Chris Morris
Telegraph-Journal
June 25, 2010

FREDERICTON – The New Brunswick government is in discussions with French-owned nuclear giant Areva about construction of a second reactor at Point Lepreau, the Telegraph-Journal has learned.

Energy Minister Jack Keir is travelling to Florida on Sunday for several days of talks with officials of the state-controlled Areva group that could lead to a letter of intent for a second reactor and major spinoff benefits for the province.

Keir said in an interview on Thursday the possibility of a second reactor with AECL and Team Candu – a consortium of private-sector companies – is now virtually dead. But he said Areva has arrived on the scene with an attractive package that deserves serious consideration.

“They’re excited about our province for a couple of strong reasons,” Keir said of the French firm. “One is our geographical location, which presents great opportunities as we all know.

“The second thing that excites Areva is we are a bilingual province and we have a French university that could provide them not only with research but also with human resource opportunities in both languages. They see a real opportunity with New Brunswick not only for the Canadian market, but for their North American market as well.”

Keir said the province has been talking with Areva for several months. He said negotiations with the firm were proceeding even as the province was trying to finalize a deal for the sale of NB Power assets to Hydro-Québec.

“I’ve probably talked to them on at least three or four occasions,” he said.

“They are in constant communication with our staff in the Department of Energy. I would categorize the talks as more than preliminary, but I’ll have a much better feel after my discussions in Florida with them. I don’t want to raise expectations, but I can tell you I’m excited about the opportunity.”

Areva is a French-owned conglomerate known mainly for its nuclear developments. Its main shareholder is the French public-sector company, the CEA.

“They’re a first-class company,” Keir said.

“They are the largest nuclear technology company in the world.”

Keir said Areva first came to the table three years ago when the province invited companies to consider a second reactor at Lepreau. The Lepreau facility was constructed with room for three more reactors at the site.

Keir said that at the time, Areva did not offer the kind of spinoff benefits the province wanted in association with a second reactor.

“We were looking for private-sector investment in a merchant plant where the government wasn’t putting money into it, if we didn’t want to, but we wanted more than just a reactor – we wanted a centre for excellence in nuclear, we wanted to build the industry around nuclear with two power plants beside each other,” he said.

“AECL and Team Candu – with Hitachi, SNC Lavalin and Babcock and Wilcox – came forward with a pretty good proposal at the time in terms of more add-ons than just building the reactor. At the time, Areva just wanted to build and sell us their technology and we weren’t interested. So we moved down the road with Team Candu.”

Keir said that until last year, there was hope the Team Candu project would come together. But he said the project unravelled as AECL became increasingly distracted by the problematic refurbishment at the current Point Lepreau reactor.

“We talked to AECL and Team Candu and we all acknowledged it’s not going to move forward at this time,” Keir said.

“So, as the premier always says, when one door closes another one opens. If this one is opening I want to take advantage of it.”

Under the so-called “merchant model,” the first such model for a nuclear project in Canada, the private sector would finance the construction and publicly-owned NB Power would contract to operate the plant.

“Areva now has come forward with a plan to build the merchant plant to look to the New England area to sell that electricity and they’ve come forward with discussion about setting up a centre of excellence in nuclear.”

He said if a letter of intent is signed in the near future, transmission capabilities would be an issue that would have to be addressed.

Keir said the second reactor would breathe new life into New Brunswick’s ambitions as an energy hub. He complained that Opposition Leader David Alward has been saying the energy hub is dead, raising the possibility that the issue will be hotly debated in the weeks leading up to the Sept. 27 election.

“The energy hub is alive and well in New Brunswick,” Keir said.

Toronto-based energy consultant Tom Adams questioned the fundamental need for a second reactor in New Brunswick with the prospect of new gas supplies and low prices on the horizon.

“However, if nuclear expansion is going to ignore consumer need, Areva is worth considering,” he said.

“Areva is far ahead of AECL in technology development, with several units under construction applying advanced safety features like aircraft crash barriers and extra protection in the event of a meltdown … Areva’s reactors have also proven to be much cheaper to operate than Candu and benefit from a much larger pool of reactors in the world fleet.” Adams said Areva is having difficulties with some of its latest construction projects.

“The Olkiluoto project in Finland, which was to be Areva’s flagship, is about as well managed as the Point Lepreau refurbishment,” he said. “And Areva recently lost a major competitive bid in the United Arab Emirates to a Korean company.”

Norm Rubin of the Toronto-based energy watchdog group Energy Probe said Thursday he doesn’t think the project will ever proceed.

“I think it’s somewhere between a long shot and an impossibility unless New Brunswick’s government becomes generous and agrees either to subsidize this venture or to accept a bunch of the downside risks,” Rubin said.