How Soon Will Saudi Arabia Turn to Nuclear Energy?(And isn't it time for America to expand!)

While a growing number of countries have announced their civilian nuclear energy ambitions over the past twelve months, no other country is likely to have more of a psychological impact on the nuclear energy picture than Saudi Arabia. We believe the Kingdom’s natural gas and water problems will lead them to nuclear, sooner rather than later, probably as early as this year.

After our interview with Kevin Bambrough, which resulted in the widely read article, ‘Explosion in Nuclear Energy Demand Coming,” we began more deeply researching Bambrough’s conclusion. He believes the overwhelming growth in nuclear energy will continue to drive the uranium bull market much higher than is suspected. He believes the uranium renaissance has gone beyond the envelope of just a mining inventory shortage. We researched this further during the course of our investigation into uranium and geopolitics. We were surprised by what we discovered, and continue to be stunned by how accurate Mr. Bambrough’s forecast is likely to play out. We included the special sub-section, which follows, in our soon-to-be-published, A Practical Investor’s Guide to Uranium Stocks. Below is a sneak preview.

An April 2006 UPI news item confirmed what many have long believed. It won’t be long before Saudi Arabia launches a nuclear project. Kuwaiti researcher Abdullah al-Nufaisi told seminar attendees in Qatar that Saudi Arabia is preparing a nuclear program. He said the government was being urged to launch a nuclear project by Saudi scientists, but had not yet received the blessing by the royal family. Social, not energy, issues could help the Saudi royals embark on a large-scale nuclear program.

Of the Kingdom of Saudi Arabia’s 24 million subjects, more than 40 percent are under 18 years of age. While still manageable, the country’s infrastructure is not prepared to deal with its explosive population growth. The two biggest problems facing Saudi Arabia are potential water and electricity shortages. True, its super oilfields may also have peaked in production and might move into tertiary recovery, but that is unknown. An Islamic revolution, similar to what Iran suffered in the 1970s is probably foremost in the King’s mind. Civil unrest might come about should his subjects suffer from insufficient electricity and inadequate water supplies. One need only look at the widespread electricity shortages Syria experienced in the 1980s and early 1990s.

As reported in the October 14, 2004 issue of Arab Oil and Gas, the Saudis lag well behind Bahrain, Kuwait, Qatar, and the United Arab Emirates in per capita energy consumption. The rate of natural gas consumption, which produces Saudi’s electricity, increased less than Egypt and Syria. Total energy consumption dropped by 3.5 percent in 1999 and 2000.

The internationally heralded “Gas Initiative” of 1998 was the Kingdom’s attempt to lure major western oil companies back into the country to help develop its natural gas reserves. After major oil companies spent $100 million in due diligence to evaluate the Saudi natural gas reserves, the initiative quietly dropped off the world’s radar screen. A Shell Oil executive, whose company is exploring for gas in the country’s Empty Quarter, told Bloomberg Daily Energy News that this was a high-risk venture with a low probability of finding sizeable reserves. In Matthew Simmons’ Twilight of the Desert, he repeated what he was told by an anonymous senior oil executive, “The reservoirs are crummy.”

The Saudis need water and electricity to match their population growth. Nuclear energy is likely to be the solution to both those problems. Continued dependence upon natural gas may prove a fatal economic and social error for the royal family. Our research forecasts the Saudis should announce a large-scale civilian nuclear energy program in the near future.

Let’s discuss the water problem first. In a 2002 story reported in the Oil & Gas Journal, Saudi Arabia’s 30 desalination plants produce about 21 percent of the world’s total desalinated water production. Nearly 70 percent of the local water drunk in cities comes from desalinated sea water. As the population grows, Saudi Arabia may spend another $40 billion to build more desalination plants.

Half of the world’s desalination plants are in the Middle East. Most are powered by fossil fuels, especially natural gas. Converting sea water to potable water is energy intensive. The commonly used desalination method of multi-stage flash (MSF) distillation with steam requires heat at 70 to 130 degrees centigrade and consumes up to 200 kilowatt hours of electricity for every cubic meter of water (about 264 gallons). MSF is the most popular technology, but some are turning to reverse osmosis (RO). RO consumes about 6 kilowatt hours of electricity for every cubic meter of water.

Desalination is very expensive. The cost to generate this electricity through natural gas explains why Saudi Arabia spends about $4 billion in operating and annual maintenance costs.

