Canadian budget underlines government support for nuclear

30 March 2023

Inclusion of nuclear in the clean energy investment tax credit and making it eligible for a range of other tax incentives show the Government of Canada's "clear and strong" support for nuclear's indispensable role in the clean energy transition, according to the Canadian Nuclear Association (CNA).

(Image: Parliament of Canada)

The 2023 Federal Budget was released in the House of Commons by Deputy Prime Minister and Minister of Finance Chrystia Freeland on 28 March, who said that Canada will seize the "historic opportunity" of building a clean economy. "We are going to build a clean electrical grid that connects Canadians from coast-to-coast-to-coast, protects our environment, and delivers cleaner, more affordable electricity to Canadians and Canadian businesses," she said.

The budget introduces a new 15% refundable Investment Clean Electricity Investment Tax Credit. Nuclear projects - both large-scale and small modular reactors (SMRs) - are eligible for the credit, which is available to both new projects and the refurbishment of existing facilities. The credit will be available to both public and privately owned entities, and will also be available for equipment enabling the transmission of electricity between provinces and territories. It is expected to cost CAD6.3 billion (USD4.7 billion) over four years starting in 2024-25, and an additional CAD19.4 billion from 2028-29 to 2034-35.

The Clean Electricity tax credit is separate to, but complemented, by the Clean Technology Investment Tax Credit announced in the government's 2022 Fall Economic Statement, which provides credits of up to 30% for non-emitting electricity generation technologies, including SMRs.

The budget also included the announcement of a 30% Investment Tax Credit for Clean Technology Manufacturing for investments in new machinery and equipment used to manufacture or process key clean technologies, and extract, process, or recycle key critical minerals. The manufacture of nuclear energy equipment and the processing or recycling of nuclear fuels and heavy water are eligible for this credit, which is expected to cost CAD4.5 billion over five years starting in 2023-24, and an additional CAD6.6 billion from 2028-29 to 2034-35.

Nuclear will also be supported by other measures in the budget, including the extension of tax reductions for zero-emission technology manufacturers to include the nuclear power sector; the allocation of further funds to the Canada Infrastructure Bank - which last year committed a CAD970 million federal loan towards Ontario Power Generation Darlington New Nuclear Project - for accelerating the energy transition; an additional CAD1.3 billion to increase efficiencies with regulatory reviews and approvals, including for the Canadian Nuclear Safety Commission; and the provision of CAD500 million over ten years to the Strategic Innovation Fund, which has previously supported SMR projects.

Making nuclear eligible for such tax incentives, in addition to being included in the clean energy investment tax credit, has further levelled the playing field for clean energy technologies, enabling nuclear to compete fairly with other non-emitting sources of power, the CNA said.

"Today’s budget represents a significant change in how the Federal government is approaching nuclear power in Canada," the organisation's CEO and President John Gorman said. "No longer are we simply 'on the table' as Prime Minister Trudeau put it one year ago; nuclear is now recognised as a fundamental and necessary component of Canada's low carbon energy system."

Around 15% of Canada's electricity comes from 19 Candu nuclear power reactors, mostly in Ontario. For many years the world's biggest producer of uranium - until it was overtaken by Kazakhstan - the country's 2021 output of 4693 tU ranks it as third in the list of the world's uranium suppliers. OPG plans to build Canada's first commercial, grid-scale SMR - GE Hitachi's BWRX-300 - at Darlington site, eyeing commercial operation starting in 2029.

Researched and written by World Nuclear News

CNL, Kyoto Fusioneering join forces for fusion tech development

31 March 2023

Canadian Nuclear Laboratories (CNL) has signed a memorandum of understanding (MoU) with Japanese company Kyoto Fusioneering Ltd (KF) to partner on the delivery of technical services to support the growing international fusion reactor market, with a key focus on testing related to tritium.

(Image: KF)

Under the MoU, the Canadian nuclear science and technology organisation will work with the Japanese fusion technologies start-up to identify and co-develop fusion products and services, helping to accelerate the progression of fusion as a source of clean energy. It covers cooperation in areas including the exchange of scientific information; the shared use of technical equipment and facilities; the delivery of joint research projects; and the exchange of technical personnel, and aims to provide fusion developers with better access to testing and demonstration equipment, making the most of CNL and KF's complementary capabilities.

