the Securities and Exchange Commission (SEC).

The contract price for the two new nuclear units is $7.65 billion, according to the SEC filing. The total price estimate that Progress Energy filed with the Florida Public Service Commission, including costs such as inflation, site preparation, financing and associated transmission facilities, is $14 billion.

This estimate includes land price, plant components, financing costs, construction, labor, regulatory fees and reactor fuel for two units. An additional $3 billion is estimated for the necessary transmission equipment and about 200 miles of transmission lines for the project.

AP1000 schematicMost of the project costs will be invested by the company and its shareholders and will not be recovered from customers through rates until the plant goes into service. However, starting January 2009, customers will begin paying for a portion of the costs of the project as approved by the PSC.

Progress Energy Florida also said in the SEC filing that it expects to have substantial joint ownership in the project and will make an announcement on additional owners when those negotiations are completed.

Positive climate impacts

A "Determination of Need" petition was unanimously approved by the Florida Public Service Commission (PSC) in July 2008, supporting the need to meet future energy needs in Florida with nuclear power. A second filing, a Site Certification Application (SCA), was filed with the Florida Department of Environmental Protection in June 2008, with a decision on the SCA filing expected this year.

Jeff Lyash Progress EnergyProgress Energy CEO Jeff Lyash (right) said the approvals by regulatory agencies confirm the planned benefits of building the two new nuclear plants.

"Our investment in state-of-the-art nuclear power is an investment in our state's energy future. Expanding our nuclear capacity will ensure our customers will continue to have a reliable supply of energy, while reducing reliance on fossil fuels and helping to eliminate greenhouse gas from our environment. This contract is a major step to implement the policy direction set by the governor and the legislature in Florida to secure safe, carbon-free nuclear power for our customers."

The company will retire the two oldest coal-fired units at the Crystal River Energy Complex in Citrus County after the new, nuclear units are built in Levy County. These actions will reduce the company's carbon dioxide (CO2) emissions by more than 5 million tons per year, which is the equivalent of removing more than 830,000 vehicles from Florida's roads.

Twin nuclear plants bring thousands of jobs

progress_energy2Building the two new plants will generate employment for at least 3,000 people during their construction. Once the units are in operation, they will employ 800 full-time, high-wage positions that Governor Charlie Crist calls "green jobs," as well as an additional 1,200 indirect jobs. The positive economic impact of a two-unit nuclear site to the state and local communities is estimated to be hundreds of millions of dollars annually over the planned 60-year life of the twin reactors.

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Exelon bears down on NRG

Hostile takeover effort is extended to Feb 25

hostile-takeoverThe Wall Street Journal reports that Exelon Corp. (NYSE:EXC) will extend its offer for NRG Energy Inc. (NYSE:NRG) by seven weeks to Feb 25 as a result of having acquired 45.6% or 106.5 million shares since November. NRG's stock closed at $28.62 on Jan 10 making Exelon's stake worth $3.05 billion.

The Chicago nuclear giant is planning several new steps to secure control of the New Jersey-based utility. The New York Times reported that Exelon was also considering a proxy fight to force NRG to sell the rest of the company. Exelon reportedly said it would propose its own slate of directors for NRG's board.

The current NRG board has twice rebuffed Exelon's advances on the grounds the all stock offering was too low. Having acquired a substantial percentage of shares outstanding, Exelon told the WSJ its holdings are a "show of support at the negotiating table."

Exelon wants NRG for its nuclear power generation capacity at STP units 1 & 2 in Texas. NRG is building two new nuclear reactors at the same site using GE-Hitachi ABWR which is an NRC certified design. Exelon is also proposing to build two new 'greenfield' nuclear reactors at Victoria, TX. At that site Exelon scratched the planned use of GE-Hitachi's more advanced ESBWR design and re-opened the search for a suitable reactor technology.

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Nuclear energy updates for 01/10/09

Catching up with the news

Vermont Yankee - Entergy's nuclear plant Vermont Yankee is a reliable nuclear plant and could have its license renewed by the NRC if various steps to improve its operations at taken according a report issued in late December by the Vermont Public Service Board.

The board specified a long list of management and operation improvements which it says must be taken in order to issue a certificate of "public good" that would allow the plant to operate in Vermont after 2012. The independent assessment, which was carried out by a team of 25 inspectors from Nuclear Safety Associates, will be distributed to the state legislature next week.