There are numerous precedents in combining water desalination with nuclear energy for electrical generation. The World Nuclear Association highlights the BN-350 fast reactor in Kazakhstan, which has produced 135 MWe of electricity and 80,000 cubic meters per day of potable water for nearly 30 years. In Japan, ten desalination facilities are linked to pressurized water reactors producing electricity. The International Atomic Energy Agency is working closely with about 20 countries to implement dual-use nuclear reactors, which would also desalinate water.

According to the World Nuclear Association’s website, “Small and medium sized nuclear reactors are suitable for desalination, often with cogeneration of electricity using low-pressure steam from the turbine and hot sea water feed from the final cooling system. The main opportunities for nuclear plants have been identified as the 80-100,000 m3/day and 200-500,000 m3/day ranges.”

There are numerous examples of nuclear desalination being considered. In 1977, Iran’s Bushehr nuclear facility was to also have a 200,000 cubic meter/day MSF desalination plant. Construction delays, and the subsequent Islamic revolution, prevented this from occurring. Perhaps when Iran commences its civilian nuclear program, the desalination plant will be revived. China is reviewing the feasibility of a nuclear seawater desalination plant in the Yantai area. Russia has advanced a nuclear desalination project with barge-mounted marine reactors using Canadian reverse-osmosis technology. India has begun operating a nuclear desalination demonstration plant at the Madras Atomic Power Station in southeast India. Another one may soon follow in the southern Indian state of Tamil Nadu, which perpetually suffers from water shortages. Pakistan continues its efforts to set up a demonstration desalination plant. South Korea has developed a small nuclear reactor design for cogeneration of electricity and water. It may first be tested on Madura Island in Indonesia. Argentina has also developed a small nuclear reactor design for electricity cogeneration or solely for desalination.

The Saudis have investigated dual use for nearly thirty years. Since 1978, Saudi scientists have studied nuclear desalination plants in Kazakhstan and Japan. Both studies positively assessed the feasibility of bringing the first dual-use nuclear reactor in Saudi Arabia. Since the mid 1980s, scientists and researchers at the Saudi’s Nuclear Engineering Department at King Abdulaziz University, the College of Engineering at the University of Riyadh, the Chemical Engineering Department of King Saud University, and the Atomic Energy Research Institute have researched and evaluated nuclear desalination. Saudi scientists presented their paper, entitled, ‘Role of Nuclear Desalination in the Kingdom of Saudi Arabia,’ at the First International Conference on Nuclear Desalination in Morocco in October 2002.

The country possesses a tandetron accelerator and a cyclotron capable of isotope production for medical purposes. Saudi’s nuclear scientists have been involved with many countries to help their country develop a bonafide nuclear energy program. In late March 2006, a German magazine reported Saudi Arabia has been secretly working on a nuclear program with help from Pakistani scientists. Ironically, many believe Saudi Arabia helped finance Pakistan’s nuclear program. Because Saudi scientists lack the proven experience of the entire nuclear fuel cycle, Pakistan’s expertise, over the past decade, could help accelerate the Kingdom’s pursuit of a civilian nuclear program.

While lacking proven uranium deposits, the country’s Tabuk region has low-grade amounts of uranium and thorium. However, Saudi Arabia has significant phosphate deposits, which some believe could be exploited. The country’s two largest deposits reportedly measure about 750 million metric tons, averaging between 19 and 21 percent P2O5. Mined by the Saudi Arabian Mining Company and the Saudi Basic Industrial Corporation, fertilizer plants at the Al Jubail Industrial City produce about 4.5 metric tons of P2O5 annually. While extraction of uranium from phosphates can be an expensive proposition, the phosphates could provide a ready supply of uranium for the country’s nuclear desalination plants. Then, it would be a matter of uranium enrichment, of which both the Russians and the French would be scrambling to provide the Kingdom.

While the Saudi program may not directly impact world uranium prices, the Kingdom’s decision to advance its nuclear program, beyond the research and medical stage, would signal the entire world that nuclear energy programs will be a primary growth sector for the next fifty to one hundred years. Should the Saudis also commence desalination projects using dual-use nuclear reactors, this could change the entire landscape of the water situation for the Middle East as well as Africa. And it would most likely spark a significant stampede of the Kingdom’s neighbors into the global nuclear renaissance.

