DOE to finance more research on USEC gas centrifuge technology

The Department of Energy has agreed to provide $280 million of a $350 million research, development, and demonstration program for USEC to scale up and test its gas centrifuge uranium enrichment technology. The funds will help the company assess whether its newly designed 120-centrifuge cascade—currently being installed at its American Centrifuge plant in Piketon, Ohio—can enrich fuel at commercially viable costs and quantities. If completed, the plant would house 96 such cascades. According to the cooperative agreement, which was signed on 13 June, USEC is to contribute $70 million to the R&D program.

For the initial phase of the program, which runs through November of this year, DOE’s contribution consists of taking over responsibility for disposal of a portion of USEC’s depleted uranium hexafluoride tails. That move lets USEC free up $88 million in cash that the company has been holding as security for disposal of the tails, amidst a $496 million loss the company suffered in the 1st quarter of the year. The loss was partly connected to expenses related to the building of the plant, which is over budget and behind schedule, and to a drop in business income from refueling other nuclear plants. The Obama administration has requested $150 million in fiscal 2013 for the plant’s R&D program.

A DOE official, speaking on condition of anonymity, said USEC’s request for $2 billion in DOE loan guarantees to build the plant to full capacity has been put on hold, and he cautioned that a successful outcome for the R&D program won’t result in automatic approval of the loan guarantee. “We’re not trying to supply support for USEC per se,” the official said. But he noted that USEC is the only supplier of uranium enrichment services that DOE can use for “nonpeaceful” purposes—producing tritium for nuclear weapons and fueling the US Navy’s nuclear-powered ships. Treaty obligations stipulate that only domestic material produced with US-origin technology can be used for those purposes. That rules out other enrichment plants currently being constructed in the US; the Urenco plant in New Mexico, which went into small-scale operations in 2010, and the Areva plant due to be built in Idaho both use European centrifuge technology. Nor can low-enriched uranium obtained from blending down Russian weapons-grade material as part of the Megatons to Megawatts program be used for military purposes.

In exchange for the R&D funding, DOE clarified its rights to the intellectual property and data generated by the cooperative agreement. The government is immediately taking ownership of the centrifuges that USEC has built and of centrifuges and other equipment that will be produced as part of the R&D program. The plant R&D will be managed under a new governance structure that strengthens the roles of other project partners, including Babcock and Wilcox and Toshiba, which will provide additional project management support and personnel for the program.

“We know that the [USEC] technology is promising, and we believe it can work,” the DOE official said. “The question is, can it work at an output that makes sense for USEC on a commercial basis?” Whether commercially viable or not, it could work for DOE’s needs, he explained.

In May, DOE announced a complex agreement that will keep USEC’s Paducah, Kentucky, gaseous diffusion enrichment facility operating for one year to produce enough low-enriched uranium to supply 15 years’ worth of tritium for nuclear weapons needs. Prior to that announcement, the company had warned DOE that due to market conditions, it had insufficient orders to keep Paducah operating through the second half of this year.