National Institute of open schooling (NIOS) in Bahrain
While a growing number of countries have announced their
civilian nuclear energy ambitions over the past twelve months, no other country
is likely to have more of a psychological impact on the nuclear energy picture
than Saudi Arabia. We believe the Kingdom's natural gas and water problems will
lead them to nuclear, sooner rather than later, probably as early as this year.
After our interview with Kevin Bambrough, which resulted in
the widely read article, 'Explosion in Nuclear Energy Demand Coming," we
began more deeply researching Bambrough's conclusion. He believes the overwhelming
growth in nuclear energy will continue to drive the uranium bull market much
higher than is suspected. He believes the uranium renaissance has gone beyond
the envelope of just a mining inventory shortage. We researched this further
during the course of our investigation into uranium and geopolitics. We were
surprised by what we discovered, and continue to be stunned by how accurate Mr.
Bambrough's forecast is likely to play out. We included the special
sub-section, which follows, in our soon-to-be-published, A Practical Investor's
Guide to Uranium Stocks. Below is a sneak preview.
An April 2006 UPI news item confirmed what many have long
believed. It won't be long before Saudi Arabia launches a nuclear project.
Kuwaiti researcher Abdullah al-Nufaisi told seminar attendees in Qatar that
Saudi Arabia is preparing a nuclear program. He said the government was being
urged to launch a nuclear project by Saudi scientists, but had not yet received
the blessing by the royal family. Social, not energy, issues could help the
Saudi royals embark on a large-scale nuclear program.
Of the Kingdom of Saudi Arabia's 24 million subjects, more
than 40 percent are under 18 years of age. While still manageable, the
country's infrastructure is not prepared to deal with its explosive population
growth. The two biggest problems facing Saudi Arabia are potential water and
electricity shortages. True, its super oilfields may also have peaked in
production and might move into tertiary recovery, but that is unknown. An
Islamic revolution, similar to what Iran suffered in the 1970s is probably
foremost in the King's mind. Civil unrest might come about should his subjects
suffer from insufficient electricity and inadequate water supplies. One need
only look at the widespread electricity shortages Syria experienced in the
1980s and early 1990s.
As reported in the October 14, 2004 issue of Arab Oil and
Gas, the Saudis lag well behind Bahrain, Kuwait, Qatar, and the United Arab
Emirates in per capita energy consumption. The rate of natural gas consumption,
which produces Saudi's electricity, increased less than Egypt and Syria. Total
energy consumption dropped by 3.5 percent in 1999 and 2000.
The internationally heralded "Gas Initiative" of
1998 was the Kingdom's attempt to lure major western oil companies back into
the country to help develop its natural gas reserves. After major oil companies
spent $100 million in due diligence to evaluate the Saudi natural gas reserves,
the initiative quietly dropped off the world's radar screen. A Shell Oil
executive, whose company is exploring for gas in the country's Empty Quarter,
told Bloomberg Daily Energy News that this was a high-risk venture with a low
probability of finding sizeable reserves. In Matthew Simmons' Twilight of the
Desert, he repeated what he was told by an anonymous senior oil executive,
"The reservoirs are crummy."
The Saudis need water and electricity to match their
population growth. Nuclear energy is likely to be the solution to both those
problems. Continued dependence upon natural gas may prove a fatal economic and
social error for the royal family. Our research forecasts the Saudis should
announce a large-scale civilian nuclear energy program in the near future.
Half of the world's desalination plants are in the Middle
East. Most are powered by fossil fuels, especially natural gas. Converting sea
water to potable water is energy intensive. The commonly used desalination
method of multi-stage flash (MSF) distillation with steam requires heat at 70
to 130 degrees
centigrade and consumes up to 200 kilowatt hours of
electricity for every cubic meter of water (about 264 gallons). MSF is the most
popular technology, but some are turning to reverse osmosis (RO). RO consumes
about 6 kilowatt hours of electricity for every cubic meter of water.
Desalination is very expensive. The cost to generate this
electricity through natural gas explains why Saudi Arabia spends about $4
billion in operating and annual maintenance costs.
There are numerous precedents in combining water
desalination with nuclear energy for electrical generation. The World Nuclear
Association highlights the BN-350 fast reactor in Kazakhstan, which has
produced 135 MWe of electricity and 80,000 cubic meters per day of potable
water for nearly 30 years. In Japan, ten desalination facilities are linked to
pressurized water reactors producing electricity. The International Atomic
Energy Agency is working closely with about 20 countries to implement dual-use
nuclear reactors, which would also desalinate water.
