Platts - Monday, July 14, 2008 http://www.platts.com ------------ UPDATE: German CDU wants nuclear life extension, no new builds London (Platts)--14Jul2008 Germany's conservative senior ruling coalition party CDU/CSU plans to extend the lifespan of modern nuclear power plants but it does not intend to build new reactors, the party's general secretary Ronald Pofalla said Monday during a phone conference in Berlin. Germany's previous government under a social democrats (SPD) and Green Party coalition passed a nuclear phase-out law in 2002, forbidding the construction of new nuclear plants and limiting existing ones to an average lifespan of 32 years, based on remaining allocated capacity. Germany has 17 nuclear reactors remaining in service. Pofalla said that the CDU/CSU wanted to extend the lifespan for safe nuclear power plants as Germany "needs affordable and safe energy." But Pofalla also said that nuclear new-builds were not part of the party's program. The general secretary said company profits made under an extended life program for nuclear reactors should be used to reduce electricity prices and for research into new energy technology and Pofalla added that "significant parts of the energy industry support this idea." The German head of government Chancellor Angela Merkel (CDU/CSU) said in an interview this weekend that she would "work to ensure that the operation of our safe nuclear power plants is extended." She added that Germany would not be able to "ensure supply for the foreseeable future in a way that protects the climate without atomic energy," she told Sunday newspaper Bild am Sonntag So far, the Chancellor had publicly supported the nuclear phase-out program as it part of the coalition agreement with the Social Democrats of the SPD. Merkel had repeatedly said that during the current term there would be no alteration of the nuclear phase-out law. In the interview, Merkel said the nuclear power issue would have to be addressed "at the latest" after 2009's elections. The CDU/CSU is hoping to leave a coalition with the SPD after 2009's scheduled general election in order to form a government with the pro-nuclear liberals of the FDP. The SPD intends to go into government with the Green Party, together with whom the nuclear phase-out law was passed. According to the most recent polls, the majority--although shrinking--of Germans still oppose nuclear new builds although a majority is now in favor of extending the life of more modern existing nuclear power plants. The polls indicated that the shift in opinion was attributable to rising energy prices and worries over security of supply and climate change. --Henning Gloystein, henning_gloystein@platts.com ------------ Minor fire at Ringhals-2 was quickly brought under control Washington (Platts)--11Jul2008 A "minor fire" at Ringhals-2 was "rapidly brought under control" on July 11, plant operator Vattenfall said in a statement. The fire was on the roof of a turbine building at the Swedish nuclear power plant station, according to press reports. The automatic alarm system summoned both the Ringhals site and external fire brigades, and "no threat to safety or to people ever occurred," Vattenfall said. ------------ UK taxpayers might foot bill for decommissioning new reactors Barcelona (Platts)--10Jul2008 UK taxpayers could end up paying for decommissioning new reactors in the UK, according to a House of Commons select committee report on the Nuclear Decommissioning Authority. The authority "is unable to provide complete assurance that the costs of decommissioning new nuclear power stations will not fall back on future taxpayers," the committee concluded in a report published July 10. Among the report's other findings were that the estimated undiscounted cost of decommissioning existing civilian nuclear sites reached 61 billion pounds (US$120.5 billion) in 2007 and is likely to rise further. The report criticized the NDA for failure to analyze details of civilian sites' estimated cost estimates; for overspending on "support costs," for program changes at short notice running up costs, and for other issues. The report is at www.publications.parliament.uk/pa/cm/cmpubacc.htm. ------------ N Korea imported Russian uranium-contaminated aluminum: sources Bonn (Platts)--10Jul2008 North Korea imported aluminum tubes from Russian sources which may be part of an undeclared centrifuge enrichment program, sources close to an investigation of North Korea's nuclear activities said. The probe is led by the US but includes China, Japan, Russia, and South Korea. Samples of the material subjected to US forensic analysis indicate that the aluminum was contaminated with traces of enriched uranium, sources said. One source said the contamination was high-enriched uranium or HEU. The finding is discussed in part, sources said, in a so-called "informal note" which North Korea submitted to the probe countries to comply with an agreement forged during so-called Six-Party talks earlier in 2008 to terminate the North Korean nuclear weapons program. In pursuit of that goal, the US has tried to determine whether, and to