Nuclear power could be a great thing for America, but here is the problem:

The military, Navy, uses nuclear power with great success. But the Navy screens their people and tries to put their best into the nuclear power programs. There is extensive training and testing for the people in the Navy’s nuclear programs. And finally, there is accountablity. Anyone caught cutting corners on maintenance, or not performing up to expectations is removed.

Commercial nuclear power plants have much incentive to cut corners. Good people, training, and maintenance are all expensive, which cuts profits. There’s just too much incentive to push the risk/reward line to the limit.

I would only support nuclear power proliferation with a different management model.

the uranium bull market

LOL

Furthermore, a utility might be of some use if the region is producing something. The oil will give out eventually and then what would Saudi have? They should go for desalinization so they can grow rice and biofuels and if they choose to merely light up the desert they will be back to brakish oases and camels soon enough.

"Commercial nuclear power plants have much incentive to cut corners. Good people, training, and maintenance are all expensive, which cuts profits. There’s just too much incentive to push the risk/reward line to the limit."

Which is why there is such an intensive and extensive inspection program of civilian nuclear installations by the Federal agency in charge of nuke plant safety.

The safety track record of the civilian nuclear program is better tnah the Navy's, which, as I recall, has lost two nuclear subs, while the civilian program has only had TMI--a much less significant accident.

“BS. 20% of our electricity comes currently from nuclear power. The French get 80% of their electricity from nuclear plants. The idea that we can’t have safe and well-run commercial nuclear plants is just nonsense.”

It might surprise you to learn that the US has nearly twice as many operating nuclear plants than France (103 vs. 56) and that US nuclear plants operate much more efficiently than French plants. The US does not trail anyone in terms of nuclear technology.

The French chose nuclear as their primary means of electrical generation because they have very little in the way of coal or natural gas reserves while the US is the Saudi Arabia of coal.

But the Navy screens their people and tries to put their best into the nuclear power programs. There is extensive training and testing for the people in the Navy’s nuclear programs. And finally, there is accountablity. Anyone caught cutting corners on maintenance, or not performing up to expectations is removed. Commercial nuclear power plants have much incentive to cut corners.

The reality is just the opposite. The commercial sector has less incentive to 'cut corners' than the Navy does. The Navy does not have to follow the same degree of regulatory oversight as civilian reactors and in time of crisis, you can bet your ass they will 'cut corners.'

The US NRC or the various State level regulatory agencies have zero authority on the Navy nuclear program. (If they did, none of those ships would ever get to sea.)

If you think that the commercial guys can cut corners when ever they please, scan through US CFR Part 50. Note particularly the enforcement and Criminal Penalties sections. People who would cut corners at a civilian plant are not just removed from their jobs. They can be sent to prison! If you know of a problem and don't speak up, you can go to prison! If you tell someone of a problem and they don't address it, they can go to prison! This stuff is no joke. NRC inspectors are looking over people's shoulders every day just waiting for someone to screw up.

The military, Navy, uses nuclear power with great success.

And so does the civilian nuclear industry.

The Navy guys do a good job, but they don't 'walk' on water. And the civilian guys are just as good regardless of how you try to make them out to be Homer Simpson.

My Energy Manifesto:

* Cease all ethanol production. It requires more energy to make than it yields and the unintended consequence is higher food costs. Corn production shifted from feed-corn to subsidized corn for ethanol. Just say "no" to ethanol!

* Immediately create only ONE "blend" of gasoline and cease regional blends which are stupid, costly, and meaningless. Even if this is the "cleanest" blend, just make it ONE and be done with it. Trucking custom blends around the country is wasteful.

* Drill for oil in Alaska, Gulf of Mexico, and other sites in the CONUS as a matter of national security.

* Construct state-of-the-art refineries and/or retrofit current and dormant ones and crank up production.

* Make all “carbon credit” scams unlawful.

* Construct SEVERAL, regional Pebble-Bed Reactors (or other similar designs) that are not considered "breeders", are rechargeable, and cleaner than any current nuclear generator design.

* Use the residual heat from the reactor above to process motor fuel from coal and/or shale. Even though Clinton "stole" some of the best coal reserves, we still have a lot to use.

* Have Iraq pay for its freedom, and maybe even pay us back for their freedom. We'll still need their oil.

* Bust up the cartels or at least be independent enough to make the cartels inconsequential.

* Convince local taxing bodies to lift or fix the sales tax on gasoline so that as gas prices go up, the local tax collectors don’t see a windfall revenue jump at the expense of the consumer.

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