According to the World Nuclear Association's website,
"Small and medium sized nuclear reactors are suitable for desalination,
often with cogeneration of electricity using low-pressure steam from the
turbine and hot sea water feed from the final cooling system. The main opportunities
for nuclear plants have been identified as the 80-100,000 m3/day and
200-500,000 m3/day ranges."
There are numerous examples of nuclear desalination being
considered. In 1977, Iran's Bushehr nuclear facility was to also have a 200,000
cubic meter/day MSF desalination plant. Construction delays, and the subsequent
Islamic revolution, prevented this from occurring. Perhaps when Iran commences
its civilian nuclear program, the desalination plant will be revived. China is
reviewing the feasibility of a nuclear seawater desalination plant in the
Yantai area. Russia has advanced a nuclear desalination project with
barge-mounted marine reactors using Canadian reverse-osmosis technology. India
has begun operating a nuclear desalination demonstration plant at the Madras
Atomic Power Station in southeast India. Another one may soon follow in the
southern Indian state of Tamil Nadu, which perpetually suffers from water
shortages. Pakistan continues its efforts to set up a demonstration
desalination plant. South Korea has developed a small nuclear reactor design
for cogeneration of electricity and water. It may first be tested on Madura
Island in Indonesia. Argentina has also developed a small nuclear reactor
design for electricity cogeneration or solely for desalination.
The Saudis have investigated dual use for nearly thirty
years. Since 1978, Saudi scientists have studied nuclear desalination plants in
Kazakhstan and Japan. Both studies positively assessed the feasibility of
bringing the first dual-use nuclear reactor in Saudi Arabia. Since the mid
1980s, scientists and
researchers at the Saudi's Nuclear Engineering Department at
King Abdulaziz University, the College of Engineering at the University of
Riyadh, the Chemical Engineering Department of King Saud University, and the
Atomic Energy Research Institute have researched and evaluated nuclear
desalination. Saudi scientists presented their paper, entitled, 'Role of
Nuclear Desalination in the Kingdom of Saudi Arabia,' at the First
International Conference on Nuclear Desalination in Morocco in October 2002.
The country possesses a tandetron accelerator and a
cyclotron capable of isotope production for medical purposes. Saudi's nuclear
scientists have been involved with many countries to help their country develop
a bonafide nuclear energy program. In late March 2006, a German magazine
reported Saudi Arabia has been secretly working on a nuclear program with help
from Pakistani scientists. Ironically, many believe Saudi Arabia helped finance
Pakistan's nuclear program. Because Saudi scientists lack the proven experience
of the entire nuclear fuel cycle, Pakistan's expertise, over the past decade,
could help accelerate the Kingdom's pursuit of a civilian nuclear program.
While lacking proven uranium deposits, the country's Tabuk
region has low-grade amounts of uranium and thorium. However, Saudi Arabia has
significant phosphate deposits, which some believe could be exploited. The
country's two largest deposits reportedly measure about 750 million metric
tons, averaging between 19 and 21 percent P2O5. Mined by the Saudi Arabian
Mining Company and the Saudi Basic Industrial Corporation, fertilizer plants at
the Al Jubail Industrial City produce about 4.5 metric tons of P2O5 annually.
While extraction of uranium from phosphates can be an expensive proposition,
the phosphates could provide a ready supply of uranium for the country's
nuclear desalination plants. Then, it would be a matter of uranium enrichment,
of which both the Russians and the French would be scrambling to provide the
Kingdom.
While the Saudi program may not directly impact world
uranium prices, the Kingdom's decision to advance its nuclear program, beyond
the research and medical stage, would signal the entire world that nuclear
energy programs will be a primary growth sector for the next fifty to one
hundred years. Should the Saudis also commence desalination projects using
dual-use nuclear reactors, this could change the entire landscape of the water
situation for the Middle East as well as Africa. And it would most likely spark
a significant stampede of the Kingdom's neighbors into the global nuclear
renaissance.
COPYRIGHT © 2007 by StockInterview, Inc. ALL RIGHTS
RESERVED.
James Finch contributes to StockInterview.com and other
publications. StockInterview’s “Investing in the Great Uranium Bull Market” has
become the most popular book ever published for uranium mining stock investors.
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