what extent, North Korea carried out development activities for gas centrifuge uranium enrichment. The investigation thus far has reached no conclusions about this matter, and some experts said the probe will extend well into 2009. US agencies have long suspected that North Korea sometime between the late 1990s and about 2001 launched a centrifuge development program. Western government intelligence agencies have compiled strong evidence that North Korea sought to buy equipment and materials for such a program during this period, but never identified a hidden centrifuge plant project. Abdul Qadeer Khan, former head of Pakistan's uranium enrichment program, told Platts this week that he provided some centrifuge assistance to North Korea in 2000, in cooperation with ex-President Pervez Musharraf and the Pakistan Army. In a 2007 book, Musharraf said that Khan, who has been under house arrest since February 2004, had assisted North Korea, but Musharraf has denied that he or the Pakistan government was involved. According to data from sources, the aluminum tubes found in North Korea would have been too soft for use in rotor tubes for enriching uranium. The sources described the tubes as made of 6000-grade aluminum. This material is UF6 corrosion resistant but has a tensile strength too low to accommodate the high speeds associated with spinning centrifuge rotors. One source said that US investigators are satisfied that the diameter of the tubes in North Korea matches the diameter of the casing for a P-1 centrifuge. US and North Korean officials have discussed the tube finding, the sources said. Initially, they said, the North Koreans said that the tubes were intended for use in the manufacture of armaments and missiles. But close examination of the tubes by US intelligence analysts showed that they were contaminated by trace amounts of enriched uranium, according to sources. --Mark Hibbs, mark_hibbs@platts.com --Shahid ur Rehman, newsdesk@platts.com ------------ US Senate panel passes $33.3-bil Energy and Water funding bill Washington (Platts)--10Jul2008 The US Senate Appropriations Committee passed the fiscal 2009 Energy and Water Development funding bill Thursday, which included $27 billion for the Department of Energy. The bill made it out of committee as Senate Majority leader Harry Reid, Democrat-Nevada, told reporters elsewhere that Congressional spending bills would be put off until next year. However, he encouraged Senate committees to continue marking up their spending bills. The overall energy and water bill passed by the appropriations committee totaled $33.3 billion for fiscal 2009, about $2 billion above fiscal 2008. Department of Energy's $27 billion portion of the bill is more than $1 billion above President Bush's request for the department. The department's FutureGen project to develop carbon capture and storage technology for coal-fired power plants did not receive any new funding, but the bill would allow it to use $134 million in funds left over from previous years, according to Byron Dorgan, the chairman of the Senate appropriations subcommittee on energy and water. DOE had requested $156 for FutureGen. The committee did, however, include $149 million for carbon sequestration research. The bill had passed out of Dorgan's subcommittee on Tuesday, and passed the full committee with no amendments and little discussion. DOE's Energy Efficiency and Renewable Energy Office was a big winner in the bill, receiving $1.9 billion, an increase of $200 million on the year, but down $600 million from $2.5 billion in a similar House bill passed two weeks ago. EERE's appropriation included $200 million to restore its Weatherization Program. The president's budget had eliminated the program, which helps individuals pay for domestic energy efficiency improvements. The department's Office of Science also got a large portion of DOE's overall funds: $4.6 billion. This was less then the president requested, but also dramatically higher than the $4 billion funding for fiscal 2008. The Strategic Petroleum Reserve, which some Democrats in Congress have recently suggested dipping into, was funded at $205 million, less then half Bush's request of $584 million. The panel also focused on increasing funds for integrating renewable energy into the electricity grid, according to a committee summary of the bill. This would come out of the Electricity and Energy Reliability program. But a full report on the Senate bill will not be available until early next week, according to a committee spokesman. The Yucca Mountain nuclear waste repository would be funded at $108 million less than requested, and maintain its current level of $386 million. Environmental clean-up, both for defense and non-defense related sites, would receive a total of just over $6 billion, about $450 million more than the current year and exactly what was requested by the president. "The increased funding would enable programs to meet legal milestones that were at risk strictly because of budget shortfalls. In addition, the funding would keep more than 600 clean-up workers on the job," the committee's