Olkiluoto - Areva and TVO will go to arbitration in a dispute over schedule delays and cost overruns at the Olkiluoto 3 reactor being built in Finland. The 1,600 MW Areva EPR is running at least three years late from its planned startup date of 2009. TVO claims that it has a fixed cost contract with Areva and that the French state-owned firm cannot pass along new costs to the Finnish utility.

The initial cost of the new reactor was $3.4 billion, but since the project started construction, more than $1 billion in new costs have been incurred by the project. Quality control problems with steel used to reinforce concrete structures, and the concrete itself, have created work stoppages.

Also, Areva is using what is called "just-in-time" engineering to design and build the plant. It charges that Finland's nuclear regulatory agency is taking too long to review documents needed to build the plant.

Yangjiang- China has kicked off construction of six domestically designed and produced CPR-1000 PWR reactors at the Yangjiang project in Guangdong province. it is the largest nuclear construction project of its type so far in that country.

China Guangdong Nuclear Power Company (CPNPC) is building the reactors. The first unit is expected to be operational by 2013 and all six units are expected to be completed by 2017. Construction of an Areva EPR in Taishan, Guangdong, is expected to start in 2010.

According to World Nuclear News, The total investment in Yangjiang's six reactors is to be $10.1 billion, giving a construction cost of $1,565 per kW, according to Zhang Guobao, head of the National Energy Bureau. He added that this was was 'much lower' than the figure for desulfurized coal-fired power plants in the province.

Reuters reported that in November China launched the construction of a separate project of six 1,000 MW reactors at Fuqing in Fujian province. The reactors there will be built by China National Nuclear Corp.

World Nuclear Association has a revised country briefing on China's civilian nuclear infrastructure and plans to build new nuclear power plants.

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Western lands uranium gopher for 01/10/09

Mining media reports and press releases for useful stuff.

gopher

This column on uranium mining in the western U.S. continues its admittedly non-rigorous coverage of the stocks of a handful of U.S., Canadian, and Australian uranium miners who are active in western states. The data and brief analysis may offer readers a snapshot of how uranium juniors active in western states are weathering the unusually difficult financial conditions of the current market.

This analysis is not to be considered investment advice. I do not own any of the stocks discussed in this column.

This blog post is an edited version of an article which was published in Fuel Cycle Week, V8, No.308, January 7, 2009, by International Nuclear Associates, Washington, DC.

Climbing out of the cellar or not?

In the ad-hoc sample of uranium junior stocks two clear trends appeared this week. First, the signature of the current recession was apparent as long ago as July 2008 with losses in stock value ranging from at least one-third to one half of market capitalization compared to 52-week highs. By Dec 31, there was not as single stock in this informal list that had retained more than 20% of its value relative to the 52-week high. If you want a picture of lost wealth, this is it.

Second, some of the stocks have started to climb out of the cellar although they have a long way to go. Every one of our nine sample stocks recorded modest price increases which at least moved the needle on the measuring gauge, but it isn't necessarily a signal of recovery. More likely, it could be a signal of the end of the panic phase of the current financial crisis and a move toward realistic valuation of companies and their prospects or maybe not.

Western Lands Uranium Gopher 20090110

Even more interesting, these trends are apparent across U.S. and Canadian stock exchanges. However, the record low stock prices still make all of the firms on our list attractive as takeover targets. Worse, the minor improvements in stock prices are not enough to signal the use of issuing new stock to capitalize major new ventures. Indeed, several of these firms announced additional cost cutting actions and retrenchment of operations to save precious cash. Only Powertech (TSE:PWE) was able to attract new funds from an existing investor owing to progress it is making towards production on two of its U.S. properties.

Bad news by the bushel

Western Uranium Corp (CVE:WUC) announced a shareholder rights plan "to ensure fair treatment in the event of an unsolicited takeover." With its stock closing at $0.68/share against a 52-week range of a $2.50-0.45, the firm is in the same boat as many other uranium juniors.

An unaudited 3Q2008 financial report issued by the firm showed it had $51.5 million in cash on hand and less than $0.7 million in current liabilities. With a market capitalization based on 59.73 million shares and a share price of $0.68, the firm is worth $40.6 million or $10.9 million less than the cash on hand. A hostile takeover could provide the buyer with significant cash premium at a bargain price.

