Platts - Wednesday, October 12, 2005 http://www.platts.com ------------ Spot price of uranium increases Washington (Platts)--11Oct2005 The spot price of uranium is now $33 a pound U3O8, a rise of $1 over the past week, according to both TradeTech and Ux Consulting. Analysts said the increase reflected the continuing belief among sellers that there is little downward pressure on the price. As a result, sellers are offering only modest amounts at increasingly higher prices to potential buyers. And some analysts are now suggesting that both spot and long-term prices will pass $40/lb U3O8 next year. ------------ Former US energy boss sees more nuclear, new responses to demand Houston (Platts)--11Oct2005 Former US Energy Secretary Spencer Abraham expects a resurgence in the development of nuclear power plants and an eventual opening of previously closed areas for oil and gas exploration as a response to increased energy demand, he said Tuesday. Addressing an energy forum in Houston hosted by accounting firm Ernst & Young, Abraham also said Saudi Arabia had failed to launch a project to invest in a new US refinery because of the same economic and regulatory hurdles faced by companies who might have considered the same thing. "It's a tough economic case," said Abraham, who served four years as the top energy official in the first term of President George W Bush. Responding to a question from Platts, he said: "Any effort will encounter a huge number of impediments from regulatory constraints, not just federal, but state and local, too." Saudi Arabia's Foreign Minister Saud al-Faisal said last month his country wanted to invest in US refining expansions, noting "a gap between production and consumption due to a lack of refining capacity." Offering data to illustrate the increasing level of global energy demand, Abraham painted a challenging picture of the road ahead for the industry and said he expected the US Congress to draft new legislation on many fronts to confront the hurdles. Besides its most recent move to stimulate investment in new refinery construction, Congress is also likely to move to open previously closed areas for drilling, including the Arctic, Abraham said. He predicted industry would also see government incentives for development of new technology and a demand for some sort of carbon emissions framework. Abraham said: "All of this can be anticipated. There is little I see that doesn't call for tough markets to continue." For more information, take a trial to Platts Oilgram News at http://oilgramnews.platts.com. ------------ Cameco, Areva to sell ERA shares Washington (Platts)--10Oct2005 Cameco and Areva have agreed to sell their shares in Energy Resources of Australia (ERA). Both companies hold "Class B" shares in the Australian uranium company, which is majority owned by the U.K.'s Rio Tinto. Last week, Rio Tinto announced it was consolidating its uranium operations in Australia and Namibia under a new organization called Rio Tinto Uranium. In a release today, ERA said that the Class B shares held by Cameco (12.8-million, or 6.69% of ERA's issued capital) and Areva (14.8-million, or 7.76% of ERA's issued capital) would be converted to Class A shares and would be offered for sale on the Australian Stock Exchange. The Class C shares held by Japan Australia Uranium Resource Development Co. (Jaurd), owned by a number of Japanese utilities, will also be converted to Class A shares. Cameco President/CEO Jerry Grandey said the exit from a passive investment in ERA will mean that Cameco can "redeploy its resources more strategically into operations where we have greater control and receive production rather than dividends." ------------ UK's Chapelcross nuclear site gets go-ahead for decommissioning London (Platts)--10Oct2005 The Nuclear Installations Inspectorate gave the go-ahead last week to decommission Magnox's Chapelcross nuclear plant in Scotland, British Nuclear Group said. "Formal approval of our plans by the regulator was a key step on the way to decommissioning the station. We have already started defuelling operations at the site, by progressing the removal of spent fuel from the storage pond for reprocessing at Sellafield," Dave Wilson, Chapelcross' transition manager said. "Defuelling the reactors will take place between March 2007 and March 2009. This approval will allow us to start decommissioning in parallel with these defuelling activities." Chapelcross started generating in 1959 and stopped in 2004. Since April 2005 the station has been managed by British Nuclear Group under contract to the Nuclear Decommissioning Authority. Under current plans the four large cooling towers will be removed by 2007, all buildings except the four reactor buildings will be removed from the site by 2017, and final