budget summary said about the clean-up funding. The bill also included $380 million for the authorization of $38.5 billion in DOE loan guarantees. Robert Byrd, the committee's chairman, also said that the committee would meet to consider a second supplemental appropriations bill on July 22. That bill will largely cover the funding of natural disaster response and infrastructure. The Department of Interior Appropriations bill will be considered by the committee on July 24. --Derek Sands, derek_sands@platts.com ------------ UK nuclear clean up costs up 30% since 2003: MPs report London (Platts)--10Jul2008 The cost of decommissioning and cleaning up former nuclear power sites in the UK now stands at a projected GBP73 billion ($144 billion), according to the latest estimates published in a report by the House of Commons Committee of Public Accounts Thursday. In its report on the Nuclear Decommissioning Authority, the public accounts committee said that the 2007 estimate was 30% higher than the estimate in 2003 "and there is a risk that costs may rise further." Edward Leigh MP, chairman of the Committee of Public Accounts, said "we cannot be confident, however, that even this figure will not be significantly upped when the estimates are next revised. Estimating costs far into the future is of course a precarious business; but elements of cost that might be expected to be more predictable--such as for work expected to be undertaken over the next five years--have risen steeply. "It has been all too easy for successive governments and the industry to push these costs onto future taxpayers," the report concludes. The Nuclear Decommissioning Authority was set up in April 2005 and is responsible for decommissioning of UK's civil public sector nuclear sites. By December 2007 14 of its 19 sites had already been shut down and were being decommissioned while parts of its largest site, at Sellafield, had also been shut down, the report said. "The NDA is dealing with a legacy of deferred decision making going back over 50 years of the UK's nuclear power program. Some uncertainty in the cost estimates is, therefore, inevitable, but some of the escalating cost estimates should have been avoidable, including extra costs imposed by short-term changes to the decommissioning program and the scale of site support costs," the report said. But it said that its work was "hampered by uncertainty in the level of commercial income earned from aging and unreliable facilities, and by emerging priorities at Sellafield," and as a result had to make short-notice cuts in the level of funding it could provide for decommissioning in 2007 and 2008. "This stop/start process in decommissioning has imposed additional costs on the taxpayer, with the NDA providing GBP31.6 million to cover the costs of early contract closure and staff training and redundancy," the report said. The opposition Liberal Democrats said the cost of cleaning up nuclear waste was now the biggest single cost for the Department for Business, Enterprise and Regulatory Reform, rather than supporting British business, and called on the government to provide more certainty. "The government must urgently provide certainty about the costs of cleaning up yesterday's waste, and guarantees that the taxpayer will not end up footing the bill for new nuclear waste," said Lib Dem Shadow Environment Secretary Steve Webb. NEW BUILD IMPLICATIONS Leigh warned that the rising costs should play a part in the government's thinking when it came to new nuclear build in the UK. "An important lesson is that, when new nuclear facilities are built, plans for decommissioning them should be already in place. The Department is unable to provide complete assurance that the costs of decommissioning new nuclear power stations will not fall back on future taxpayers," Leigh warned. Greenpeace's Jean McSorley told Platts Thursday "The committee's conclusion that the taxpayer is at risk in terms of picking up the decommissioning and clean up bill of new build is a devastating conclusion at this point of time. This most definitely should be a wake up call to MPs who want to protect the public purse." In January 2008, the UK government announced it would allow energy companies the option of investing in new nuclear power stations. Operators will be expected to meet the full cost of decommissioning new facilities and their full share of waste management costs. Tony Free, British Energy's acting head of environment and nuclear liabilities, told Platts: "This will no doubt be used by anti-nuclear groups as an argument against new nuclear. But the great majority of the NDA's GBP73 billion clean-up cost is associated with the legacy facilities at Sellafield and Dounreay. This has nothing to do with the decommissioning of new build power stations which are simpler and less expensive to dismantle. "The government will be putting in place detailed arrangements to make sure that new build operators pay the full cost of decommissioning and their full share of waste costs. And that is perfectly reasonable. It means that permission to construct and operate a