The firm's primary drilling program is in the Bull Basin and Old Man Springs areas of Nevada. So far the firm has drilled 28 holes for 20,745 feet. One hole was drilled in the Midnight Mine area. The firm has not yet published core drilling results in an NI 431-101 report. The firm indicates on its website it will continue to acquire properties and engage in exploration.

It raises the question, separate from Western Uranium itself, whether some firms might issue shareholder rights plans to invite takeovers on the theory that a cash out now is better than waiting for a recovery. To be attractive in the current financial climate, a firm would need to be nearing production or have a producing property.

eslogoEven large firms are not immune from takeover jitters. EnergySolutions (NYSE:ES) a Salt Lake City conglomerate with nuclear waste cleanup contracts in the U.S. and the U.K. recorded a market closing price Jan 2 of $5.80 against a 52-week high of $27.85 or just over 20% of a value recorded shortly after the firm went public earlier this year.

Steve Creamer, CEO, told the Salt Lake City Tribune as long ago as Nov 19, "we're in a takeover position right now. There is no doubt about it. It scares me to death." Creamer and other executives reduced their share holdings from 62% of the firm to just 23% in a secondary offering in July 2008 thus giving up a controlling interest in the firm. Despite reporting profits for the past three years, and having a positive cash flow, Creamer says, " I think we are trading at a ridiculously low price."

Uranium Resources (NASDAQ:URRE) attracted a lot of attention with its announcement that it has initiated cost cutting actions to save $2.2 million. It eliminated three executive positions and slashed white collar salaries by 30-40% for other managers. The firm closed its office in Corpus Christi, TX, and Albuquerque, NM, and curtailed new exploration in Texas. The firm said in a statement it does not plan to have any significant capital expenditures in 2009 unless there is a significant improvement in the uranium market.

Also, the firm closed its Rosita property after producing just 7,700 pounds of U3O8. Operations at its Vasquez and Kingsville sites will continue in 2009. URI CEO Dave Clark said the firm is focused on slashing costs to control its cash burn rate through 2010. He added that if industry conditions and prices improve, the firm will expand development of its operations at its Churchrock site in New Mexico.

The firm reported having $13.5 million in cash on hand as of Dec 1 according to a filing with the SEC. The firm spent $10.4 million in 2008. unless the price of uranium increases significantly in 2009, it could spend as little as half that rate the next two years to get through 2010 without new infusions of capital.

Strathmore Minerals (CVE:STM), based in Riverton, Wyo., announced that it terminated the Juniper Ridge, Wyo. Joint Venture Agreement with Yellowcake Mining Inc (OTC:YCKM). Yellowcake has advised Strasthmore that due to the continued deterioration in existing market conditions, it is not able to comply with the terms of the agreement. Strathmore retains its 100% interest in this property.

According to its website, Yellowcake describes the Juniper Ridge project as being located in the Poison Basin uranium district in the south central area of Wyoming, close to the Colorado border. The total acreage of the property is 3,200 acres and over 2000 historical drill holes have been drilled on the project to verify the resource.

The roughly 2000 historical drill holes have been drilled between 100 and 300 feet in depth, and have shown an average grade of between 0.05% and 0.20%. Yellowcake assessed the grade as being economical for ISR mining.

Yellowcake's financials show no revenue for the past three years and its market capitalization drastically reduced by the current Wall Street crisis from a 52-week high of $1.25/share to just $0.04/share. Total assets are $1.8 million and total market capitalization using the Dec 31 closing price was $2.05 million.

New Horizon Uranium (CVE:NHU) confirmed it has abandoned two mining claims northeast of Hartsel, Colo. Bill Wilson, company president, told the Fairplay, Colorado, Flume Newspaper on Dec 26 the company decided not to pay the $125 federal claim fee for 100 properties saving a modest $12,500. Wilson said the firm has decided to make its Sand Creek property in Converse County, Wyo, its main priority.

Jeff Parsons, an attorney with the Western Mining Action Project, which opposed uranium mining on the Colorado property on behalf of nearby homeowners, told a group of homeowners in Fairplay they shouldn't relax because of New Horizon's decision. He said, "When uranium prices rise, others will come because there has been interest in mining in the area."

It is unlikely in the near term New Horizon will return to the area. For the past three years New Horizon has had no revenue from any of its projects. Its stock closed Dec 31 at $0.01 compared to a 52-week high of $0.55 with 20.3 million shares outstanding for a severely depressed market capitalization of $203,000.