KF was spun out of Kyoto University in 2019 as Japan's first fusion start-up, to develop advanced technologies for commercial fusion reactors building on decades of university research. One of the advanced technologies the company is developing for commercial fusion reactors is tritium fuel cycle technologies and breeding blankets for tritium production and power generation.

Tritium is an isotope of hydrogen that will provide the fuel for many fusion reactor designs. CNL has a long and extensive history in the development of technologies and systems to safely manage the isotope, and operates a dedicated, state-of-the-art Tritium Facility at its Chalk River Laboratories site in Ontario. Originally built to support the tritium technology needs for Candu reactors and to support the Canadian fusion program, the facility is capable of handling significant amounts of tritium for research and development activities.

"CNL is currently exploring plans to establish an internationally unique fusion fuel cycle and demonstration loop at the Chalk River Laboratories campus," CNL Vice-President of Science and Technology Jeff Griffin said. "This partnership with Kyoto Fusioneering could build on this work and contribute to the setup of a demonstration-scale test loop, which would combine elements of Kyoto Fusioneering's Unique Integrated Testing Facility (UNITY) concept with CNL's expertise in the fusion fuel cycle."

"Kyoto Fusioneering is providing solutions for fusion energy based on innovative and unique research from Kyoto University and high quality Japanese industrial technology," KF CEO Taka Nagao said. The cooperation with CNL "will provide a very strong and important contribution to the international development of fusion energy, which has the potential to solve key energy and environmental problems on this planet", he added.

Earlier this month, KF signed an agreement with the UK Atomic Energy Authority to develop fusion-related technologies, with plans to develop a fusion-grade silicon carbide composite system.

The agreement is the latest in a recent series of fusion-related projects announced by CNL, including working with private fusion developer General Fusion on joint projects to accelerate the deployment of commercial fusion power in Canada and an agreement with UK-based First Light Fusion to design a system for extracting tritium from a planned 60 MW pilot power plant reactor.

"Our best approach to confront climate change here in Canada and around the world is by working together, and sharing our technical knowledge and resources in the pursuit of next-generation clean energy solutions," said CNL President and CEO Joe McBrearty. "That is at the heart of this agreement with Kyoto Fusioneering, an incredibly talented and ambitious company which shares our optimism in fusion power. Working together, we hope to accelerate this promising new technology, by providing fusion vendors with access to the products and services they need to develop, qualify and deploy their technologies."

Researched and written by World Nuclear News

Suriname’s Stalled Oil Boom Adds To Economic Headwinds

By Matthew Smith - Mar 31, 2023

• Suriname is facing an economic and political crisis due to corruption, poor policies, and ballooning public debt.
• 
  
• The COVID-19 pandemic worsened the situation by causing a significant decline in the country's GDP and triggering sovereign debt default.
• 
  
• The resulting austerity measures, soaring inflation, and rising living costs have caused civil unrest and protests in the country.

The former Dutch colony of Suriname is struggling to recover from the economic devastation of the pandemic. Civil dissent is intensifying with riots sparked by rising food and fuel prices rocking the capital Paramaribo. The emerging economic and political crisis is rooted in the corruption, poor policy and ballooning public debt that occurred during the 10-year rule of Santokhi’s predecessor Dési Bouterse. The headwinds buffeting Suriname are compounded by the fallout from the 2020 COVID-19 pandemic, which hit the impoverished former Dutch colony especially hard. Disappointing news concerning Suriname’s nascent oil boom further complicates the situation, with the government in Paramaribo viewing the country’s considerable oil potential as a silver bullet for resolving its many economic woes.

It was the 2020 COVID-19 pandemic that was the catalyst that sparked Suriname’s current crisis. For a decade, trouble had been brewing as the civilian administration of former military strongman President Bouterse adopted deficient public policies, allowed corruption to flourish and mismanaged the economy. As result, his final years in office were tarnished by frequent corruption scandals, soaring public debt and shrinking exports. During 2020, as the pandemic swept across the world, sharply impacting Latin America and the Caribbean, Suriname’s gross domestic product plunged by 16%, the worst decline in South America after Venezuela. This exposed the extreme fragility of the former Dutch colony’s economy and the fiscal headwinds buffeting Paramaribo.

