Wednesday, August 29, 2007

Nuclear Rebirth

The nuclear industry in Canada has been largely moribund for the last twenty years. The biggest news has focused on the re-opening of the Bruce power plants in Ontario and the questions areound whether the Pickering plants will be able to be refurbished or if they will have to be re-built. Now in the last week two major announcements of plans to build new nuclear power plants in Canada. We can also see the industry starting to become a flashpoint for conflict -- and I expect we will see more.

The first announcement comes out of Alberta where a private company proposes to build a reactor in the Peace River district. Part of the mystery of this article is the question of who will use the power given he remote location of the reactor. Indeed in the Globe article the lead suggests a mystery customer:

CALGARY -- An upstart Alberta firm with no experience in nuclear energy has taken its first official step to build the province's first nuclear power plant, saying yesterday that it has the backing of a large but unnamed company working in the province

It does not take a rocket scientist though to figure out the likely consumer -- the Peace River Oil Sands. The Peace River Oil Sands are the next big oil sands development likely to come on line and in addition to the huge amount of water that will be needed to mobilize the underground bitumen, an even larger amount of energy will be needed to heat that water to the boiling point. Indeed an article just the week before (reproduced below) commented on Shell's consideration of nuclear power for a similar project to the west of Fort McMurray. Shell, incidentally, is the first company out of the box to seriously start looking at developing the Peace River area. There is a certain irony in developing a controversial 'clean' power source in order to facilitate the operation of one of the leading 'dirty' power sources.

In Ontario the Ontario Power Generation Corporation unveiled its twenty year plan which, together with conservation and gas fired plants, will likely include the building of at least two new nuclear power plants and the refurbishment and re-opening of several closed ones. The Globe and Mail said:

In its 20-year plan, the OPA said the province will need massive investments in natural gas-fire plants, as well as conservative and renewable power to make up for the loss of coal over the next seven years.

As well, the province's nuclear operators will have to spend at least $26.5-billion to refurbish existing plants and build one or two new units by 2018 in order to maintain nuclear's current share of the electricity supply.

Finally, we see the inevitable happen as a growth of the nuclear industry leads inevitably to the re-examination of uranium mining. An Ontario Court just issued an injunction against a group of aboriginal blockaders who have been blocking the early stages of the development of uranium mine in the Ottawa valley region. I expect this will the first of many such incidents as interest in developing Canada's uranium resources revives and the eyes of government and industry turn to Canada's frontiers.

One thing we should all watch for though is the presure that will come and the subsidies that will be provided to choose Canada's Candu reactor techonology over the more widespread technologies used in the United States and the rest of the world. This Candu technology historically was viewed as superior in a key aspect; namely that it did not require a shut down in order to refuel. However, it is a more complex reactor and the experience at Darlington and Pickering suggests that this advantage may be outweighed by the fact that as it ages increasingly brittle metal piping requires largescale replacement entailing years of shutdowns and billions in rebuilding costs.

Finding the right balance between these concerns will be tricky and will be made even more difficult as the world increasingly faces a labour shortage. In such a world it will be increasingly important to ensure that we are using technology that can easily be supported by the highly mobile, worldwide force of engineers and technicians that will be working in the nuclear industry. To the extent that we use a unique technology we may be putting ourselves at a competitive disadvantage for attracting these workers. Given the Canadian government's propensity for subsidizing the construction of Candu reactors (thus making us all share in the cost), I for one hope there is some real public scrutiny given to how the decision to choose what technology is used is made. I would hate to see us invest billions of dollars in Betamax techonology in a VHS world.

Shell eyes nuclear power for oil sands
New technology that extracts bitumen from limestone demands huge quantities of electricity

May 22, 2007

CALGARY -- Royal Dutch Shell PLC is looking at nuclear power to support its experimental oil sands ambitions, on which it has already placed a bet of more than half a billion dollars.