Last February the firm raised $5 million in a brokered private placement for use on its Wyoming properties. On April 15, 2008, the company acquired the Buck and the Wild Horse properties, located in Colorado and Nevada, respectively. The Buck property in Montrose County, Colo., and San Juan County at the northwest end of the Paradox Valley. The Buck property is less than twenty miles from the Pinon Ridge Uranium Mill now being developed by Energy Fuels Corporation near Naturita, Colo.

The Wild Horse Property in Humboldt County, Nev., is in an area of previous uranium exploration by Exxon Corporation and adjacent to historic gold and mercury mining. The acquisition price of the two properties was not disclosed in press statements or on SEDAR.

The Converse County property is a joint venture with Canyon Resources Corp and through that firm with Uranium One. In January 2006, an exploration, development and operating agreement was signed to form the Converse Uranium Joint Venture. Later that same year the Converse JV organized the Sand Creek Joint Venture with High Plains Uranium, now known as Uranium One (TSE:UUU).

These joint ventures were formed with the objective to explore and develop areas of known uranium occurrences located along the southern end of the Powder River Basin in Wyoming. During 2006 and 2007 New Horizon completed 30 rotary drill holes at the Converse property totaling approximately 22,000 feet. Highlights of drilling results from the 2006/2007 drill programs include 22 holes encountering >0.02% U3O8. 6 feet 0.288% U3O8 13 feet 0.142% U3O8 10 feet 0.119% U3O8 12 feet 0.054% U3O8 10.5 feet 0.066% U3O8

So far the firm has not announced any economically recoverable resources from its properties nor published information in an NI 43-101 report.

Not all bad news in Wyoming

Marion Loomis, executive director of the Wyoming Mining Association, told the Wyoming Business Report on Dec 30 he doesn’t see uranium mining in Wyoming to be in as bad shape as in Colorado. While Loomis concedes that uranium prices have dropped from their 2007 peak of $137 a pound, “I don’t think anyone thought that they needed $137 a pound to keep the projects going.”

“When the prices moved up over $20 a pound, companies got interested again in developing reserves. The market has pulled back into a more reasonable price range, but companies remain very interested in developing properties."

Good news here and there

Uranerz (AMEX:URZ) reports NI 43-101 resources on West North Butte satellite properties in Wyoming. It estimates a "measured and indicated" mineral resource of approximately 2,837,015 pounds of U3O8 at an average grade of 0.153%, and an "inferred" mineral resource of 2,681,928 pounds of U3O8 at an average grade of 0.120%. The properties are located in the Pumpkin Buttes Uranium Mining District of the Powder River Basin, Campbell County, Wyoming.

In December 2007, the company submitted federal and state mining license and permit applications to build and operate the Nichols Ranch Uranium ISR Complex, including uranium in-situ recovery (ISR) wellfields and a central processing facility (complete with ion-exchange concentration and elution circuits, and drying and packaging circuits for finished yellowcake product) at the Nichols Ranch property, and a satellite facility with uranium ISR wellfields and ion-exchange plant at the Hank property.

Both the U.S. Nuclear Regulatory Commission and the Wyoming Department of Environmental Quality have accepted the company's applications to advance them to the next stage of their formal review process.

Powertech (TSE:PWE) reports that it has entered into a bridge loan agreement with Synatom for $2.5 million. The bigger news is that Powertech has also entered into an agreement to obtain $9 million from Synatom for working capital to move its mineral properties to production including the Centennial project in Colorado and the Dewey-Burdock project in South Dakota. Once the properties are in production, some of the product will be exported to Belgium.

In an unrelated action, Powertech announced that it had acquired additional mining claims and leases in Wyoming and South Dakota from Bayswater Uranium Corp. (CVE:BAY). Powertech purchased 381 mining claims and 8,186 acres in Wyoming mining leases for a total of 15,806 acres for $50,000.

White Canyon Uranium (ASX:WCU), an Australian company, has purchased 33 mining claims, known as the Lark-Royal Project, consisting of 682 acres adjacent to the firm's Daneros mine development project nearing Blanding, Utah. The seller is Uranium One which released the properties for $300,000. The properties are subject to a 21% royalty claim by a local prospector.

The new Lark-Royal property covers the northern extension of White Canyon's Daneros uranium deposit which is currently the subject of a mine permit application. Development of the Daneros mine for production is expected to take place in the first quarter of 2009. Exploration and drilling of the Lark-Royal property is planned for the third quarter of 2009.

