Hearings and Business Meetings

SD-366 Energy Committee Hearing Room 02:30 PM

Mr. Tom Christopher

Areva, Inc.

Statement of
Thomas A. Christopher
Chief Executive Officer
AREVA, Inc.
Before the
Senate Committee on Energy and Natural Resources
June 12, 2006

Mr. Chairman and members of the Committee, I am Tom Christopher, Chief Executive Officer of AREVA, Inc.

Thank you for this opportunity to testify before you today on the U.S. Department of Energy’s Next Generation Nuclear Plant program.

I am very pleased to join Assistant Secretary of Energy Dennis Spurgeon on this panel. Assistant Secretary Spurgeon comes from a distinguished industry background, and he has taken on many challenges implementing our nation’s nuclear energy policy. I look forward to working with him to achieve the objectives of the Energy Policy Act of 2005.

AREVA, Inc. is an American company headquartered in Maryland with 5,000 employees in 40 locations across 20 U.S. states. We are part of a global family of AREVA companies with 58,000 employees worldwide offering proven energy solutions for emissions-free power generation and electrical transmission and distribution. We are proud to lead the nation and the world in nuclear power, and we are the only company to cover all the industrial activities in our field. Last year, our U.S. operations generated revenues of $1.8 billion—9 percent of which were from U.S. exports to foreign countries.

We provide nuclear power plant services, components and fuel to America’s electricity utilities. We offer our expertise to help meet the nation’s environmental management needs and have been a longtime partner with DOE. We jointly operate the successful Blended Low Enriched Uranium (BLEU) program in Erwin, Tennessee, for example, where we convert problem waste materials from Savannah River Site into safe and inexpensive fuel for Tennessee Valley Authority reactors. In Idaho, we recently invested $300,000 in new equipment to upgrade Idaho National Laboratory’s fuel testing capabilities and supported the INL study of next generation technologies for the production of heat for coal gasification processes.

With the hard work this Committee put into authoring and shepherding into law the Energy Policy Act of 2005, AREVA is poised to build the country’s newest fleet of commercial nuclear reactors using our advanced U.S. EPR (Evolutionary Power Reactor) design. Just weeks following the President’s signing of the energy bill, AREVA announced its new UniStar partnership with Constellation Energy to create the framework to build the country’s newest U.S. EPRs. We are investing $200 million here in the U.S. to obtain NRC design certification, and we are providing Constellation with the necessary Combined Construction and Operating License (COL) application support to begin work on their next nuclear plant. Clearly, America’s nuclear renaisance will be driven by this next fleet of light water reactors.

NGNP’s Commercial Possibilities

Our significant investment in the deployment of the U.S. EPR reactor design is based upon the belief that nuclear power is an essential element of America’s energy independence, energy security and clean electrical power generation. Nuclear energy supports global sustainable development and the reduction of harmful greenhouse gas emissions. These objectives are important elements of the Energy Policy Act passed by Congress last year.

AREVA foresees market needs for nuclear power beyond electricity generation. Our ANTARES reactor design is envisioned to serve these future markets and is a High Temperature helium cooled graphite moderated Reactor, or HTR. Thanks to its indirect cycle, this HTR is able to produce process heat at temperatures well above those of the current fleet of light water reactors. This process heat may be able to offset heat currently produced by fossil fuels in a broad range of industrial applications.

For example, in the coming decades, we see a growing need for alternate liquid fuels. To augment traditional petroleum sources, alternate sources such as Alberta oil sands, Western oil shales and conversion of coal to liquids may become significant contributors to our transportation fuel mix. These all consume large quantities of process heat and hydrogen. Conversion of cellulosic biomass to ethanol also requires significant process heat. In place of fossil fuels presently used to provide the process heat for these applications, nuclear reactors may be able to provide the necessary energy. This would avoid significant amounts of carbon dioxide emissions and further consumption of fossil fuel.