Since the start of the pandemic, the economic fallout was so severe that Suriname defaulted three times on its sovereign debt. To shore up weak finances and bolster government coffers, President Santokhi negotiated a $688 million loan deal with the International Monetary Fund, which was approved on the condition that Paramaribo implements a range of economic reforms, including austerity measures. Those changes included eliminating subsidies for electricity, natural gas and fuels magnifying domestic inflation and triggering a massive spike in the cost of living. After soaring into double digits during 2020, inflation has spiraled ever higher, hitting a peak of over 60% during 2021 and then declining to under 40% toward the end of 2022, surging to 58% for February 2023. Rising inflation is being fueled by the collapse in the value of the Suriname dollar, which by 27 March 2023 was worth $0.028 U.S. cents compared to nearly double that amount a year earlier. The catastrophic collapse of Suriname’s currency occurred after Santokhi floated the dollar during 2021 to meet the rigorous conditions imposed by the IMF.

The austerity measures and soaring inflation are responsible for the cost of living spiraling ever higher at a time when many people are experiencing extreme hardships because of the dire state of Suriname’s economy. Those events sparked the late-February 2023 demonstrations where protesters stormed Suriname’s parliament. While security forces eventually reasserted control and President Santokhi entered into national dialogue engaging a range of civil society organizations, including unions, business groups and political parties, further protests are appearing. Last week a handful of protesters gathered in Paramaribo, accusing President Santokhi of attempting to postpone the 2025 general election through his electoral reforms aimed at introducing a fairer voting system and demanding that he resign.

With social unrest and economic hardship plaguing Suriname, along with the local currency plunging to historic lows, it is easy to understand Paramaribo’s push to exploit the vast petroleum potential thought to exist in the tiny nation’s territorial waters. Suriname’s government is hungrily eyeing the massive economic boom underway in neighboring Guyana, with which it shares the Guyana-Suriname Basin, where GDP soared by a massive 58% last year on the back of that country’s colossal oil boom. After a slew of five commercial petroleum discoveries by 50% partners Apache and TotalEnergies in Block 58 offshore Suriname, Paramaribo became optimistic that the country will experience an oil boom on the scale of that underway in Guyana.

Apache and Total Energies, which is the operator, made five commercial discoveries in Block 58 with successful flow testing conducted at the Sapakara South 1 and 2 wells. Those events saw industry analysts assert that Block 58 contains the same petroleum fairway as the nearby Stabroek Block in offshore Guyana and U.S. investment bank Morgan Stanley estimated that it contains 6.5 billion barrels of oil resources. In September 2022, Apache announced the first oil discovery in Block 53 offshore Suriname with the Baja-1 wildcat well, while Malaysia’s national oil company Petronas 2020 discovered oil in Block 52. Those additional discoveries buoyed Paramaribo’s hopes that Suriname’s territorial waters possessed similar oil potential to Guyana’s.

In recent months, the outlook for Suriname’s burgeoning oil boom has dimmed considerably with news that Apache and TotalEnergies had delayed the final investment decision, known as an FID, for Block 58, which was expected during 2022. A combination of poor drilling results, including a series of dry wells, conflicting seismic data, the stricter fiscal terms of Paramaribo’s production sharing agreements and Suriname’s chaotic economic outlook all contributed to this decision. When it is considered that it could take up to $10 billion to develop Block 58 and bring the asset to production, TotalEnergies' caution is understandable. The FID is complicated by Suriname’s national oil company Staatsolie holding the option to acquire a 20% stake in Block 58, lacking sufficient capital, particularly with Paramaribo in the midst of an economic crisis, to exercise that right.