A permit is expected for the Daneros property from the Bureau of Land Management later this winter at which time underground development of the mine will take place. Ore is expected to be shipped 62 miles to the Denison mill at Blanding, UT, within four months of start-up of mine operations.

White Canyon said in a statement is has $6.5 million in cash to develop these properties and will also advance its other southeast Utah properties including the Thompson, Blue Jay, Marcy, Look, and Geitus projects.

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Friday, January 9, 2009

Bruce Power seeks new site for tar sands project

Alberta energy project is moving to avoid environmental conflicts

According to a report in the Calgary Herald, Bruce Power has sent a letter to the Canadian Nuclear Safety Commission withdrawing its application for a dual reactor, 2,200 MW, $6.2 billion nuclear power complex that it planned to build in the tars sands region near the Peace River in northern Alberta.

The company said environmental considerations, including the location of an underground aquifer used for drinking water, have compelled it to seek a new site. It may have found one about 25 miles to the north of the original site. However, it will have to start over in terms of evaluating the environmental issues associated with a new licensing application that could cost the firm tens of millions in new expenses.

The original application was submitted in August 2007 just three months after Bruce Power acquired Energy Alberta. According to World Nuclear News, Frank Saunders, vice president of Bruce Power's nuclear oversight and regulatory affairs division, wrote to the CNSC's secretary Marc Leblanc with the withdrawal on Jan 6.

Saunders wrote that Bruce Power would share its decision-making process with communities through a series of information sessions in 2009. He added that the company expected the site selection process for the new reactors to be complete by the middle of the year.

John Peevers, a spokesman for Bruce Power, said the company did not make the decision because of the current economic climate. He said licensing and building a nuclear power plant is a long process. By the time the firm is ready to make a decision to build the plant, the economy will be different than it is today.

Once built the reactors will supply electricity and process heat for the tar sands oil extraction and processing activities. Excess power will be sold to the rest of the province which needs the electricity.

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Entergy bids goodbye to ESBWR

Utility asks NRC to stop reviews for Grand Gulf and River Bend

entergylogoPlatts reports that Entergy has asked the NRC to suspend review of the utility's two COL applications - one for Grand Gulf, MS, and the other for River Bend, LA. According to Platts, Entergy asked the NRC to stop billing time at $250/hr for the safety review on both applications and to temporarily suspend the environmental review on them.

Significantly, both sites involve GE Hitachi's ESBWR reactor design which is still in the certification process with the NRC. Platts makes the point that this is the second company to back out of building GE Hitachi's 1,535-MW ESBWR. In November, Exelon bid goodbye to the ESBWR for its Victoria, TX, site saying the DOE review of its loan guarantee application got a lower rating for referencing the GE ESBWR design. At issue is GE-Hitachi's delayed time to market for the reactor. The NRC has not yet published a schedule for completing the design review.

Switching horses but not out of the race

Strike OutFor its part, Entergy said the reason for its decision is that it has not been able "to come to mutually acceptable terms with GE Hitachi."

In its prepared statement, Entergy said the firm will continue to explore other new nuclear technologies as Entergy’s utility operating companies seek solutions for meeting the region''s growing energy demands. Though license review work has been suspended on the ESBWR, the firm also said licensing work completed to date will be used for any alternative technology selected.

“We continue to see value in developing the nuclear option, and the temporary suspension of the license application review effort does not reflect a change in position regarding new nuclear’s potential value,” said Paul Hinnenkamp, vice president of Entergy Nuclear’s business development function.

Two down, one on the fence, and one left standing

The combined actions by Exelon and Entergy, two of the nation's largest nuclear utilities, raises doubts about the future of the ESBWR design. At this time, only Detroit Edison with its application for Fermi III, and Dominion's application for the North Anna plant remain referencing the ESBWR design.

Reuters reports that Dominion Resources (NYSE:D) said Friday Jan 11 it will open a competitive bidding process to select a new engineering, procurement and construction partner for its proposed new reactor in Virginia after being unable to reach an agreement with GE Hitachi.

Dominion spokesman Jim Norvelle told the wire service the decision to look for a new engineering and construction partner was made "recently" and there was no timetable for completion of the competitive process. Dominion also told Reuters will continue its pursuit of an NRC license based on ESBWR design.

"We have not suspended our process," said Norvelle. "We believe the ESBWR offers some technological advances that keep it a very attractive design."

