Platts - Friday, April 04, 2008 http://www.platts.com ------------ Duri premium hits record $5/b on Japan nuclear outage, high LSWR Singapore (Platts)--4Apr2008 The premium for spot Duri barrels loading in May surged nearly $1/barrel this week to a record $5/barrel over the grade's Indonesian Crude Price or ICP, as direct-burning crudes are in demand for thermal power generation in Japan, market sources said. The premium dwarfs the last peak, when August 2007 Duri cargoes were assessed at $4.75/b over ICP, following a major nuclear power plant outage in Japan. Demand for Duri and similar crudes used as feedstock at power plants spiked after a nuclear plant shutdown at Japan's Hokuriki Electric Power Co. this week. Relatively high prices for low sulfur waxy residue, which competes with heavy sweet crudes as power plant fuel in Japan and South Korea, also bolstered demand for Duri from the utilities. In Japan, buyers of electricity from Hokuriku Electric's nuclear plants were in the spot market for crude this week. "They have purchased some crude from Japanese [trading] companies this week," said a source close to one of the power plants in Kansai, but declined to provide the price or the crude bought. HOKURIKU LATEST IN NUCLEAR UNIT SHUTDOWNS Hokuriku Electric shut a 1.358 GW nuclear reactor at its Shika plant in northwestern Japan Wednesday following a technical glitch, the latest in a string of problems that have hit Japan's nuclear power industry. A 540 GW nuclear reactor of the company at Shika remains idled since March 16, after it was found to have flaunted local safety standards. Meanwhile, Tokyo Electric Power Co., Japan's largest electricity utility, is not expected to restart any time this year its giant 8.21 GW Kashiwazaki-Kariwa nuclear power plant, which was shut by an earthquake in July 2007. Direct-burning crudes have also benefited from a decline in Japanese purchase of Sudan's Nile Blend since late last year. Some Japanese utilities have cut back imports of Sudanese crude in protest against human rights abuses in the African country, and as a result become more dependent on regional grades. Meanwhile, refinery demand for heavy to medium sweet crudes is also fairly robust in Asia, led by strong demand for low sulfur fuel oil, sources said. Prices of LSFO have climbed $10-15/b over high sulfur fuel oil on the back of problems at South Korean refiner S Oil's 67,000 b/d residue fluid catalytic cracker in Ulsan and Pertamina's 348,000 b/d Cilacap refinery in Indonesia in late March. --May Tham, may_tham@platts.com ------------ OIG: Lack of information on DOE contractor pick `disturbing' Washington (Platts)--3Apr2008 DOE's lack of documentation on its selection of a legal services contractor for the repository project at Yucca Mountain, Nevada is "disturbing," DOE's Office of Inspector General said in a report released April 3. DOE hired Morgan, Lewis, and Bockius LLC last year to help prepare a repository license application that the department wants to send to NRC in June. DOE had hired the same firm in 2001 to assess the program's safety conscious work environment. Its consideration of Morgan Lewis for the 2007 contract reversed an earlier DOE prohibition against hiring law firms to work on the repository program whose utility clients had sued the federal government over DOE's failure to begin disposing of their spent fuel by a 1998 contract date. OIG said DOE did not document its rationale for that apparent shift in procurement strategy or its comparative analysis of bids that led to its selection of Morgan Lewis. OIG said thorough documentation was especially important "given the controversial nature of the Yucca Mountain Project; the history of allegations concerning conflicts of interest; and, the likely public scrutiny of any Yucca Mountain Project legal services contract." The OIG did not say it found a conflict of interest, prompting DOE spokeswoman Megan Barnett to say that nothing in the report prevents the firm from representing the department in a Yucca Mountain licensing proceeding at NRC. ------------ DOE wants to issue loan guarantee solicitations this summer Washington (Platts)--2Apr2008 DOE hopes to issue loan guarantee solicitations this summer for nuclear projects, David Frantz, director of the DOE loan guarantee program, said April 2. Speaking to reporters after a Senate Appropriations subcommittee hearing, Frantz said DOE is hopeful the solicitations will cover a wide range of energy projects, including new reactors. But, he added, the program is "still a work in progress" and DOE has not yet submitted a detailed plan on how it plans to proceed to Congress and the White House Office of Management and Budget. More than half of the $38.5 billion loan guarantee program is dedicated to nuclear projects, with $18.5 billion allocated for new reactors and another $2 billion for uranium enrichment. During the hearing, Republican Senators Pete Domenici of New Mexico and Larry Craig of Idaho both urged DOE to proceed as quickly as possible with the program, which was created under the Energy Policy Act of 2005. The program is aimed at benefiting energy efficient technologies that do not produce greenhouse gases. A loan guarantee provides the recipient with a show of federal support that can help lower the cost of project financing. ------------ NRG plans technology, fuel shift to cut its carbon emissions: CEO Portland, Maine (Platts)--2Apr2008 NRG Energy plans to build a variety of power plants that will reduce the company's exposure to potential climate change legislation, its