There is every indication that the FID for Block 58 will not be made until later this year nor not even until 2024, delaying the successful exploitation of Suriname’s offshore oil resources. For these reasons, it is now anticipated that Paramaribo will not see first oil until at least 2027, compared to 2025 as initially planned, and potentially even later, thus deferring the urgently required economic benefit anticipated by President Santokhi. Rising economic and political instability in the impoverished South American nation is also putting the success of the long-anticipated Demerara Bid Round at risk where six deepwater blocks are on offer with bids closing on 31 May 2023. Paramaribo was hoping the oil auction would generate considerable interest in offshore Suriname and attract further offshore oil investment. The risk of Suriname’s economic and civil upheaval deterring industry capital inflows is amplified by TotalEnergies' decision to delay the Block 58 FID, with industry participants waiting to see what the energy supermajor’s final decision will be.

By Matthew Smith for Oilprice.com

CRIMINAL CAPITALI$M

Nickel Buyers On Edge As Another LME Scandal Unfolds

By Stuart Burns - Mar 31, 2023

• A fraudulent nickel shipment was discovered from Access World's Rotterdam warehouse.
• 
  
• Trafigura, Mercuria Energy Group and Stratton Metals are some companies that have fallen victim to nickel contract fraud.
• 
  
• Industry leaders are debating the effectiveness of blockchain technology in preventing future scams in global transactions.

Via AG Metal Miner

The London Metal Exchange and its notorious nickel contract are back in the limelight again. This time, the news has to do with reports of potential fraud with a recent LME nickel shipment. The scrutiny comes following the discovery of nine warrants, some 54 tons of Nickel briquettes, that turned out to contain rocks.

The discovery came following a delivery out of Access World’s Rotterdam warehouse. At the time the nickel arrived at the warehouse, Glencore had full ownership. However, a BVI firm called Global Capital Markets purchased it almost immediately. Access World announced last week that “there is no indication that LME rules were not followed when the material was warranted.” However, it is clear from the outcome that something went very wrong.

LME Nickel Not Alone in Contract Fraud

According to Reuters, workers should weigh deliveries on arrival. If this was done, a discrepancy should have been apparent. However, Access World is not making any further announcements while investigations are ongoing. Another possible explanation is that someone replaced the delivered nickel with rocks at some point after delivery. Of course, this would be even more disturbing considering it could happen in a tightly regulated and secure facility.

The owner of the consignments are Trafigura in the U.S. and Stratton Metals in the U.K. Unfortunately, these traders are not alone in suffering fraud on nickel contracts. A recent Financial Times post details how Mercuria Energy Group, a Geneva-based multinational trading company, bought 10,000 tons of blister copper from Turkish supplier Bietsan Bakir last summer for $36 million. However, when the cargo arrived in China, workers found the containers to be full of painted rocks.

Trafigura is also alleging systemic fraud in its dealing with Indian businessman Prateek Gupta and his companies. The allegations came following the discovery of falsified paperwork detailing containers of nickel from Mr. Gupta’s firm. At the moment, that case remains ongoing.

Some Think Blockchain Could Prevent Future Scams

Supporters suggest blockchain technology could help negate the risk of fraud by creating an unalterable record of transactions with end-to-end encryption. Still, it is hardly an airtight solution. For example, blockchain could significantly reduce the ability of fraudsters to substitute documentation while goods are in transit. This is potentially what happened in the Trafigura-Gupta case. However, the technology doesn’t do anything to prevent theft or the replacement of the real cargo with a substitute. This is particularly true if the fraudsters know how to assign the proper tracking to the fraudulent replacement.

The idea is nothing new. Mining firms are looking at using blockchain to track cargo from the mine to the buyer. This would mean that companies could securely trace cargo details, right down to chemical analysis and assay results, from mine shaft to refiner and potentially to end user. Banks and shipping companies have been looking at using blockchain as well. In their case, they hope to reduce or even remove the bureaucratic hurdles and risk that comes along with Bills of Lading and Letters of Credit. Unfortunately, progress remains painfully slow.

Clearly, blockchain technology has the potential to reduce risks and increase the efficiency of global transactions. However, it is very difficult to update processes fine-tuned over hundreds of years. Like the LME, global logistics and banking will benefit from blockchain in time. But despite the rare case of fraud, the current systems work well enough to support millions of transactions a year.