A spokeswoman for DTE Energy (NYSE:DTE), which also selected the ESBWR design for its proposed nuclear expansion in Michigan, said the company has no plans to withdraw its NRC license application.

Not ready for prime time?

It isn't clear why these utilities are having problems with GE-Hitachi. The exception is Exelon, which made it very clear it scratched the reactor from its Victoria, TX, site (2 units) because it ranked so poorly in Department of Energy evaluations of applications for federal loan guarnatees.

Other factors likely include the fact that due to the incomplete design of the ESBWR, GE-Hitachi can't commit to fixed costs because it doesn't know how much it will cost to build one of the reactors. Utilities are not ready to take the risk on a reactor design that could have unknown cost factors.

Finally, GE-Hitachi has an NRC certified design, the ABWR, and its does have construction cost data for three of the units built in Asia. It is likely that GE-Hitachi is out selling the ABWR to the utilities that said "no" to the more technologically advanced ESBWR because of the uncertainties associated with building one.

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Point Lepreau could get two new reactors

AECL would finance the deal with private sector firms

map point lepreau Canadian Energy Minister Jack Keir said this week he will seek approval for two additional new nuclear reactors at Point Lepreau in New Brunswick province. The atomic power plants would be built by Crown corporation Atomic Energy Limited Canada (AECL) and two private sector partners - SNC-Lavalin and Hitachi Nuclear.

The three firms are lining up investors. According the Keir, the consortium, known as 'Team Candu', is very close to making a formal announcement for two 1,100 MW ACR-1000 reactors. The reactor is still in the design certification stage with the Canadian Nuclear Safety Commission. The new reactors are expected to cost $4-5 billion each. A completed project would be three times the size of the existing installation.

The merchant model has never been used in Canada. Liability for costs, and the potential for cost overruns, is very complex with a project of this size. Financing for the two new reactors depends, in part, on the ability of the consortium to sell electricity to the U.S. including New England states including Maine, New Hampshire, and Vermont. Commitments to new transmission and distribution infrastructure and rights of way must be made to get the power to these customers.

AECL is currently refurbishing the existing 635 MW Point Lepreau reactor as part of a $1.4 billion effort. The Candu reactor came online in 1983. When this work is complete, the reactor should be good to go for another 25 years. AECL has to complete the upgrades on time and within budget to build confidence in the new twin reactor project. The deadline is September 2009.

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Sunday, January 4, 2009

New RSS feed for Idaho Samizdat

Google's acquisition of Feedburner is the reason

For those of you who read posts on this blog with a feedreader such as FeedDemon or other RSS client, the code for the RSS feed has changed. This is due to the purchase of Feedburner, which used to provide the RSS feed, by Google.

You can click on any of the icons below to update your RSS feed. The first one with the universal orange icon for RSS feeds should work for just about everyone. The others are for the convenience of readers who use some of the more common services.

If you have special needs, just pick off the code from the orange icon or plug this line of RSS code for this blog into your reader: http://feedproxy.google.com/blogspot/Yiuo

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States push the envelope on nuclear energy

Legislatures are taking a strong role

global-warming-mapMissouri, Oklahoma, and Kentucky are three states which will are grappling with the issue of nuclear energy in 2009. In Missouri, the fate of AmerenUE's proposal for a new nuclear power plant will likely be decided by the state legislature this term. At issue is whether the utility can recover the cost of construction while it is building a new plant. In Oklahoma legislators will look at whether building a new nuclear power plant as a regional energy resource is more expensive than anyone can handle. In Kentucky, a moratorium on construction of nuclear power plants may get a review because a state energy plan calls for building one.

A common theme for all three states is growing demand for electricity and the desire to move away from energy sources that generate greenhouse gases. There is no consensus among the various stakeholders in each of the three states. Here is a review of where things stand in three very different places.

Missouri

Missouri show meThe nuclear electric utility AmerenUE has filed a COL application with the NRC for a 1,600 MW Areva EPR. The plan for a second nuclear power plant in Callaway County, Missouri, 109 miles west of St. Louis, is up against a stiff challenge from a state law that bans recovery of construction costs while the plant is being built.

Cost estimates for the new plant could be as high as $6 billion. The small utility cannot get financing for a project of this size. If the plant is to be built, the state law must be overturned. This is AmerenUE's objective as the legislature opens its session this winter.