CEO, David Crane, on Wednesday told a Morgan Stanley energy conference. Starting in 2010, Princeton, New Jersey-based NRG, plans to transition from a carbon-heavy portfolio to a carbon neutral or light portfolio, Crane said. NRG produces nearly 0.9 tons of carbon per MWh. Under the independent power producer's plan, its carbon emissions intensity will fall to about 0.82 tons/MWh in 2011 and 0.56 tons/MWh in 2020. NRG plans to begin adding 200 MW of nuclear capacity a year in 2020, according to Crane. Starting in 2016, NRG expects to add 200 MW of natural gas-fired capacity a year, 150 MW of advanced coal with carbon capture and sequestration a year and 100 MW of wind, he said. On nuclear development, NRG expects to begin developing new nuclear plants with its partner Toshiba. The company expects to file letters of intent with the US Nuclear Regulatory Commission for one or two new projects by the end of 2008, Crane said. Although now is a good time to build power plants with falling reserve margins and a relatively small number of plants under construction, development is being stymied by uncertainties around carbon regulation, Crane said. The uncertainty is the "biggest obstacle" to development, he said. Advanced coal projects will not take off until there is a clear price placed on carbon emissions, Crane said. "It's very difficult for me to see clean coal getting going in the US until there's a price on carbon," Crane said. NRG expects more clarity on federal carbon legislation by the end of the year, with a final bill possible in 2009, he said. ------------ USEC buys former centrifuge manufacturing site from Boeing Washington (Platts)--1Apr2008 USEC has bought a former centrifuge manufacturing site from Boeing for $5 million and plans to use the facility to make the 11,500 centrifuges that USEC's new American Centrifuge Plant, or ACP, will need to enrich uranium, USEC said April 1. The 74-acre site in Oak Ridge, Tennessee includes a 200,000-square-foot building with a high bay structure that was built specifically to manufacture, balance and test centrifuges that Boeing built for DOE's gas centrifuge uranium enrichment program in the 1980s. USEC said in a press statement that it will make more than $50 million in improvements to the site, which has an assessed value of $13 million. USEC hired Babcock & Wilcox Technical Services Group to take over centrifuge manufacturing, balancing and testing from Boeing last summer. B&W is expected to hire up to 400 people to work at the Oak Ridge facility, USEC spokeswoman Elizabeth Stuckle said April 1. The ACP, being built in Piketon, Ohio, is slated to begin operations next year and to ramp up the number of centrifuges installed at the modular facility, Stuckle said. All 11,500 centrifuges planned for the plant are expected to be installed by 2012, she said. However, she added, additional modules can be added to the ACP if the demand for enriched uranium increases. ------------ UK's NDA signs five-year low level radioactive waste contract London (Platts)--1Apr2008 A consortium of Areva, URS Washington Division, Studsvik UK and Serco Assurance signed March 31 a five-year contract to manage and operate the UK's low level radioactive waste repository in Cumbria, North West England, French nuclear engineer Areva said Monday. Valued at Eur160 ($251) million for the consortium, the contract can be extended for up to 17 years, taking contract value up to Eur650 million, Areva said. The contract also covers the implementation of a national strategy to manage additional low level waste expected to be generated by the NDA's decommissioning of 20 nuclear facilities across the UK. The contract is the first to be awarded for the operation of a nuclear site by the UK Nuclear Decommissioning Authority (NDA) since it was established in 2005. Areva is also a member of Nuclear Management Partners, one of the consortia bidding for the management of Sellafield, the UK's largest nuclear complex. Its partners are URS Washington Division and Amec. The result of the competition is expected to be announced later this year. ------------ Groups criticize DOE's GNEP program as too costly and too risky Washington (Platts)--31Mar2008 The Global Nuclear Energy Partnership is a poorly-supported program that could pose significant risks to public health and safety, a group of public interest, environmental and policy groups said in a report Monday. The partnership, which began in 2002, involves 21 countries whose goal is to spur the construction of civilian nuclear power plants while ensuring that spent fuel would not fall into the hands of terrorists. Partnership countries would send their spent fuel to be reprocessed in the US. The report sponsored by Friends of the Earth USA, the Government Accountability Project, the Institute for Policy Studies, and Southern Alliance for Clean Energy, said the project is too risk and too costly and should be cancelled. In releasing the report, Robert Alvarez, a senior scholar at the Institute for Policy Studies, said the groups plan to urge Congress to eliminate funding for GNEP. Alvarez, who had been senior policy advisor to former Energy Secretary Bill Richardson, said the groups want spent nuclear fuel to stay where it is, buried at reactor sites. They also want the government to abandon the idea of Yucca Mountain as the nation's nuclear waste repository and start a process for selecting a new site. The report said that none of the GNEP technologies and processes is commercially viable at the moment, adding that the Bush administration's proposed schedule