By Stuart Burns

Drax In Talks With UK Government For £2 Billion CCS Project

By Michael Kern - Mar 30, 2023

British power giant Drax surged by 5% in early trading on Thursday after it disclosed that it was in talks with the government about a proposed carbon capture project. 

Britain intends to bolster its energy security and independence through investment to move towards more affordable and cleaner energy sources. 

One such initiative includes carbon capture and storage projects. 

Drax aims to capitalize on this push and develop a £2 billion CCS project alongside its 2.6 GW biomass power plant in northern England. 

Drax paused the project temporarily, asking for clarity from the government over the funding model.

On Thursday, Drax disclosed that it had been invited to start bilateral discussions with the government to continue the project. 

Drax CEO, Will Gardiner, said in a statement that the company stood ready to progress its £2 billion investment plan with the government's proper engagement and a fast decision-making process.

Initially, Drax's share prices fell by over 12% when the government announced that it had not chosen the Drax project for its Track-1 scheme, which is part of its £20 billion per year funding initiative announced this month for carbon capture technology. 

Shares bounced back and jumped 5% after the company revealed it was in talks with the government.

Drax is concerned that its existing subsidy scheme for the biomass units, which provide approximately 6% of Britain's electricity, would expire in 2027, making the units unviable, according to its spokesperson. 

Analysts at Citi stated in a research report that "The concern now for Drax is how do they fill the cashflow cliff that exists post-2027."

Biomass power generation has received significant disapproval from environmental activists who argue that it is not carbon-neutral or sustainable. 

Further, they claim that the production of pellets can contribute to deforestation. 

Drax maintains that it only uses wood residuals or byproducts from trees primarily used for lumber and that sustainably managed demand for wood from forests can help increase forest growth.

Drax's proposed CCS project is considered significant progress in Britain's efforts to improve energy security and reduce carbon emissions. 

According to Drax, the scheme would translate into removing as much as 16 million tonnes of carbon dioxide per year from the environment.

The project's development is dependent on government clarity and fast decision-making. 

Drax and the government look forward to their discussions and hope that the outcome of the talks leads to the successful development of one of the most significant CCS projects for energy security and emission reduction in Britain.

By Michael Kern for Oilprice.com 

Chevron Bids Highest For Gulf Of Mexico Drilling Rights

By Charles Kennedy - Mar 30, 2023

Gulf of Mexico oil lease sale number 259 held on Wednesday attracted $264 million in bids for drilling rights in an area estimated to hold nearly 30 billion barrels of oil, with Chevron coming in with the highest bids, followed by BP, Shell and Equinor.

Chevron turned up with seven of the 10 highest bids for blocks, with BP Exploration & Production Inc and Equinor Gulf of Mexico LLC representing the second and third highest bids. Chevron offered up $108 million for 75 tracts, followed by BP with $47 million in bids and Shell, with $20 million. 

The auction saw 38% higher bids than the previous auction, and also ranks as the highest bidding since 2017.

The Biden administration was forced to move ahead with the controversial auction of 114,000 square miles of oil and gas leases in the Gulf of Mexico due to a climate bill compromise, which prohibits public land leases for renewable power unless oil and gas is first offered tens of thousands of acres.

The outer continental shelf in the Gulf of Mexico is estimated to hold 29.95 billion barrels of oil and 54.85 trillion cubic feet of natural gas in undiscovered technically recoverable oil. It is also estimated that the Gulf of Mexico could produce more than 1 billion barrels of oil and more than 4 trillion cubic feet of natural gas in five decades.

Still, BP, Chevron, and Talos Energy received disappointing results at the beginning of this month from their Puma West-2 appraisal well, which encountered hydrocarbons in multiple zones, but not enough to immediately consider whether to move forward.

The lease sale, the Biden administration’s first in over a year, comes right after the administration approved the controversial Willow drilling project in Alaska.

Responding to the Gulf of Mexico lease sale, Democrat Senator Joe Manchin, who forced the climate bill compromise, said in a statement that the sale demonstrates that the climate bill was “holding this administration’s feet to the fire” in terms of continuing fossil fuel production in the U.S., ABC News reported. 

By Charles Kennedy for Oilprice.com