Nuclear, Reactors

Fluor Increases Stake in Nuclear Power: An Interview with Chris Tye, Senior Vice President, Nuclear Operations, Fluor Corp.

Issue 1 and Volume 5.

By Brian Wheeler, Editor

In Oct. 2011, Fluor Corp. announced that the engineering, procurement, construction, and maintenance company had invested $30 million in NuScale Power, an Oregon-based small modular reactor (SMR) technology company. NuScale will continue to operate as an independent company and the two companies have entered into a separate agreement whereby Fluor will provide certain services to NuScale as well and have exclusive rights to provide engineering and construction services for future NuScale SMR facilities.

Senior Vice President of Nuclear Operations for Fluor, Chris Tye, spoke about the company’s history in nuclear and the prospects for growth globally.

NPI: Can you tell me a bit about Fluor’s involvement in nuclear power, along with the history of the company’s work in the industry?

Tye: Fluor’s involvement in the nuclear industry dates back to the 1950s and is pretty broad ranging, from the U.S. Government Department of Energy and Department of Defense side of the business, to the commercial nuclear power side of the business. We were fairly active in the first round of nuclear new build in the United States in the 70s and 80s on the construction side of the business. Once that build out was complete, and as you know a lot of it ended in cancelations, we remained active in the operating plant services side of the business with large capital projects, including steam generator replacements and a lot of maintenance-type services.

As we saw the nuclear new build market coming back a number of years ago, we really turned our focus back on that part of the business and reacquired all of our credentials, such as ASME certifications, for the nuclear new build market we saw coming. We have since been very active in that side of the business.

NPI: What is Fluor involved in globally, in regards to nuclear? Does Fluor still see that large reactors can be a viable option with lower gas prices?

Tye: On the large reactor side of the business, you have probably seen that we have entered into memorandums of understanding with GE-Hitachi (GEH) for the ESBWR pursuit in Poland for Polska Grupa Energetyczna S.A (PGE) and more recently with GEH for Olkiluoto 4 in Finland. We are also active on the advanced pressurized water reactor side of the business.

We are seeing not only some of the utilities in the U.S. who are taking a longer-term view of levelized cost of power, they are looking at the complete life cycle of nuclear new build and speculating what gas pricing may be. I think you have characterized it as competing against gas, which it obviously is, but we are also seeing utilities looking at their fuel diversity and around the world we are seeing countries recognize that the only way they are going to meet their carbon reduction commitments and goals is to go nuclear. We didn’t see any stop to building new nuclear plants around the world, and that’s certainly continuing and evolving into the Generation III and the Generation III+ advanced reactor designs.

Fluor provided construction, maintenance and modification support services, and decontamination services at the V.C. Summer Nuclear Station. Photo courtesy of Fluor Corp.

NPI: When you speak about the GEH MOUs specifically, what is the timeframe on delivery of those units?

Tye: The request for quotation will probably be out this year (2011), but there is not a certain date for that. The solicitation and down select processes will move through the 2012 timeframe. I don’t know if they have stated exact commercial operation dates, but it is a lengthy process and will probably be the early-2020s for commercial operation.

NPI: Fluor has announced the investment into NuScale Power. Can you tell me about the investment and Fluor’s thoughts on the future of the small modular reactor?

Tye: With our focus on the nuclear industry, commercial nuclear power and nuclear new build, we see a role for advanced pressurized water reactors, advanced boiling water reactors and we also see a role for small modular reactors. We at Fluor had been looking for some time at the various technologies that were emerging on the SMR side of the business. And we were very intrigued with what we saw at NuScale. We saw an opportunity to enter into the NuScale path forward as a strategic investor and strategic shareholder. We finalized those agreements and now are a majority shareholder of NuScale. We will be in a position to provide the engineering, procurement and construction services for those plants going forward. Certainly we are supporting NuScale getting back into the Nuclear Regulatory Commission (NRC) design certification process here in the near future.

NPI: As of now, NuScale will continue with research and development (R&D) and attempt to get the proper licenses from NRC, is that correct?

Tye: Well, you characterized it as R&D; I guess I would characterize it as finalizing the design of their plants such that they have their application ready to submit to the NRC. They have done a lot of work, even to the point of having a test facility that is up and running in Corvallis, Ore. And they have been working there for some time now.

NPI: It has been the big topic for 2011; does Fluor see any delay or any halting of nuclear power new build globally as a result of the accident at the Fukushima Daiichi plant in Japan?

Tye: Well of course we have seen effects from Fukushima. We have seen the NRC take a very measured approach toward studying the lessons learned from Fukushima and translating that into whatever changes that they see need to be made, going forward.

And let me talk a little bit about the global response. Generally, globally we saw a couple countries take a very negative view, with Germany being the most pronounced in announcing the curtailing of their nuclear program. We have seen some other countries that are not quite so drastic, but still putting moratoriums in place. But by and large, we saw countries globally that were already embarking on a nuclear new build program deciding to stay the course. Whether or not they move a little bit more slowly due to evaluating lessons learned I think is a situational deal. Generally there are countries, Poland, Finland, etc., that had already undertaken the front-end of programs.

As far as the U.S. is concerned, I have already alluded to the process that the NRC is going through and of course utilities are following that very closely. Again, the programs that were already underway, Vogtle and V.C. Summer, are on the same track that they were on before. NRC has announced, though, that there will be some slowdown to the licensing process because of the workload of Fukushima.

NPI: Is it safe to say that nuclear power is going to continue to be a key part of Fluor’s business portfolio moving forward?

Tye: Very much so, Brian. We are committed and have been in the business for 60 years plus. We see it as a very strategic part of Fluor’s plans.

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