for deploying GNEP is not feasible. ------------ US nuclear plants set generation, capacity factor records in 2007 Washington (Platts)--31Mar2008 US commercial nuclear power reactors set records for generation and capacity factor in 2007, the Energy Information Administration said Monday. The 806.5 billion kWh generated by the US' 104 power reactors in 2007 surpassed the previous record, set in 2004, by 2.3%, EIA said. The fleet's 2007 capacity factor of 91.8% exceeded the previous record of 90.3%, set in 2002, EIA said. --Steven Dolley, steven_dolley@platts.com ------------ Southern Nuclear files COL with NRC for two Vogtle units Washington (Platts)--31Mar2008 Southern Nuclear filed a combined construction permit-operating license, or COL, with NRC March 31 for two new units at the Vogtle site. Southern Nuclear Operating Co., a Southern Company subsidiary that operates the two existing 1,215-MW PWRs at Vogtle, applied for a COL on behalf of Vogtle's four co-owners: Georgia Power Co., Oglethorpe Power Corp., the Municipal Electric Authority of Georgia, and the city of Dalton, Georgia. The COL seeks approval to build two Westinghouse AP1000s, if the owners decide to move ahead with the project. Approval of the Georgia Public Service Commission is needed before a final decision on construction is made. Southern Nuclear applied in August 2006 for an early site permit, or ESP, to obtain approval of the site for the additional units. Applying for the ESP and COL, which are part of the NRC's licensing process, preserves Southern Nuclear's option to expand its nuclear generation. In addition to Vogtle, Southern Nuclear operates Hatch-1 and -2 and Farley-1 and -2. ------------ Spot uranium price might fall several dollars: analysts Washington (Platts)--28Mar2008 The spot price for uranium has the potential to drop several dollars over the next month -- perhaps falling below $70/lb -- if a number of spot sellers aggressively pursue the chance to sell 300,000 lb U3O8-equivalent to Taiwan Power Co., several market analysts said. The Asia-based utility recently entered the market, taking bids through April 8 for either U3O8 or UF6 uranium for delivery in September. The spot price likely will continue "bumping around this $3-$5 band [around the current spot price] until something major happens," one analyst said. The analyst added that those following the market are "searching for indications that the market is going to stay strong." As an example, some, but not all, market analysts expect buying interest to pick up later in the year as some more utilities enter the market to fill any remaining uranium requirements for 2009, but other analysts suggest that utility spot demand for 2009 is less than some expect, so the spot price likely will not rise much, if at all, based on that limited demand. Based on discussions with market sources, spot U3O8 transactions over the next week likely will occur within the $69-$75/lb U308 range. Ux Consulting indicated in its latest report that with the weak US dollar, more utilities in Europe and Asia might find the current spot price attractive enough to enter the market to buy and hold. Other analysts said, however, that most utilities in Europe and Asia have significant stockpiles of uranium sufficient to cover their reactor needs for at least three years and that, for them, a buy-and-hold strategy probably is not cost effective. Scenarios that could push the price higher involve supply disruptions caused either by natural events -- such as heavy rains or floods -- or by continuing problems with the startup of newly opened uranium operations, analysts said. The spot price of uranium dropped $1 to $73/lb U3O8, according to Ux Consulting's March 24 report. Sellers, facing weak buying interest, lowered their offer prices, Ux Consulting said. TradeTech, in its March 21 report, kept its price at $74/lb, but also noted that most near-term demand was discretionary, with supplies sufficient to meet that demand. A report that the US Government Accountability Office prepared on the US Department of Energy's high-assay depleted uranium is set for an April 1 release. A hearing on the report before the US House of Representatives Energy and Commerce Subcommittee on Oversight and Investigations is scheduled April 3. A quick and limited e-mail survey of market interest that the Nuclear Energy Institute did March 26 indicated at least six utilities and four other companies would consider bidding on DOE's depleted uranium stocks if the material were available for sale. --Michael Knapik, newsdesk@platts.com --Amena Saiyid, amena_saiyid@platts.com ------------ DOE awards $18.3 million GNEP contracts to four teams Washington (Platts)--28Mar2008 DOE has awarded $18.3 million for continuing work on its Global Nuclear Energy Partnership to four industry teams, the department announced March 28. The teams are developing plans for deploying new reprocessing and fast-reactor technologies as part of GNEP. DOE awarded $16 million for the original work last September; the four teams delivered analyses to DOE in January, the department said. Those analyses "helped determine where additional studies were needed and provided the basis" for the new round of awards, DOE said. According to DOE, a team led by EnergySolutions will receive $5.9 million; one led by Areva and Mitsubishi Heavy Industries will receive $5.7 million; the General Electric-Hitachi team will receive $5.5 million; and the General Atomics team will get $1.3 million. DOE said it might make an additional round of awards later this year. ------------