station will not be given until the government is sure that the taxpayer will be protected from the risk of having to meet the costs of decommissioning in the future," Free said. CONSISTENCY, EFFICIENCIES NEEDED ACROSS SITES In its conclusions the MPs' report said it was "surprising that the NDA only reviewed the process of estimating decommissioning costs by the site licensees, but not the details of the costs themselves." It called on the authority to adopt measures to ensure that all estimates are prepared on a consistent basis. "It is even more surprising that, in 2006-07, around a third of the NDA's expenditure on its sites went to meet support costs," it said calling for benchmarking across sites and better use of shared services to bring support costs down. It said there were "significant variations in performance across the sites being decommissioned and that the NDA could do more to strengthen the supply chain for decommissioning work, "for example by helping to train people and develop the required skills." ------------ Nuclear power significant addition to traditional energy:Medvedev Toyako, Japan (Platts)--9Jul2008 Russia's president Dmitry Medvedev said Wednesday that nuclear energy could be "a serious addition" to fossil fuel after pointing out the potential for its use worldwide to the leaders of the Group of Eight countries. "We especially stressed that a comprehensive, significant use of nuclear power could be a serious addition to existing sources of energy. There is potential [for its use] in Russia and other countries, including the G8," Medvedev told reporters after the closure of the three-day G8 summit in Toyako, northern Japan. Energy security and the situation on the markets amid a recent sharp increase in crude prices was in the focus of attention at the G8 summit, he said. Nuclear energy is cleaner and does not create greenhouse gas emissions, he said, adding that there is potential for cooperation between countries in this area. ALTERNATIVE ENERGY DEVELOPMENT LAGS BEHIND GROWTH Medvedev said, however, that the development of alternative energy sources has not kept pace with fast economic growth and traditional energy sources continued to dominate, although its supply was not sufficient. "The situation in the energy sector is not easy. Development is very fast, but new energy sources do not appear that fast, while there is a far from sufficient [supply of] traditional energy sources," Medvedev said, adding that this affected prices. "We must think how we need to provide energy security, taking into account new challenges," he added. The solutions to food and climate issues will depend largely on how the situation on the oil and gas markets develops, he added. BIOFUELS' IMPACT ON FOOD A COMPLEX ISSUE On other energy sources, he said the G8 leaders discussed the production of biofuels in connection with concerns about both high crude and food prices. "In our opinion, the situation here is more difficult. On the one hand, it is a promising new energy source. On the other hand, and I spoke about it yesterday, in some experts' opinions, biofuels create significant problems on the food market," he said. He cited estimates that some 75% of the hike in food prices stemmed from changes in food policy and the allocation of fields for biofuels production. "But we agreed that, first of all, we will develop second-generation biofuels that do not affect food security," he said. Medvedev said energy security will remain in the focus of G8 attention in the years to come, "given the importance of this problem for the development of the global economy and, of course, separate economies." --Anna Shiryaevskaya, Vandana Hari, Takeo Kumagai, Wendy Wells, newsdesk@platts.com ------------ Regulators to seek cause of uranium effluent spill at Socatri Paris (Platts)--9Jul2008 French regulators will inspect the Socatri site at Tricastin July 10 to "assess the precise causes" of a July 8 spill of natural uranium effluent into the environment "and examine the provisions taken by the licensee," nuclear safety authority ASN said July 9. Socatri is an Areva subsidiary specialized in uranium decontamination and waste management. ASN said measurements by Socatri in the water table, private wells and nearby ponds showed no rise in uranium concentration, and that concentrations in two rivers were "decreasing rapidly" and were down to levels recommended for drinking water by the World Health Organization. The spill occurred when a tank holding the uranium solution overflowed due to a faulty valve; a retention tray underneath, accidentally damaged by recent maintenance work, failed to contain the overflow, a Socatri spokesman said July 9. He said a total of 18.07 cubic meters (4,774 gallons) of solution containing 12 grams of uranium per liter had leaked outside the site, versus an original estimate of 30 m3; the effluent contained a total of 74 kg of uranium, all of it natural. Local authorities maintained restrictions on water use pending new analyses. French environment minister Jean-Louis Borloo said "all [appropriate] conclusions" would be drawn from the