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  1. The railroad barons thought they were in the railroad business. Not one of the railroad companies invested in the airplane industry. A railroad company is not a transportation company. Likewise, an oil company is not likely to remake its self into an energy company.
    Although, if a large oil company wanted to start a nuclear division, there is an attractive way to do so. The first purchase would the The Shaw Group for about 4 billion. Shaw has the engineering contracts to build the AP1000 in China and the United States. Shaw also owns part of Westinghouse. Then the Westinghouse portion of Toshiba could be purchased. By offering attractive financing the first sales could happen in relatively short order. The large oil company could do the same thing for the world that the Chinese government has done for China, fleet planing. By scheduling a whole fleet of AP1000’s the suppliers of AP1000 modules could ramp up production. Parts would come from all over the world with competitive pricing.
    Although an oil company could commit 100 billion to such a project and expect a large future return, I do not expect any “oil” company to really become an “energy” company. A leopard cannot change its spots.

  2. I am not anticipating that the fossil fuel companies will enter the nuclear energy business in a significant way. Dispite their claims to be “energy companies”, they are really fossil fuel energy companies. They are following the same failed model that the railroad companies followed a century ago. Had the rail companies considered themselves to be transportation companies, rather than rail transportation companies, today we would have companies with integrated transportation systems, putting together the best of rail, road, and air transport. Imagine, if you will, Union Pacific Airlines.
    Remember that for a while there was an operation called Exxon Nuclear. It provided fuel for light water reactors. It no longer exists as a branch of Exxon partially because of a failure of vision. Here was a nuclear fuel company. One of the great promises of nuclear energy is to provide abundant, economical energy whose cost has little to do with the cost of the fuel. Contrast this to the fossil fuel energy paradigm where fuel is a major portion of the cost of the energy delivered to the user. This conflict of paradigms is the cause of the failure of vision. In the fossil fuel model, fuel is (nearly) equivalent to energy delivered to the user. The device that converts the fuel to useful energy is almost secondary. In nuclear, the conversion device is primary, and the fuel (especially with Gen IV reactors) is secondary.
    The vision for nuclear is a systems view of delivering energy to the user, not just fuel. A nuclear energy company might very well provide fuel, but more importantly, they need to provide a safe, efficient, and economical reactor on the site useful to the energy consumer. This is a shift of vision that I do not believe the fossil fuel companies will be able to make.

    1. I think that you are quite right in your analysis. For some reason, large interests cannot see that they need to embrace the future and occasionally reinvent themselves completely even if it means their demise. There is a study in psycho-economics somewhere in that observation yet to be written, but I think it is a very important phenomenon indeed.

  3. Rod, I definitely think it’s a worthwhile idea to try to convince the current energy companies to begin serious investments in nuclear. You know I’ve said it before – oil, gas and coal companies, in some ways, seem like the natural entities to really invest in nuclear power – as the current ‘kings of energy’, they have plenty of cash right now to invest, and have pretty much guaranteed cashflow for at least a couple decades. If people really start to get worried about climate change, the fossil-fuel companies may find themselves ever more and more on the wrong side of public opinion (they’re already their, in a lot of way, but luckily for them, right now, people have little alternative but to buy energy from them). If some *other* companies, meanwhile, begin large scale new nuclear builds before those fossil companies, the fossil companies may find themselves in a situation where some combination of taxes or other government barriers are increasing the costs of their products, and they are selling products for which production will (probably) be in decline within a century or two as they are forced to dig ever deeper to tap ever more expensive deposits of oil, gas, and coal, while public opinion could very well become very favorable towards competitively priced, clean nuclear energy. In other words, they might find themselves, eventually, in a death spiral while other companies who had the foresight to invest in nuclear, are on the rise.
    If, on the other hand, they take the opportunity right now to invest a portion of their large profits into developing nuclear power plants which will start coming online over the next 10-20 years, 20 years from now they could be in a very enviable position in the market – having public good will for selling a clean product, providing people plenty of energy, and securing their position as market leaders, and their ability to keep making a lot of money selling energy, for centuries or millenia to come.

