Financial crisis could dent nuclear plant growth

Wednesday, October 1, 2008

PARIS (AP) — Growth in the construction of new nuclear plants worldwide is at risk because of the global financial crisis, U.S. Energy Secretary Samuel Bodman said Wednesday, adding that short-term projects like oil drilling are more likely to go ahead.

During a visit to Paris, Bodman said the crisis could have an impact on the "nuclear renaissance" that is sweeping the industry as countries around the globe search for alternatives to fossil fuels.

Long-term projects like nuclear plant building "are the ones that are going to be the most difficult to finance," he told reporters. While Bodman said he is hopeful the financial crisis will be resolved, "long term projects are at risk, I would think."

The U.S. has 104 commercial reactors that supply about 20 percent of the country's power. The U.S. Energy Department projects 45 percent growth in national electricity demand by 2030, meaning 35 to 50 new nuclear plants would be needed by then just to maintain nuclear's share of the energy market.

A failure of the U.S. to resolve the ongoing financial crisis would have "a significant impact" on energy demand there, Bodman said on the sidelines of an international nuclear energy conference.

"That's what the president has been saying, that's what we've all been saying," Bodman said. "That's what leads to the need to come up with a solution."

While long-term nuclear projects are at risk, short-term projects such as oil drilling shouldn't be affected, Bodman said, because the industry is less reliant on bank borrowing.

"I would guess in large measure they would proceed. But again, I don't want to forecast exactly what they do," Bodman said.

Bodman also said he expects U.S. oil refining capacity in the Gulf of Mexico to come back to pre-hurricane Ike and Gustav levels in four or five weeks.

"It's been less rapid than I hoped it might be," Bodman said. "I thought it would be two or three weeks, it's probably going to be four or five, that kind of time frame. It's not going to be 10."

Hurricanes Gustav and Ike shut down nearly 100 percent of oil and natural gas production in the Gulf for several weeks.

Asked if he was worried about Russia's expanding cooperation with the OPEC oil producing cartel, Bodman said "We don't encourage that."

"Am I worried? I don't lose a lot of sleep over it. But it's not an encouraging position," Bodman said. Russia agreed earlier this month to sign a cooperation agreement with OPEC.

Bodman said he hoped Russia would focus more on encouraging companies from around the world to invest in its oil and gas industry but that it "seems to be more interested in OPEC and making deals with OPEC. That gives me some pause."

Russia is the second-largest oil and gas producer, just behind Saudi Arabia, making closer ties to OPEC — which dominates world oil production — potentially bad news for major fossil fuel consumers, including the U.S. and Europe.

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