Open, Direct Competition Between Natural Gas and Nuclear Energy In UAE
The UAE is one of the world’s most richly endowed oil and gas producers, but it has recently signed a contract with a consortium of South Korean manufacturers to build 4 large (1400 MWe) nuclear power plants to supply the electricity baseload in the country. This decision is completely rational. The UAE has a growing, energy intensive industrial base, summer temperatures that frequently exceed 115 F (46 C), and little fresh water (but lots of access to salt water). Every drop of oil or molecule of gas that the country burns to supply internal needs represent a lost opportunity to sell product in the lucrative international energy market.
This same logic, of course, applies equally well to Iran, but the UAE has avoided international pressure in opposition to its nuclear program by clearly abdicating any interest in fuel cycle developments that can raise the issue of nuclear weapons proliferation. (I am pretty sure that there are people in the non-proliferation camp that would love to oppose the project because it actually spreads nuclear knowledge (oh the horror) but they would have a hard time convincing the world that enforced ignorance is morally justifiable.)
The Wall Street Journal published a article titled Joining the Nuclear Club on this very topic that comes complete with a rather interesting sub-title: Despite an embarrassment of hydrocarbon riches, the U.A.E. is having trouble meeting domestic energy demands. (Why would anyone call hydrocarbon riches “an embarrassment”?)
According to the article, the decision to move to nuclear power came after an evaluation of other available options. Renewable energy like wind and solar was recognized to be unsuitable for baseload power generation and
Other options were studied but not considered feasible. Coal-fired power plants were ruled out because of their impact on the environment and the supply risks created by having to ship large amounts of coal through the narrow Strait of Hormuz. Another option, burning liquid fuels such as diesel or crude oil, was also rejected.
“Running power plants on fuel oil or crude oil is expensive and environmentally damaging,” says Mr. Woertz of the Gulf Research Center. “The opportunity costs are considerable. It’s more profitable to sell the oil on international markets.”
For each new nuclear power plant that begins operation, the UAE will be able to export an additional 300 million cubic feet of natural gas per day without doing anything to increase its production capacity.
I am sure that competitors are watching this development very closely; right now, at least a portion of the methane gas that the UAE is burning is being sold by its neighbor in Qatar. That country has been investing heavily in developing its enormous off shore fields, which have been reputed to contain as much as 900 trillion cubic feet of natural gas. (To put that number in context, the US, one of the world’s largest natural gas consumers, burns about 20 Trillion cubic feet of methane each year. Tiny Qatar could supply our entire demand for 45 years.)
Both Shell and ExxonMobil have invested tens of billions of dollars into natural gas extraction and processing facilities in Qatar.
Though a major portion of those investments have been aimed at LNG and gas to liquids processing facilities that enable easier export into lucrative Asian, European and North American markets, the prospect of losing easier local sales to the UAE cannot be making the marketing folks at those majors happy. No company – or country – likes to see their sales volumes in previously captive market eroded by newer, better technology.
What is even worse is when a competing business or country has an increasing volume of the same product that you sell available to compete in more lucrative markets. That increased competition has the potential to erode both total sales volume and the available margin for each sale. I may be reading too much into this part of the article, but I see the following excerpt as a subtle warning from the world’s oil producers to the UAE leadership:
“If they sell the oil that they don’t use on the world market for $70 a barrel, then a nuclear reactor is feasible,” says Mr. Rogner. “It’s clear, however, that if oil drops below $30 or $40, then it won’t be as economical.”
It is really funny that UAE with large amount of local gas available is opting for nuclear power with imported technology, plant and fuel. Of course they may have paying capacity but avoidable transport is bad for CO2 levels and conservation of resources.
Australia, the country with largest uranium reserves, is not using nuclear power. At least the coal they burn is local.
India, with large reserves of rich thorium resources, can not import fissile feed of reactor grade plutonium lying surplus with UK or Russia.
When will the mankind become rational?
The CO2 burden of transporting the bits of a nuclear power plant and its fuel are several orders of magnitude lower per KWh than burning indigenous methane to make electricity.
Australia burns brown coal domestically, and ships hard coal. There is nothing positive about the fact that they burn local coal.
However you are right about India, and no it’s not rational.
Yeah you are reading too much into this. Oil companies are short-sighted. UAE could also just build a giant petrochemical industry to supply China and India.