  4. Rod, thanks for the classic video and this very eloquent post. I absolutely agree with your assessment of what an energy company (as opposed to a fossil hydrocarbon company) should be doing with their cash flow. I live in Alberta and I think that our province should be developing nuclear energy with our cash flow; the argument is exactly the same.
    A CEO or management team with vision would have to sell the idea of making the change to energy to all of their stakeholders. Politicians would likely have an even tougher time. since they have even more stakeholders with an even wider range of agendas. Leadership and vision are the key elements.
    We’ve been watching the Pillars Of The Earth television series on the CBC, and your comments have made me see it in a different way. I had been wondering what it’s about. There are a lot of characters with several story threads. The writers and producers are dwelling on some of the shock value elements as well. With your comments I can see the themes more clearly now – they do seem to be emerging – but I’m not sure how clear they will become by the end of the series. I’ve done enough in film and video to know how hard it is to make themes clear in a movie without preaching. Good storytelling is an important part of effective leadership. Thank you for telling your stories clearly.
    Storytelling can be very powerful. Robert McKee, in his excellent book Story, says ‘In 388 B.C., Plato urged the city fathers of Athens to exile all poets and storytellers. They are a threat to society, he argued. Writers deal with ideas, but not in the open, rational manner of philosophers. Instead, they conceal their ideas inside the seductive emotions of art.’ It’s time to enclose modern rational ideas in some seductive emotions of art; the way that, from the sound of it, Ken Follett has.

  5. I think the Exxon Nuclear lesson brings more to this question. Partly it was bad timing (i.e., so many fuel vendors they had to sell at a loss to maintain market share), but also it has a higher financial risk than the current fossil business. Your product is always at the mercy of politically appointed regulators in a way that petroleum is not. And I do not think it is merely a matter of more and better lobbyists. Gasolene can be poured into a tank and burned without specialized training. Yes, the oil and gas fuel cycle is complex, but not to the degree and extent throughout the nuclearfuel cycle. Even if there were no NRC, it is still more intricate to use nuclear energy than fossil fuels. Nuclear is safe and economic, but does not produce profits as quickly, which is why its expansion is mostly occurring in places with fossil fuel pinchpoints (France, Korea, etc.). For the US, we will need Government support (loan guarantees, more staff at NRC, etc.) to move nuclear forward. The fossil companies will join in once the oil and gas are depleted.

    1. @RSM – I believe that Exxon Nuclear is a lesson, but not in the same way as you do. You can learn as much from a mistake as from a success – perhaps even more.
      There has been a lot of learning and operating experience in the several decades since they dipped their toe into the nuclear business. One of the lessons is that nuclear fuel, though it can be a reasonable cash flow business for a relatively small operation, is not big enough to “move the needle” for a company the size of Exxon. If each plant spends $30 million per year for fuel, the whole market from mining to enrichment to fabrication to delivery is only a $3 billion per year market. If your annual sales are in excess of $450 billion, why bother since you will never capture the whole market anyway.
      As you say, nearly anyone can burn gasoline. The only energy product I can think of that is easier to use is electricity. Hmmm. Suppose a company like Exxon decided to build a large nuclear energy park and to operate that park like an oil field that can sell the product steadily over a 60-80 year period? Suddenly the capital investment might make sense because it begins to look a lot more like the kind of investment that they are used to making to develop a new find.
      The US electricity market is far larger than the US nuclear fuel market. I think it is at least 100 times larger at about $300 billion per year. It can also be far more profitable for a low cost producer. Exxon, with the right acquisition strategy can be a very low cost producer because they have access to lower cost capital than anyone else. When I put the MIT assumptions into their cost of electricity model, fully 30% of the computed cost of electricity is cost of return on investment and interest on the invested capital.
      That is why my old article talked about “new school” energy wells. I am not proposing that oil companies get into the fuel business, but into the business of owning and operating power plants. Heck, you might even see electric vehicle charging stations popping up at the already established filling stations if the visionary number crunchers in the bunch recognize the potential of this business model.

  6. For some reason I perceived the 1953 GE video to have been been conveyed in a similar tone to the recent China MSR press release…
    Something about optimism about the future powered by clean energy…

  7. I do enjoy these vintage scientific films (and this one speaks to me of the great hope and optimism in the US directly after WWII

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