The utility has been lobbying state legislators to change the law. Also, it set up a political action committee before the November elections and contributed $325,000 to various election campaigns according to a report in the Kansas City Star.

As a first step, the utility wants the Missouri Public Service Commission to allow it to recover the costs of its NRC license application which are reported to be $51 million. Environmental and consumer groups have lined up to oppose the request. Melissa Hope of the Sierra Club told the Kansas City Star the new nuclear power plant is needed but that energy efficiency and renewable energy sources like wind will meet demand for electricity.

Mike Cleary, a spokesman for AmerenUE, responded, "Efficiency is a way of preserving and stretching energy supplies, but efficiency doesn't put out a single kilowatt."

The legislature knows the fight over AmerenUE's desire to over turn the law will be a big deal. State Senator Charlie Shields, the incoming senate president pro tem, told the Star energy independence, ability to attract business with amble electricity, and fairness to rate payers will be the key issues.

Oklahoma

oil-jobs-in-oklahomaIn the heart of the country's oil industry, some Oklahoma legislators want to look at the option of building a nuclear power plant to make the state a regional center for distribution of energy throughout the region. However, the state's largest utility doesn't want to hear about it and says no new power plants will be needed in the state until at least 2020.

According to a report in the Tulsa World Dec 23, Oklahoma House Speaker Chris Benge, R-Tulsa, toured a nuclear power plant in Arkansas to learn more about the technology. Rep. Mike Reynolds, R-Oklahoma City, has announced plans for legislation to streamline the state permitting process for a new nuclear power plant.

Despite these initiatives, a spokesman for the Oklahoma Gas & Electric Company (OG&E), the state's largest utility, objected saying, "It is much too expensive and much too great an undertaking for any one utility in the state."

He added that OGE, which generates 6,600 MW of electricity for 760,000 customers, is not big enough to bet the company on a project that could cost $5-6 billion.

The utility is a wholly owned subsidiary of OGE Energy (NYSE:OGE) with annual revenues in 2007 of $3.8 billion. The firm's stock showed a Jan 2 close of $26.68/share against a 52-week range of $36.23-$19.56. With 92.78 million shares outstanding, market capitalization stood at just under $2.5 billion.

Sen. Benge is not deterred by these objections. He told the Tulsa World, the long-term benefits of nuclear energy may outweigh the concerns about initial high costs. Rep. Reynolds put a sharper focus on the issue. He said pushing the envelope on investment in nuclear energy should be a priority.

"It is time for us to move forcefully to move this issue forward and do what we can to help companies that are capable of doing it. If we don't have any, then find some who can."

OG&E spokesman Brian Alford responded that if Oklahoma wants a nuclear power plant, "you really need to start today."

Kentucky

Kentucky energyThe State of Kentucky, which currently has a complete ban on construction of nuclear power plants, has just published a statewide energy plan that calls for one. The plan, titled "Intelligent Energy Choices," lists a series of strategies to meet the state's energy needs. One of them, which calls for a reduction in greenhouse gases, lays out the case for building a nuclear power plant.

Kentucky Governor Steve Beshear told the Associated Press, "We must begin the discussion now about whether nuclear energy should be part of our energy portfolio."

“The choice we face is to take no action and see large price increases in energy with limited economic security or to take prudent actions now for a better chance at smaller price increases, as well as increased economic security.”

The plan lays out a series of scenarios for energy demand and use in Kentucky through the year 2025. Under the mainstream "business as usual" case, the plan identifies projected increases in energy use in the state by more than 40% by 2025. The plan also calls for a parallel decrease in greenhouse gas emissions to a level in 2025 that is 20% lower than greenhouse gas emissions recorded in 1990.

These are very ambitious goals. How will they be achieved in so short a time? In an analysis of the plan, World Nuclear News points out it says,

"Nuclear power is one such option that deserves our full attention, as its technology and safety have significantly improved in the last three decades. It also is likely to become a national priority."

A suggestion put forward by the Kentucky plan is that "a moderate investment" in nuclear power (eight plants at four sites) could be considered as part of a strategy to diversity Kentucky's future electrical energy portfolio, reduce emissions. Taking a hypothetical case of building eight 1,000 MW plants by 2025, that would require an investment of $28-35 billion dollars in the next 17 years.