“Oil companies are short-sighted.”
B.S.
What do you call short sighted? If you BURN the oil/gas you cannot sell it. The countries bottom line is better off if they SELL OIL.
The largest burden on the cost of US nuclear power is regulatory fees. multimillions per plant per year. Additionally, every time a nuclear power plant hiccups, ALL nuclear power plants MUST modify the plant so that it is impossible to happen there. Then if someone at a nuclear power plant has a “runny nose,” All nuclear power plants MUST train ALL workers on the correct techniques for preventing “runny noses and mitigating the consequences of runny noses.” Can you imagine how much it cost to put several hundred people through just an hour of training and have verifiable data that ALL attended? But, the average class is usually 4 to 6 hours! If the FAA handled things the same way as the NRC we would be traveling by trains!
Now, add in the cost of the security force. 40 years ago there was ONE unarmed guard (rent-a-cop, like in the Mall-Cop movie) at the front gate. He knew you by sight and waved you in. Now, at even the smallest nuclear power plant, the largest department on site is the security force. Larger than operations and engineering. They need five shifts. three for the three 8 hour shifts per day, one to rotate off, and the fifth for training. Every 4 weeks they rotate through a week of training. This may be different at some plants but the same end is achieved.
I won’t even go into how Operations has doubled in size three times in the last 30 years and now, additionally (as at most plants they are not part of operations) has the “Shift Technical Advisor” Or should I say college educated, (or almost), HIGHLY paid gopher. These Quasi Engineers must get licensed on the plant and go through all of the training and updates as the operators, BUT they cannot “fraternize” with the operators. So they have six crews instead of the five operator crews, thus they only work with the same crew “occasionally,” and at training, and during outages, and parties, and picnics, etc.
It is highly unlikely that electricity produced by nuclear power in any of these countries would cost more than 1/3 as much as here and probably closer to 1/4th as much. Like one of the earlier topics Rod wrote “to cheap to meter.”
I disagree. The total cost of nuclear energy production to the consumer is mostly made up of construction costs. Despite lower operating costs in other countries, the vast majority of the total cost to the consumer will still be present: construction. Given that almost 3/4 of the total cost to the end user is NOT from operating costs, it is impossible to achieve cost of production that is 1/3 of the US’s cost. The mathematics just don’t add up.
HALF yes 1/2 of the construction costs are caused by the fact that in the US the rate payer can not pay one dime of the cost of the site evaluation EPA licensing, NRC licensing, construction, training, testing, any expenditure whatsoever UNTIL that power plant is “operational.” I have worked at more than five nuclear power plants in various stages of construction and ALL have paid more than the actual material/construction cost in INTEREST charges. I know of plants that have paid twice that amount because of economic/NRC delays. My wife, an accountant, worked at a bank and her sole job was monitoring a loan for a nuclear power plant. They had a big party when the plant went operational and the bank could get did of the loan. It started out at just around 1.2 Billion and ended uo at over 5 Billion. I do not think UAE will have those problems. I do not think the UAE will have NRC delays. I do not think the UAE will have NRC mandated design changes delaying the project. It will be the true definition of “Turn-Key.”
Arn’t you glad that your public utility commission watches out for you and supports the banking industry?
Jason – not only is there a lot of interest and return on capital included in the computations of total cost, but there are also a lot of labor hours associated with the entire process of licensing, reviews, public hearings, legal challenges, etc. that have nothing at all to do with plant quality and construction.
If you look back into history, you will find that there was a time when nuclear power plants in the US cost just a little bit more than 100 dollars per kilowatt of capacity. Many of those early plants are still operating today. Even if you apply normal inflation factors to that cost, you would not get even close to the figures that get tossed around for the projected cost of new plants.
I believe that once learning curves are applied, new supply chains are established, and construction becomes routine in countries that simply do not allow the kind of silly challenges that the US legal system allows – and forces the applicant to pay for, by the way – the cost of nuclear energy plants is going to drop by a substantial margin.
I would not be surprised in the least to have costs approach $1,000 per kilowatt of capacity – very similar to those of combustion gas turbines.
I have faith that eventually the US will get its act together, Rod.