site clearance will be completed in 2128. The NDA is consulting on proposals to accelerate this process and achieve final site clearance before 2030. For more muclear news, request a free trial to Platts Nucleonics Week at http://www.platts.com/Request%20More%20Information/ ------------ USEC wins round in centrifuge plant proceeding Washington (Platts)--7Oct2005 USEC won a victory today when an NRC Atomic Safety & Licensing Board (ASLB) ruled there were no admissible contentions filed by two intervenors challenging USEC's application to build its American Centrifuge Plant (ACP) in Portsmouth, Ohio. The intervenors were the Portsmouth/Piketon Residents for Environmental Safety & Security (PRESS) and Geoffrey Sea. PRESS is a group representing the interests of various individuals who live in close proximity to the proposed ACP; Sea has become the owner of, and a resident in, a private structure adjacent to the ACP. The ASLB left open the possibility that some contentions raised by Sea could be admitted as late-filed contentions. That would happen if NRC does not meet its obligations under the National Historic Preservation Act to fully assess the impact of the ACP on historical sites near the proposed plant, the board suggested. ------------ Entergy's 836-MW Arkansas-1 nuclear unit to shut for refueling Houston (Platts)--7Oct2005 Entergy Nuclear's 836-MW Arkansas-1 nuclear power plant in Russellville, Arkansas, is to be taken off line Oct 11 for a planned refueling and maintenance outage, according to a company spokeswoman. This outage is the plant's nineteenth for refueling, and is the most extensive project since the original construction, she said. The $200-mil plus operation includes replacement of both steam generators and the reactor vessel closure head. The 852-MW Arkansas-2 unit is currently operating at full power, but is scheduled to go down for refueling in fall 2006. For more information, take a trial to Platts Megawatt Daily at http://megawattdaily.platts.com. ------------ US merchant coal, nuclear plants benefit from high gas prices New York (Platts)--6Oct2005 While record US natural gas prices have hit some power generators hard, they have provided coal-fired and nuclear power plant operators with "rapidly increasing power margins," Calyon Securities (USA) Inc equity analyst Craig Shere said Thursday. In a report, "The Power of the 'Dark Spread noted the recent 14% jump in NRG Energy's stock price after the company announced plans to acquire Texas Genco for $5.8-bil in cash and stock. Texas Genco's power plant portfolio is comprised of 5,200 MW of coal and nuclear generation, 4,561 MW of intermediate gas-fired generation and 1,158 MW of peaking plants. If the NRG deal goes through, Shere said it will give Texas Genco's four private equity owners a six-fold return on their original $900-mil investment, a gain Shere attributed to the "power of the 'dark spread.'" Dark spread is a variation on the term spark spread, which refers to the difference between the cost of a fuel, typically natural gas, and the selling price of electricity. Dark spread, however, applies to the difference between the cost of coal and the price of electricity. Many electric utilities rely heavily on coal-fired power plants, but Shere argued that energy merchants have a "higher proportional exposure" to wholesale dark spreads because merchants lack the complicated political exposure of utilities and have more leveraged balance sheets that can realize a greater benefit from rising cash flows. Shere highlighted Reliant Energy, Dynegy and NRG Energy as merchant firms with exposure to further dark spread expansion. He has a "buy" rating on Reliant and Dynegy. Calyon does not cover NRG. ---Peter Maloney peter_maloney@platts.com For more information, take a trial to Platts Global Power Report at http://gpr.platts.com. ------------ Sizewell B okayed for 10 more years of operation London (Platts)--6Oct2005 Sizewell B received regulator Nuclear Installations Inspectorate's (NII) go-ahead to operate for 10 more years "subject to continued satisfactory safety performance," NII said today. NII's approval followed its review of owner British Energy's (BE) first 10-year periodic safety review (PSR) of the 1,200-MW Sizewell B, the U.K.'s sole PWR. Under the U.K. regulatory regime, each nuclear licensee is required to undertake a PSR of a facility at 10-year intervals as a condition of a nuclear site license. The PSR then must be submitted to NII for clearance. BE's Sizewell B PSR involved a comprehensive study of the reactor's operational history, aging factors and whether it has kept up with advances in standards since construction. NII said it had agreed to "follow-up" work with BE, but this is in line with "normal regulatory" programs. ------------