While a growing number of countries have announced their civilian nuclear power ambitions in the past twelve months, no other country is likely to have a greater psychological impact on the nuclear power landscape than Saudi Arabia. We believe that the Kingdom’s natural gas and water problems will drive them to nuclear power, sooner rather than later, probably this very year.
After our interview with Kevin Bambrough, which resulted in the widely read article “An Explosion in Nuclear Power Demand Is Coming,” we began to dig deeper into Bambrough’s conclusion. He believes the overwhelming growth in nuclear power will continue to drive the uranium bull market much higher. what is suspected. He believes that the uranium renaissance has gone beyond a simple shortage of mining inventory. We investigated this further during the course of our research on uranium and geopolitics. We were surprised by what we discovered, and continue to be amazed at how accurate Mr. Bambrough’s forecast is likely to come true. We include the special subsection, which follows, in our forthcoming Practical Investor’s Guide to Uranium Stocks.
An April 2006 UPI story 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 that Saudi scientists were urging the government to launch a nuclear project, but that he had not yet received the royal family’s blessing. Social, not energy, issues could help the Saudi royals embark on a large-scale nuclear program.
Of the 24 million subjects in the Kingdom of Saudi Arabia, more than 40 percent are under the age of 18. While still manageable, the country’s infrastructure is ill-prepared to deal with its explosive population growth. The two biggest problems facing Saudi Arabia are possible shortages of water and electricity. It is true that its super oilfields may also have peaked in production and could move to tertiary recovery, but that is unknown. An Islamic revolution, similar to the one Iran suffered in the 1970s, is probably top of mind for the King. Civil unrest could break out if his subjects suffered from insufficient electricity and inadequate water supplies. Just 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 far behind Bahrain, Kuwait, Qatar, and the United Arab Emirates in energy consumption per capita. The rate of consumption of natural gas, which produces Saudi Arabia’s electricity, increased less than Egypt and Syria. Total energy consumption fell by 3.5 percent in 1999 and 2000.
The internationally heralded “Gas Initiative” of 1998 was the Kingdom’s attempt to attract major Western oil companies to the country to help develop its natural gas reserves. After major oil companies spent $100 million on due diligence to assess Saudi Arabia’s natural gas reserves, the initiative quietly disappeared from the global radar screen. A Shell Oil executive, whose company is exploring for gas in the country’s Empty Quarter, told Bloomberg Daily Energy News that it was a high-risk venture unlikely to find sizable reserves. In Matthew Simmons’s Desert Twilight, he repeated what an anonymous top oil executive told him: “The deposits are horrible.”
The Saudis need water and electricity to keep up with their population growth. Nuclear power is likely to be the solution to both problems. Continued reliance on natural gas may prove a fatal economic and social mistake for the royal family. Our research predicts that the Saudis should announce a full-scale civilian nuclear power program in the near future.
Let’s talk about the water problem first. In a 2002 story published in the Oil & Gas Journal, Saudi Arabia’s 30 desalination plants produce about 21 percent of the world’s total desalinated water production. Nearly 70 percent of local drinking water in cities comes from desalinated seawater. As the population grows, Saudi Arabia may spend another $40 billion to build more desalination plants.
Half of the world’s desalination plants are in the Middle East. Most run on fossil fuels, especially natural gas. The conversion of seawater into drinking water consumes a lot of energy. The commonly used desalination method of multi-stage flash distillation (MSF) with steam requires heat from 70 to 130 degrees Celsius and consumes up to 200 kilowatt hours of electricity for each 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 of generating this electricity through natural gas explains why Saudi Arabia spends around $4 billion in annual maintenance and operating costs.
There are numerous precedents for combining water desalination with nuclear power for electricity generation. The World Nuclear Association highlights Kazakhstan’s BN-350 fast reactor, which has produced 135 MWe of electricity and 80,000 cubic meters of drinking water per day for almost 30 years. In Japan, ten desalination plants are connected to pressurized water reactors that produce electricity. The International Atomic Energy Agency is working closely with some 20 countries to implement dual-use nuclear reactors, which would also desalinate water.
According to the World Nuclear Association 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 seawater feed from the cooling system. The main opportunities for nuclear plants have been identified as being in the 80-100,000 m3/day and 200-500,000 m3/day ranges.”
Numerous examples of nuclear desalination are being considered. In 1977, the Bushehr nuclear facility in Iran was also to have a 200,000 cubic meter per day MSF desalination plant. Construction delays and the subsequent Islamic revolution prevented this from happening. Perhaps when Iran begins its civil nuclear program, the desalination plant will be reactivated. China is reviewing the feasibility of a nuclear seawater desalination plant in the Yantai area. Russia has made progress on a nuclear desalination project with barge-mounted marine reactors using Canadian reverse osmosis technology. India has started operating a nuclear desalination demonstration plant at the Madras Atomic Power Station in southeastern India. Another could soon follow in the south Indian state of Tamil Nadu, which suffers from perpetual water shortages. Pakistan continues its efforts to establish a demonstration desalination plant. South Korea has developed a small nuclear reactor design for the cogeneration of electricity and water. It may first be tested on the island of Madura in Indonesia. Argentina has also developed a small nuclear reactor design for cogeneration of electricity or for desalination only.
The Saudis have been researching 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 to Saudi Arabia. Since the mid-1980s, scientists and researchers from the Department of Nuclear Engineering at King Abdulaziz University in Saudi Arabia, the Faculty of Engineering at Riyadh University, the Department of Chemical Engineering at King Saud University and the Research Institute of Atomic Energy have investigated and evaluated nuclear desalination. . Saudi scientists presented their paper, titled ‘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 has a tandetron accelerator and a cyclotron capable of producing isotopes for medical purposes. Saudi Arabian nuclear scientists have been involved with many countries to help their country develop a nuclear power program in good faith. In late March 2006, a German magazine reported that Saudi Arabia has been secretly working on a nuclear program with the help of Pakistani scientists. Ironically, many believe that Saudi Arabia helped finance Pakistan’s nuclear program. Because Saudi scientists lack proven experience of the entire nuclear fuel cycle, Pakistan’s experience over the past decade could help accelerate the Kingdom’s pursuit of a civilian nuclear program.
Although it lacks proven uranium deposits, the Tabuk region of the country has quantities of low-grade uranium and thorium. However, Saudi Arabia has significant phosphate deposits, which some believe could be exploited. The two largest deposits in the country reportedly measure around 750 million metric tons, averaging between 19 and 21 percent P2O5. Fertilizer plants in Al Jubail Industrial City, operated by the Saudi Mining Company and the Saudi Basic Industrial Corporation, produce about 4.5 metric tons of P2O5 per year. While mining uranium from phosphates can be an expensive proposition, phosphates could provide a ready supply of uranium for the country’s nuclear desalination plants. So, it would be uranium enrichment, which both the Russians and the French would fight to provide to the Kingdom.
While the Saudi program may not have a direct impact on global uranium prices, the Kingdom’s decision to advance its nuclear program beyond the research and medical stage would be a signal to the world that nuclear power programs will be a primary growth sector for the next fifty to one hundred years. years. If the Saudis also started desalination projects using dual-use nuclear reactors, this could change the entire landscape of the water situation for the Middle East and Africa. And it will most likely cause a significant stampede from the Kingdom’s neighbors towards the global nuclear renaissance.
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