upcoming inspection, including possible penal and administrative charges. The antinuclear scientists' group Criirad said it was preparing to file suit against Socatri for violation of its license limits. Criirad said it will also sue Areva NC for an unrelated incident involving shallow burial at the Tricastin site of 700 metric tons of used diffusion barriers from the operation of the early defense enrichment plant, now decommissioned, by the French atomic energy commission. ------------ Uranium's spot price jumps $1 a pound for second week in a row Washington (Platts)--8Jul2008 Uranium's spot price jumped $1 a pound for the second week in a row and is now at $60/lb, according to TradeTech and Ux Consulting. Both price reporting companies also suggested that the price was continuing to face upward pressure, as sellers raised their offer prices in the face of increased demand, primarily from the investment community. In its July 7 report, Ux Consulting noted that deals that have delivery out more than two to three months are going at higher prices. The report added that it "is likely that offer prices will continue to firm up, and reflect slight increases over the next several weeks." According to one analyst, potential buyers are seeing more market-based pricing schemes for deliveries later this year, meaning that a number of sellers are bullish on where the price is headed. The fixed-price offers that are being made, this analyst said, are running higher than $60/lb, with some now said to be near the $70/lb level. In Platts' opinion, based on discussions with market sources, spot U3O8 transactions this week are likely to be concluded within the range of $58-$63/lb U3O8. ------------ G8 demands Iran suspend all uranium enrichment activities Toyako, Japan (Platts)--8Jul2008 The leaders of the Group of Eight industrialized nations on Tuesday called on Iran to comply with the international community's request to suspend all its nuclear enrichment-related activities. "We express our serious concern at the proliferation risks posed by Iran's nuclear program and Iran's continued failure to meet its international obligations," the G8 leaders, who have gathered for a summit July 7-9 in Toyako, northern Japan, said in a statement. "We also urge Iran to fully cooperate with the [International Atomic Energy Agency], including providing clarification on the issues contained in the latest report by the IAEA Director General," the G8 statement added. The G8 leaders said they "firmly supported" efforts by China, France, Germany, Russia, UK, US and the EU to resolve the Iran nuclear issue "innovatively through negotiation," and urged Iran to respond positively to the group's offer of June 14. Washington accuses Tehran of trying to develop nuclear weapons, but Iran insists its program is for peaceful purposes only. ------------ US, Russia to continue pressing Iran on enrichment, Bush says Washington (Platts)--7Jul2008 The US and Russia will continue working closely to urge Iran "to give up its desire to enrich uranium," President George W. Bush said July 7 before the start of the G8 summit in Toyako, on the Japanese island of Hokkaido. Speaking at a news conference with Russian President Dmitry Medvedev, Bush singled out the enrichment issue as an area of agreement between the two countries. Medvedev said there were other areas where the two leaders shared the same views, including matters on North Korea, though he did not provide any specific examples. After his arrival July 6, Bush met privately with Japanese Prime Minister Yasuo Fukuda to discuss, among other topics, the coordination of future six-party talks and a strategy to ensure North Korea has relinquished the technologies needed to develop a nuclear weapon, administration officials said. ------------ EDF says it is ready to build second EPR in France Washington (Platts)--3Jul2008 Electricite de France said it is "ready" to build a second EPR in France. EDF said in a statement July 3 that it is "ready to play its part" in the French government's plan to launch construction of a second 1,650-MW EPR. French President Nicolas Sarkozy announced the plan for a second EPR, to follow the one EDF is building at Flamanville-3 in Normandy, during a visit to the Le Creusot industrial site in Burgundy. EDF Chairman/CEO Pierre Gadonneix said EDF was "delighted" at the news and was ready to build the reactor "in view of the increased demand for electricity and the constraints associated with global warming." Sarkozy did not say where the new reactor would be built, who would build and operate it, or when it would start up. Suez/Electrabel has been lobbying for a green light to build an EPR in partnership with Areva, on one of the vendor's French sites, by 2017. EDF has argued a new reactor isn't needed until 2020. In the statement, EDF said it "owns a number of potential sites for the [second EPR] reactor and the skills of its teams are well-known. It also has the necessary experience following its involvement in building the EPR installation in Flamanville." Flamanville-3 is scheduled to start up in 2012. ------------