USEC To Demobilize Centrifuge
Wedneday, July 29, 2009
by Ryan Scott Ottney
USEC announced Tuesday the company is now taking steps to demobilize its American Enrichment Project (ACP), after the U.S. Department of Energy (DOE) asked the company to withdraw its application for a $2 billion loan guarantee to complete construction in Piketon.
"We are shocked and disappointed by DOE's decision," USEC Inc. CEO John K. Welch said Tuesday. "The American Centrifuge met the original intent of the loan guarantee program in that it would have used an innovative, but proven, technology, reduced greenhouse gas emissions and created thousands of immediate jobs across the United States."
Energy Secretary Steven Chu said Tuesday "USEC will have another chance to resubmit their application if they can overcome the technical and financial hurdles, but in the meantime we'll put more people to work in the environmental cleanup effort."
Chu made the statement as part of DOE's announcement that between 800 and 1,000 jobs are expected to be created as the environmental cleanup effort at Piketon is expanded.
The DOE loan denial has no impact on the proposed nuclear power plant project announced at Piketon earlier this summer, USEC spokesperson Elizabeth Stuckle said.
USEC applied for the loan guarantee 11 months ago under a DOE program launched by former President George W. Bush. Last month, the company said it expected the DOE to make a decision on a conditional commitment for a loan guarantee by early August.
"With DOE's decision, we are now forced to initiate steps to demobilize the project," Welch stated. "We deeply regret the impact this decision will have on all those affected, but as we have stated in the past, a DOE loan guarantee was the path forward to completing financing for the project. Instead of creating thousands of jobs across the country, we are faced with losing them. Instead of reducing our dependence on foreign sources of energy, we are now increasing it. President Obama promised to support the loan guarantee for the American Centrifuge Plant while he campaigned in Ohio. We are disappointed that campaign commitment has not been met."
First announced five years ago, the American Centrifuge Plant was supposed to open in 2011 and employ about 400 workers. As America's only commercial uranium enrichment facility using U.S.-owned and operated centrifuge technology, the American Centrifuge Plant would have played an important role in America's energy security and national security.
In a letter written to Ohio Gov. Ted Strickland in Sept. 2008, then-Sen. Brarack Obama pledged to support Piketon and help make loan guarantees available to it, and to similar advanced energy programs.
"Under my administration, the Piketon site workforce and the surrounding communities will play a central role in our nation's domestic energy supply through private sector and government initiatives. The Piketon site is ideal for either traditional or advanced energy programs, or both," Obama wrote to Strickland. "Under my administration, energy programs that promote safe and environmentally-sound technologies and are domestically produced, such as the enrichment facility in Ohio, will have my full support. I will work with the Department of Energy to help make loan guarantees available for this and other advanced energy programs that reduce carbon emissions and break the tie to high cost, foreign energy sources."
A White House spokesperson told the Daily Times Tuesday the president remains committed to promoting job growth in the Piketon area, and thus supports accelerating the environmental clean-up efforts at the decommissioned Portsmouth facility that will increase the total number of jobs at the Piketon site while improving the local environment.
"Since the project does not appear to be ready for commercialization, the President believes we should support this technology through continued research and development," the spokesperson said.
Rob Portman, who was an Ohio congressman at the time and instrumental in the launch of the ACP project, said he was "surprised and disappointed to learn today that the Obama administration has rejected the loan guarantee application for the American Centrifuge Plant, which is essential to saving 1,200 jobs and creating thousands more new jobs in hard-hit Southern Ohio."
Portman said Washington has missed an opportunity to create thousands of jobs and move the nation toward energy independence.
"President Obama is going back on a campaign promise, the Strickland-Fisher administration has once again been unable to deliver for Southern Ohio, and the tragic result is that thousands more Ohioans will be out of work," he said.
The White House asserts the loan guarantee regulations prohibit DOE from funding a project that is not ready to move to commercial operations, thus the ACP is not eligible for a loan guarantee at this time. The administration has made clear to USEC that the company may re-apply for a loan guarantee when the ACP technology is commercially viable, and has provided funding to support the research and development that is driving that process.
Amanda Wurst, spokesperson for Gov. Strickland said the governor does not feel this is a contradiction the statements Obama made to him in September.
"The governor is disappointed a loan guarantee will not be made to USEC's American Centrifuge Project at this time, but the governor is hopeful that the U.S. Department of Energy can work with USEC to use the $45 million that the department has made available to resolve outstanding questions about the project, and the governor is hopeful that can be done a shorter timeframe than 12-to-18 months, so USEC can re-apply for the loan guarantee so the project can move forward," Wurst said.
The Piketon location is also where the former Portsmouth Gaseous Diffusion Plant enriched uranium during the Cold War. The American Centrifuge project supports more than 5,700 jobs today and more than 2,300 more jobs would be created within a year once loan guarantee funding commences. The company said in June that without the guarantee, it wouldn't be able to obtain private loans.
Upon news that the DOE would not approve the loan guarantee, the Dow Jones reported a 48 percent drop in USEC Inc. stock prices by at midday Tuesday.
USEC has already spent $1.5 billion developing the plant in Piketon, for a total project cost of $3.5 billion. USEC spokeswoman Elizabeth Stuckle said Tuesday the company would try to find other financing, but that would be difficult in the current economic environment
RYAN SCOTT OTTNEY can be reached at (740) 353-3101, ext. 235, or e-mail [email protected].