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Nuclear Power Revival Could Encounter Hurdles [WSJ]
Tight Uranium Supplies, Scarce Processing Facilities May Hurt Bush Energy Plan
By JOHN J. FIALKA
December 5, 2006; Page A4
WASHINGTON -- The Bush administration's plan for a "renaissance" in nuclear power may be crimped by tightening world-wide supplies of uranium and a lack of enrichment facilities to turn the uranium into fuel for power plants.
In a recent setback, an accident in October flooded the world's largest uranium mine, which was set to open in Canada next year. That nudged prices for processed uranium ore, already up more than 800% since 2001, even higher.
Meanwhile, enrichment facilities, which turn uranium into fuel for nuclear power plants, have already pledged their services because of growing interest in nuclear fuel by other countries. The result is that the U.S. is relying more than before on Russia, which provides about half the enriched nuclear fuel used in this country.
Uranium is extracted from mines and processed into a form called "yellowcake." The yellowcake, in turn, is processed at enrichment plants, into fuel for nuclear-power plants. A far more time-consuming process is required to turn yellowcake into fuel for nuclear weapons.
Spurred by President Bush, who for years has touted nuclear power as a clean, safe way to generate electricity, the owners of U.S. utilities have made plans for at least 30 new U.S. nuclear power plants.
The administration is calling its plan a "renaissance," as it would revive a domestic industry that has been dormant for decades. The most recent time a utility ordered a new nuclear power plant in the U.S. was 1973.
Spurring the renaissance isn't just the tax breaks the administration is offering for the first six plants. Some utilities also are looking to nuclear power because of the soaring prices of natural gas and the prospect of controls on fossil-fuel generated power. Possible climate-change legislation wouldn't affect nuclear power, which doesn't generate the same pollutants.
However, the "Ad Hoc Utility Group," an industry collective that represents 85% of the utilities involved in producing nuclear power is nervous about securing adequate fuel supplies for nuclear power plants over the next 10 years. The group is lobbying the administration to allow Russia to sell enriched fuel directly to U.S. utilities.
That effort is opposed by USEC Inc., the Bethesda, Md., company that acts as the U.S. agent for Russian enriched fuel under a 1993 agreement that requires Russia to supply $12 billion of enriched uranium derived from its nuclear weapons to the U.S. USEC opposes the introduction of more Russian fuel, arguing that it could interfere with its plans to finance and build a new enrichment plant in the U.S.
The supply situation with uranium and enrichment facilities will be discussed today at an international gathering of nuclear power experts here. One speaker, Thomas L. Neff, a senior researcher at the Massachusetts Institute of Technology, says the supply issues mean that "it will take heroic efforts to fuel the expected growth in nuclear power by 2015. Under the most positive assumptions you might just get there. But they may not pan out."
Mr. Neff, who has followed the nuclear fuel market for 30 years, blames the tightening uranium supply on a failure to open mines in the U.S. and elsewhere. Between 1987 and 2001, he says, stockpiles of processed uranium were "sold off really cheap." Some hedge funds, he adds, are exacerbating the situation by buying and holding uranium off the market in an effort to reap profits later.
The accident at the Canadian mine highlights the supply problem. In October, the ceiling of the nearly completed mine, located in Saskatchewan, collapsed and let in a flood of water. The mine's owner, Cameco Corp., says the mishap will delay completion for as long as three years. The mine could eventually supply 17% of the world's uranium demand, Cameco says.
The dwindling supply of uranium enrichment plants began after two U.S. facilities, built after World War II, shut down, leaving power-plant owners more dependent on the Russians. Natural uranium has less than 1% of the unstable isotope U-235, which must be concentrated to a level of 4% to 5% to make fuel for nuclear power plants. The concentration required to make nuclear weapons is closer to 90%. The concentration is done through a complex sifting process called enrichment.
USEC plans to build a $2 billion enrichment facility near Piketon, Ohio, scheduled to open around 2009, but it still must obtain the financing -- a concern for utility-plant owners who need an assured supply of fuel. The plant will use a type of high-speed centrifuges that haven't been commercially proven in the U.S. Currently USEC operates a plant near Paducah, Ky., built in the 1950s. "If anything happens to that, where do you go?" asks Jim Tramuto, a vice president of PG&E Corp., a San Francisco utility, and a leader of the Ad Hoc Utility Group.
"You want to have as many suppliers in the market as you can have," adds Mr. Tramuto, noting that most non-Russian suppliers already have promised their supplies of enriched uranium to buyers.
The Russians say they could supply more enriched uranium to the U.S., but they are blocked by an agreement with the Commerce Department that restricts their imports to the current levels managed by USEC. While the Russians have some additional near-term capacity, they say they will cut shipments to the U.S. in half after 2013, when the current agreement to use fuel derived from nuclear weapons ends.
"We're having our own nuclear renaissance," says Vladimir I. Rybachenkov, a counselor at the Russian embassy in Washington. He notes Russia recently announced plans to increase its use of nuclear power to generate electricity to 25% from 15%, which means it will need more of its uranium and enrichment facilities.
Still, Mr. Rybachenkov says, Russia is willing to help the U.S. if the limits on its near-term imports of enriched fuel are lifted. "If nothing happens by 2013, there will be a black hole in deliveries of enriched fuel for the U.S. from Russia," he predicts.
Clay Sell, deputy secretary of the U.S. Department of Energy and an architect of U.S. plans for more use of nuclear power, admits that there are near-term problems with both uranium and enrichment services, but adds: "We think it can all be managed."
His department is circulating a draft plan among U.S. power-plant owners that suggests that more enriched uranium fuel could be provided by "blending down" highly enriched uranium from retired U.S. nuclear warheads and by reprocessing uranium tails, or wastes from the process of enriching uranium for U.S. nuclear weapons.
"The higher uranium prices go, the more these tails look like money instead of trash," Mr. Sell says.
Getting more fuel from U.S. enrichment wastes, however, might require the Russians to enrich them, another option under discussion. Mr. Sell says the future U.S. supply picture may not be as bleak as the "black hole" described by Mr. Rybachenkov. "You've got to understand that a lot of what they're saying right now has to do with bargaining," he noted.