The company, through a secretive Calgary-based subsidiary called Sure Northern Energy Ltd., is working to unlock an estimated 60 billion barrels of raw bitumen - more than 100 kilometres west of the oil sands epicentre around Fort McMurray in northeastern Alberta.

The prize Royal Dutch is chasing is bitumen trapped in hard-rock limestone, rather than the conventional oil sands around Fort McMurray where bitumen is mixed with dirt and sandstone.

The Anglo-Dutch energy giant is the likeliest customer for a nuclear power plant proposed by Energy Alberta Corp., a private company working with Atomic Energy of Canada Ltd.Unlocking the multibillion-barrel bonanza encased in limestone requires an astounding amount of electricity.

The resource has been known for decades but efforts to recover it have failed.

Royal Dutch is working on electric heaters below ground to loosen up the gooey bitumen to draw it to the surface through wells.

The firm is trying to commercialize what it calls a "novel thermal recovery process" invented by Shell's technology arm.

Last year, Royal Dutch, through Sure Northern, paid the Alberta government $571-million to acquire exploration rights west of Fort McMurray - by far the biggest outlay to stake a claim in the oil sands.

Husky Energy Inc., which has publicly expressed an interest in harnessing nuclear power, is the other major player in the area, and has said it wants to partner with Royal Dutch, which is leading the new technology.

Energy Alberta, backed by oil patch veteran Hank Swartout, has a deal with government-controlled AECL to develop a nuclear reactor for the oil sands.

Technology to recover bitumen from limestone is "moving very rapidly," Mr. Swartout said.

"As it goes forward, the demand for electricity, without going any further, will be hugely increased," said Mr. Swartout, who is retiring from his post as chairman of Precision Drilling Trust, a firm he founded two decades ago.

Royal Dutch's Sure Northern unit didn't return several calls seeking comment. It is the only company actively working on bitumen in limestone. Other firms in the conventional oil sands, such as Total SA of France, have expressed interest in nuclear power.

One unnamed company is looking to take 70 per cent of the output from Energy Alberta's proposed $6.2-billion twin nuclear reactor that would start producing 2,200 megawatts in 2016. The reactor design exists only on a drawing board and the amount of power is equal to about a fifth of Alberta's electricity supply.

For comparison, Suncor Energy Inc., the second-largest oil sands producer, uses roughly 400 megawatts of electricity at its operations.

Neither Mr. Swartout nor his partner Wayne Henuset, president of Energy Alberta, would comment directly about a possible connection with Royal Dutch. "I'm not going to say anything officially," Mr. Swartout said. "Officially, we're not chatting with anybody other than there's a huge amount of interest that we facilitate this and obviously I don't spend my money foolishly."

Energy Alberta plans to submit a preliminary application to the Canadian Nuclear Safety Commission by mid-June to start the regulatory process. It is looking at building its facility in either of the small towns of Whitecourt or Peace River in northwestern Alberta.

Industry players have wondered about those locations, given their distance from Fort McMurray, but both sites are relatively close to Royal Dutch's limestone ambitions.

Last week, Energy Alberta held a public meeting on the proposed plant in Whitecourt, drawing about 300 people, with less than five dissenters among the crowd, according to Mr. Henuset. A nuclear reactor promises construction jobs for about 2,000 people with as many as 1,000 permanent, high-tech jobs.

There has been some opposition in Alberta - a citizens group called Cause is opposed - but the provincial government has shown increasing interest and the federal Conservative government is supportive. Energy Alberta, at its Whitecourt meeting, had several speakers, including Patrick Moore, who was anti-nuclear as part of Greenpeace in the 1970s but has become a nuclear advocate.

A potential competitor for Energy Alberta/AECL is Areva SA, the state-owned French nuclear power company.

Armand Laferrère is president of Areva's Canadian arm, which is looking to sell its technology in Ontario and Alberta, and he has had top-level meetings in Alberta. "We haven't made announcements to huge drumbeats for projects that don't have a customer ... but Areva is definitely interested in presenting its solution," Mr. Laferrère said.

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