Hopefully, the mainstream of the environmental movement will be wedged off from the anti-nuclear flat-earth brigade, people start evaluating risks in context rather than in absolute terms, concrete action is taken to reduce fossil pollution, the NRC is significantly streamlined, and the unique institutions and capabilities that the US has and is able to deploy in nuclear research and engineering are given the funding needed to flourish once again. I think that smaller reactors might be able to produce the right correlation of forces and means that we’ve been waiting for…there are promising signs.
But if there is anywhere to direct all common efforts towards, it is not towards a specific design, better profits, or what I might call “a hole in the ground” – but, rather, towards reducing the life-sucking bureaucracy of the NRC that makes the business of nuclear power – and research into new nuclear technologies – almost impossible to conduct in the US.
The paradigm of the NRC is faulty: the NRC is neutral. No other regulator is neutral – because regulation without encouragement fails to realize that inertia is not neutral – it hinders getting things into motion – a regulator that insists on neutrality towards the regulated industry is really an entity obstructing the further development of the regulated industry. Without the regulator supporting that which it regulates, it is an obstacle, it causes inertia, it slows things down.
Is the FCC neutral towards communication technologies? Is the FAA neutral towards aviation technologies? Is the ICC (or whatever it’s morphed into now) neutral towards interstate commerce? Is the Federal Railroad Administration neutral towards railroads? Is the Food and Drug Administration neutral towards medicine and food production? Is the Department of Education neutral towards education? Are these all rhetorical questions? (Yes.)
Is it absurd to ask that the NRC change from “regulating nuclear technologies” towards “encouraging and supporting research, development, and use of nuclear energy, nuclear medicine, and other nuclear technologies, in a responsible manner that promotes the public health, safety, and the common defense”? Is it absurd that the NRC be changed from a Nuclear Regulatory Commission to a Nuclear Technologies Administration or a Nuclear Energy Administration?
You can’t be neutral on a moving train.
The New Yorker published a “Comment” column by Hendrik Hertzberg on nuclear power that I haven’t yet read, but they had an online Q&A with the column in mind. An exerpt:
“QUESTION: What does it say to you about the global trend for nuclear energy if the United Arab Emirates? country with enormous oil and solar resources?re building a new nuclear plant?
HENDRIK HERTZBERG: It says to me that they?e worried about the Iranian bomb.”
The rest of “Ask the Author” is here:
http://www.newyorker.com/online/blogs/ask/2010/03/questions-for-hertzberg2.html
Well that “Ask the Author” speaks volumes for what wasn’t said. Clearly they were being very selective which of Charles Barton’s question they addressed, and thus we can assume this was true for others as well.
As far as Hertzberg’s statement about the United Arab Emirates NPP, it indicates ether deep ignorance or outright mendacity on the part of the author.
If the UAE was worried about “the Iranian bomb”, then they wouldn’t import a Korean LWR.
It’s kind of like importing ten thousand of the highest quality shotguns and pellet shot to protect you from the Wehrmacht. Good for hunting game, not so good for defending against an armored division.
LWRs, can, however, power a ship, a boat, or a military base pretty well…so I suppose that’s a military use.
But beyond that? You’re better off importing rubber chickens.
Rod,
I take the “embarrassment” comment as a rhetorical device used, in this case, to say, in effect, “Here we are, this sand-patch of a country, and we have under us this amazing resource that, without Western technology, we would not be able to extract and profit handsomely from. Our good fortune is almost an embarrassment.”
I liken it to how the Apostle Paul used an editorial “we” when he called out those who would pervert the Gospel, rather than call them out by name. To me, it’s a Velvet Hammer approach that still gets the message across without being unduly obnoxious, like allowing someone to save face.
The real question is : is it really too late for UAE to start utilizing the nuclear power. E.g. how long will it take for the nuclear industry to be able to produce any type of energy products ( fuels and pure electricity) cheaper than the traditional drilling …
If even 10% of all the battery breakthrough news would become reality in 5 years … the transportation sector is lost for the oil industry, since they cannot compete with 2 cents per 100 km … If one adds up all the nano stuff into the picture – better materials, faster production , scalability than you will realize that the oil mastodonts have some 10 years time to react … If that seems unbelievable imagine Intel , Samsung , Matsushita and other semiconductor giants producing batteries which are orders of magnitude times cheaper and more energy dense than the current li-on batteries …