Ultimately, ANTARES may be able to procure the process heat necessary to deploy the technology developed at Idaho National Laboratory to produce hydrogen. Achieving these missions in process heat production would strongly support Congress’ and the Administration’s goal to further America’s energy security and sustainability.

NGNP and Industry Involvement

Nuclear programs such as NGNP require significant investment in research and development, first-of-a-kind engineering and manufacturing infrastructure. These costs of developing new technology can be prohibitive for individual commercial entities working alone. That is why international cooperation to develop new technology is needed.

But a government-industry partnership is also vital to addressing the goals of a major advance in nuclear technology. For the HTR, a demonstration reactor is necessary in order to overcome the technical, infrastructure and licensing hurdles of this first-of-a-kind power technology in the U.S. As a demonstrator for this key technology, the NGNP at Idaho National Laboratory will greatly accelerate the commercial deployment of this technology by reducing risks in these areas.

AREVA has participated whenever possible with the NGNP program throughout the last four years. We’ve contributed to the Generation IV Roadmap and provided direct input to the NGNP Independent Technology Review Group in 2003 and 2004. Our efforts have been aimed at helping guide the NGNP to become a commercially deployable nuclear technology for the future.

This type of technology development and demonstration complements AREVA’s core missions and capabilities. We invest in both near- and long-term nuclear technology
development and bring these technologies to market. We are also involved in the support of other Generation IV concepts.

As mentioned earlier, AREVA has been developing ANTARES as a practical and flexible future provider of process heat and electricity. During the past three years, AREVA and its affiliates have invested more than $70 million in research, development and engineering to advance the ANTARES design concept. However, achieving the vision of an HTR demonstrator such as NGNP will require resources that are beyond what can be provided by any one company.

The Energy Policy Act of 2005 contains provisions supporting cost-sharing and industry participation. AREVA believes that the best way for achieving real progress towards NGNP realization is for the Department of Energy to have frank discussions with industrial partners who have a vested interest in HTR technology development. AREVA would be interested in leading an industrial consortium to achieve NGNP goals if such a strategy were selected. AREVA will invest in technology design and development that is forecast to have future marketability. NGNP could match this criterion.

Industry needs to be involved at the early stage of licensing and design strategy for the NGNP. This is when the highest leverage exists to ensure that a cost-effective and marketable technology is defined. We should, therefore, have industrial involvement now and not wait until 2011.

There are markets for this technology now, especially in hydrogen and process heat production. Given the long time needed to bring any nuclear technology to market, we must start now and make steady visible progress in order to create market confidence. NGNP could benefit from a government-industry partnership today. AREVA is ready to lead the formation and execution of such a partnership.

NGNP and DOE Leadership

A key element of a successful NGNP program is a demonstration plant that has a measured risk profile. The selected technology goals for this plant should be the result of a realistic assessment of its future usefulness in an industrial setting, with features that support ongoing research and development.

Whereas there may be a temptation to incorporate some “stretch goals,” we must remain mindful that such goals carry potentially significant technical challenges and cost burdens that could result in early project termination. The recent Nuclear Energy Research Advisory Committee report on NGNP identified some of these kinds of measured risks that should be considered for the NGNP demonstration plant.

Regarding specific needs for the NGNP, we believe DOE should define the technology concept that they will support for the NGNP. This selection process needs to address market-based requirements. Then industry needs to be a partner in providing a reference design that meets customer requirements. This reference design should be the means to focus all research and development.

Industrial involvement is also needed in developing licensing strategy and assessing design tradeoffs throughout the project. The NGNP should be defined to focus the effort where the benefit is the highest. This will minimize risk for the NGNP and the first commercial versions of this new technology.

In conclusion, we believe that high temperature reactor technology can be a part of the mix of energy technologies we should be working on now to achieve energy independence. HTR technology offers the potential to replace fossil fuel heat delivery in a broad range of applications, offsetting oil and gas imports. We look forward to working with DOE to make the NGNP program a successful partnership—and to support America’s goal of energy independence.

Mr. Chairman, I appreciate having this opportunity to join you today. I would be pleased to answer any questions you may have at this time.