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Swords-Into-Plowshares Nuclear Venture Hit by Budget Cuts

The mixed oxide, or MOX, fuel fabrication facility at the Energy Department’s Savannah River complex near Aiken, South Carolina. Photograph: High Flyer, Courtesy of Friends of the Earth via Bloomberg Close

The mixed oxide, or MOX, fuel fabrication facility at the Energy Department’s Savannah... Read More

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The mixed oxide, or MOX, fuel fabrication facility at the Energy Department’s Savannah River complex near Aiken, South Carolina. Photograph: High Flyer, Courtesy of Friends of the Earth via Bloomberg

U.S. budget constraints may signal a short half-life for a South Carolina plutonium processing plant that was supposed to be the nation’s showcase post-Cold War swords-into-plowshares venture.

President Barack Obama’s budget proposal, sent to Congress last week, would cut spending on the project by 27 percent, or almost $120 million, while the administration considers whether to abandon an effort that is years behind schedule and projected to cost billions of dollars more than anticipated.

The plant is intended to covert surplus weapons-grade plutonium -- a type of material coveted by terrorists and nuclear-wannabe nations -- into fuel for civilian nuclear-power reactors. The unfinished project, which has cost $3.7 billion so far, “may be unaffordable,” according to budget documents that said the government will look for alternative ways to ensure the plutonium can never be used in nuclear weapons.

“The budget environment has changed, and we have to make tough long-term decisions,” according to an April 11 fact sheet from the National Nuclear Security Administration, or NNSA, the U.S. Department of Energy unit that runs the nation’s nuclear weapons complexes.

The proposed fiscal 2014 budget may signal the eventual demise of the partially built U.S. project, which three consecutive U.S. presidents championed as a model in reducing the risk of nuclear proliferation.

‘Safer World’

Three years ago, Obama praised a U.S.-Russia agreement to have each nation destroy 34 tons of weapons-grade plutonium -- enough for 8,500 nuclear weapons -- and called the accord a sign of “real progress in building a safer world.”

Both countries have growing amounts of unneeded plutonium under guard as they reduce the size of nuclear arsenals. The initiative is intended to deal with “dangerous weapon-grade nuclear material with a half-life of thousands of years,” the NNSA said in the previous year’s budget documents, which projected eventual U.S. savings of “hundreds of millions of dollars per year in safety, security, and storage costs.”

The South Carolina facility, which is intended to produce mixed oxide, or MOX, reactor fuel, is more than a decade behind the initial schedule. The Government Accountability Office last month estimated the construction has risen to at least $7.7 billion from $4.9 billion when construction began in 2007. To date, $3.7 billion has been spent on the project, according to Josh McConaha, NNSA director of public affairs.

Funding Cut

The administration proposed cutting fiscal 2014 funding to $320 million from $437 million under this year’s continuing resolution. That will result in a construction “slowdown” while the administration assesses alternatives, according to budget documents.

The facility is being built at the Energy Department’s Savannah River complex near Augusta, South Carolina, a highly secured area where the government for decades produced plutonium and other materials for nuclear weapons.

The facility is a complex of 11 buildings -- six of them completed -- that are intended to blend plutonium with depleted uranium oxide to produce the MOX fuel. Irradiating the fuel in a commercial reactor to generate electricity would render the plutonium unusable for weapons, according to the plan.

The contractor is Shaw Areva MOX Services LLC, a consortium that includes Paris-based Areva SA (AREVA), the world’s largest producer of MOX fuel, and the Shaw Group, recently acquired by Chicago Bridge and Iron NV of The Hague. A spokesman in Washington for the group, Bryan Wilkes, said it had no immediate comment on the proposed budget cut’s impact.

‘Unnecessary Risk’

Lawmakers from South Carolina -- including the state’s Republican senators, Lindsay Graham and Tim Scott, and its only Democrat Representative, James Clyburn -- are trying to protect the project, which the company says is creating about 2,200 jobs in the state and an additional 1,750 at suppliers around the country.

“We must stay the course,” six South Carolina House members, including Clyburn and Republican Joe Wilson, wrote Obama in February. Failing to complete the facility, they wrote, “will lead to a world with more weapons-grade plutonium than necessary -- creating additional and unnecessary risk that such material will be stolen or diverted to malicious purposes.”

The budget cut was a win for critics such as Democratic Representative Edward Markey of Massachusetts, who say there is a cheaper way to deal with the plutonium. Also, while a version of MOX fuel is used in European nuclear reactors, the properties of weapons-grade plutonium present technical issues that must be resolved before it could be used in U.S. reactors, according to Markey.

Other Options

Duke Energy Corp. (DUK), the largest U.S. utility owner by market value, withdrew from the project in 2009, and it has no firm customers at present. Kelly Trice, president and chief operating officer of Shaw Areva MOX Services, told the South Carolina Governor’s Nuclear Advisory Council in December that the Tennessee Valley Authority and four other utilities have expressed interest in the MOX fuel

The NNSA said it plans to evaluate unspecified other “available options.” Alternatives include long-term storage after immobilizing a mixture of plutonium and highly radioactive waste. That route is favored by nuclear-power opponents and environmentalists such as Friends of the Earth activist Tom Clements in Columbia, South Carolina, who long has criticized the MOX project as ill-advised and a money pit.

‘Unrealistic Expectations’

Robert Raines, NNSA associate administrator for acquisition and project management, has said that the project has suffered from rising costs, poor oversight, unrealistic expectations and inadequately designed critical components.

“There was a tendency towards optimism in developing project estimates, assessing and assigning risks, identifying and locking in project requirements, and evaluating and monetizing the cost and schedule impacts of building a first-of- a-kind Hazard Category 1 nuclear facility,” he told a House appropriations subcommittee last month.

Planning for a MOX plant was first announced by then-energy secretary Federico Pena in 1998 as the U.S. and Russia were starting to reduce their Cold War nuclear arsenals. The Energy Department at that time projected the construction and 25-year operating cost at $1.8 billion to $2.3 billion, with operations starting in 2007.

Climbing Costs

In 1999, the NNSA signed an initial contract with Shaw Areva for a plant that would be based on Areva’s two commercial MOX plants in France. By the time construction began in 2007, the construction cost had climbed to $4.9 billion and the completion date had slid to 2016. In March, the Government Accountability Office told Congress that the construction cost has increased to at least $7.7 billion, and the operational date will slip to 2019.

The GAO cited multiple shortcomings, including “inadequately designed critical system components, such as the “glovebox” airlock assemblies that enable workers to handle radioactive materials safely.

The design for the facility wasn’t sufficiently complete to develop an accurate and credible cost estimate, according to Raines. That required changes, and the project has encountered limitations in the ability of the nuclear industry to fabricate suitable components to meet the projected schedule, according to GAO.

The project “was started at a time when the U.S. nuclear industry had atrophied, and there hadn’t been a major civilian nuclear project in several decades,” according to the NNSA fact sheet.

To contact the reporter on this story: Terry Atlas in Washington at tatlas@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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