Value proposition for nuclear leads to coal

Coal in KentuckyThe value proposition is interesting. The plans says such an investment could position the state to take advantage of advanced coal conversion opportunities. Kentucky could utilize nuclear power to generate a significant percentage of the state's energy needs, with coal-based and nuclear power for electricity generation being roughly equal.

The plan proposes that nuclear power could provide the energy needed to develop a coal-to-liquids industry in Kentucky to replace petroleum-based liquids. Kentucky could develop a coal-to-liquids industry that will use 50 million tons of coal per year to produce four billion gallons of liquid fuel per year by 2025.

That's an interesting idea. It will be even more interesting if the coal industry, which has a very significant presence in Kentucky, takes the state up on it. It could be a path out of competition between coal and uranium as fuel sources to meet growing energy demand and lead to a win-win energy strategy.

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Virginia uranium prospects heat up

Challenges include a state ban and the lack of a mill on the east coast

threeHorsemenThe prospects for uranium mining in Chatham, VA, may be heating up. The impetus for the change comes from two key developments. First, on Nov 6 the Virginia Coal and Energy Commission unanimously approved a study of the issue. It could be the first step to lifting the state's long standing ban on uranium mining. Second, Virginia Uranium, the company that wants to mine the estimated 119 million pounds of uranium, has a new partner. It is Santoy Resources (CVE:SAN), a junior uranium firm from Vancouver, British Columbia.

There is still a long way to go to actually mine the uranium. Even if a study is favorable to mining, the state legislature must still act, and the governor must sign, legislation that overturns the current 25-year old ban on uranium mining. Second, there is no uranium mill on the east coast to process the ore. A new mill to process 500 tons a day of ore could cost in the range of $25-50 million.

However, there are several nuclear fuel processing firms doing business 50 miles due north in Lynchburg, VA. It isn't known whether any of the nuclear energy firms located there would be interested in building a mill.

State study kicks off Jan 6

The Virginia Coal and Energy Commission Uranium Mining Subcommittee will hold its first hearing on Jan 6th in Chatham, VA, taking public testimony.

Lee Ware Jr., a state legislator from Powhatan, VA, issued a statement that the hearing "will take testimony from all interested parties on what environmental, economic, scientific, engineering, and related topics should be included in the study."

The Commission will reply on scientific expertise from Virginia Tech and the National Academy of Sciences.

Opponents want to uphold the ban

uncharted territoryThe Southern Environmental Law Center, which supports the ban on uranium mining, is expected to be one of the groups submitting testimony at the hearing. Caleb Jaffe, a senior attorney with the group, told the Associated Press, "We've got to proceed with caution because we are in uncharted territory."

Todd Benson with the Piedmont Environmental Council, told the Virginia Pilot, there needs to be accountability for uncontrolled releases of pollutants from a uranium mine that could threaten drinking water supplies.

Santoy merger boosts investment in the proposed mine

The announcement of a merger between Virginia Uranium, which has no publicly traded stock, and Santoy Resources, a uranium junior mining firm from Canada, brings money, expertise, and expanded outreach to additional investors to the proposed mining project.

The draw is what some geologists have called the largest untapped deposit of uranium in the U.S. At today's depressed price of about $50/lb on the spot market, the estimated 119 million pounds of would be worth about $6 billion. There is no NI 43-101 report for the Virginia deposit so the estimated amount of uranium is based on prior geological surveys. The deposit is described as being accessible on the surface, but also diving to a depth of 800 feet. If the mine is ever developed, it would likely be with a combination of open pit and hard rock methods.

Even if Santoy and Virginia Uranium get a green light two years from now to develop the mine, the firms will need to bring in additional investors to develop a deposit of this size.

wall streetFinancial data for Santoy (CVE:SAN) shows the firm's stock had a Jan 2 market close of $0.15/share against a 52-week range of $0.16-$0.09. Market capitalization on 93.7 million shares was $14 million. The firm has not reported any income for the past three years. It reported $8 million in cash as of Sept 30.

The firm's executive team has long experience in the mining industry. Its primary uranium mining projects are in Quebec, Canada.

It will take 18-24 months for the Virginia Commission to complete its work. The sparks will fly between supporters and opponents of the proposed mine. If the pace of development of new nuclear power plants takes off in the next few years, demand for uranium will increase significantly putting pressure on state legislators in Virginia to overturn the ban. However, Virginia Uranium and its partners will still need a mill within economical haul distance to process its ore, and it remains to be seen how that challenge will be met.

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