On October 28, 2015, Westinghouse issued a press release titled AP1000® RCP REACHES FULL QUALIFICATION confirming a rumor I heard during my visit to Knoxville last week.
The release contained wonderful, sigh of relief, news indicating that the hard-working, under-the-gun engineers and technicians at Curtiss-Wright’s EMD division had achieved their task of building and successfully testing the first two reactor coolant pumps for the AP1000 reactor design.
“Successful completion of the extensive design verification program for this innovative large canned motor pump represents another significant milestone achievement for Curtiss-Wright and its employees, and demonstrates our on-going commitment to the AP1000 nuclear reactor program,” said David C. Adams, chairman and CEO of Curtiss-Wright Corporation. “Furthermore, as a key partner to Westinghouse and SNPTC, we look forward to the successful operation of the first AP1000 plant and we remain committed to supporting China’s growing nuclear power program.”
“Designing and manufacturing the technically sophisticated and demanding AP1000 reactor coolant pump has been a close, collaborative effort. After seven years of hard work among China and U.S. companies and a rigorous regulatory review and strong support of the National Nuclear Safety Administration (NNSA) and National Energy Administration (NEA) of China, development of the reactor coolant pump has succeeded,” said Zhongtang WANG, president of State Nuclear Power Technology Corporation. “This success will further accelerate China AP1000 project construction progress as well as boost advanced passive Generation III nuclear power development in China.”
I discussed the possible implications of failing at the task in a February 2015 article titled Diseconomy of scale – world’s largest canned-motor reactor coolant pump and again in an August 2015 article titled Reactor Coolant Pumps for AP1000 still a problem.
I did not enjoy writing either one of those pieces; nothing good would come out of failure or lengthy additional delays for the 8 AP1000 projects that are well on their way to completion and need their reactor coolant pumps to work as reliably as they were designed to work.
This update, on the other hand, is putting a smile on my face. I’m sure there are thousands of more deeply involved people who feel even more strongly about the news than I do. Congratulations to everyone who made it happen.
Westinghouse purchase of CB&I nuclear construction arm
A day earlier, Westinghouse had surprised the small community of nuclear news enthusiasts of which I am a member with the announcement that they had agreed to purchase the nuclear plant construction arm of CB&I.
This is the part of CB&I that was at one time the widely respected construction company known as Stone and Webster. Rights to use that name were auctioned off during a bankruptcy liquidation in 2000 and acquired by the Shaw Group, a financial conglomerate led by an aggressive, deal-making entrepreneur named Jim Bernard.
Shaw, which Bernard had founded in 1987, was growing rapidly through acquisitions. Some of the previous acquisitions were construction companies, but none with the name recognition of Stone and Webster.
Acquiring the Stone and Webster brand allowed Shaw to be pitched as an experienced construction company with deep roots. The financial engineering skills of the team that Bernard had gathered at Shaw enabled it participate in Toshiba’s purchase of Westinghouse with and investment that gave it a 20% equity in Toshiba’s new nuclear equipment supplying subsidiary. That arrangement came with an agreement to give Shaw the opportunity to build the early units of Westinghouse’s increasingly attractive new reactor offering, the AP1000.
In Feb 2013, CB&I (formerly known as Chicago Bridge & Iron) purchased the Shaw Group for $3 billion, mainly to buy its way back into the business of building nuclear power plants in the U. S. At the time of the purchase, analysts thought is was a good fit and increased their “target price” for the company’s stock.
Soon after the purchase, CB&I sued Westinghouse claiming that it was not fully informed about the progress that had been made at Vogtle and Summer or about the costs of the remaining work required to complete the projects. The legal battle was being fought off site and was mostly invisible to the workers trying to complete the project, but it threatened to sufficiently distract management and increasingly delay the project.
Westinghouse apparently decided to purchase its “partner” in order to establish clear lines of responsibility and enable the projects to advance to completion.
With this announcement, Westinghouse assumes both responsibility and authority over the nuclear plant construction activities at Plant Vogtle and V.C. Summer – under the direction, of course, of the owner groups that actually hold the NRC COL licenses for the plants and work under the regulations of their respective state public utility commissions.
Though I don’t yet have any information that is not published in Westinghouse press releases or various media sources like 5 things to know about Westinghouse’s deal with CB&I or Westinghouse Buys CB&I Division to Beef Up Its Nuclear Business, I’m as enthusiastic about this announcement as I am about the RCP test completion announcement.
From my point of view, it is the best available solution to years worth of finger pointing over responsibility and liability for delays associated with difficult, but important nuclear plant projects. Though some people might have thought it was going to be easy to begin building large nuclear power plants in the United States again, most experienced people knew that a lot of learning would be required to restore the construction and manufacturing prowess lost during a thirty-five year hiatus.
Consolidating project ownership and responsibility gives Westinghouse the ability to follow one of Admiral Rickover’s prime ingredients for success. As he used to repeat with great effect, “Unless you can point your finger at the man who is responsible when something goes wrong, then you have never had anyone really responsible.” That dictum can be expanded to corporate partnerships; they can devolve into litigious morasses when too many interests work too hard to CYOA.
Westinghouse leaders seem to have realized, a little belatedly, that one of the main lessons from the first Atomic Age that their predecessors should have passed down to them is the importance of aligning the interests of all of the parties associated with completing projects. One of the major reasons we slowed and then stopped building nuclear plants in the U.S. was that too many decision makers were spending too much time suing each other over issues like uranium market manipulation, steam generator longevity, and pressure vessel delays.
Westinghouse’s new structure has the potential to reduce infighting and enable Westinghouse to offer contracts for large, dual unit nuclear projects that are more competitive with the offerings from Rosatom, Areva, and KEPCO.
Though I often write about the potential benefits of smaller plants and projects, there are also advantages to big, centralized power plants that can serve millions of customers while keeping grid frequency steady enough for running clocks.
Plenty of people repeatedly criticize nuclear projects for being too slow and too expensive, but those same people conveniently ignore the challenging histories of projects like The Big Dig, Cape Wind, Keystone XL, the Polk Power Station Unit 1 and the Kemper County Energy Facility. Several of the projects on that list are still not complete, despite being many years overdue and millions to billions of dollars over budget. The completed projects have been beneficial, but not as cost effective as initially promised.
Other people blithely suggest that it would be cheaper to build natural gas power plants, but they conveniently overlook the costs associated with new pipelines, new fracked gas wells, and the potential price increases that would come with increased demand for a limited supply of natural gas. They also overlook the financial costs associated with depending on a fuel that is volatile in physical form, making it difficult to store and transport. That transportation and storage difficulty plays a big role in the volatility of natural gas prices and their sensitivity to a delicate balance in supply and demand.
It’s possible that many, if not most, of the people who repeatedly recommend that electric power producers choose natural gas over nuclear are aware of the impacts of increased reliance on gas. There are plenty of people who are somehow involved or invested in the continued growth of the natural gas industry.
I might as well make it clear once again. I am fully invested in the success of nuclear energy. Not only do I believe that increasing use of the power source will have great benefits for mankind, but it will give Atomic Insights plenty of material for many years to come. It will also help to increase the size of my personal investment portfolio.
Atomic Insights does not provide investment advice, but I can tell you that I purchased a moderate amount of Toshiba [the corporate parent of Westinghouse] stock this morning.
Post updated with more details about the Shaw Group, its purchase of Stone and Webster, its deal to be the construction company for Westinghouse, and its sale to CB&I.