Friday, May 11, 2012

Nuclear Fix from Flibe

Instead of providing the proverbial final nail for nuclear energy’s coffin, the disaster at Japan’s Fukushima power plant appears to have galvanized many nuclear professionals.  Japan rolled the dice and lost when locating the plant so close to the sea and within the tsunami threat zone.  The answer, some contend, is better nuclear reactor designs that offer higher margins of safety even for land-constrained island-nations like Japan.

Enter the nuclear team at Flibe, Inc., an Alabama-based developer of small modular nuclear reactors.  Flibe has been around for a while, doggedly perfecting a reactor design using molten salts such liquid-floride thorium rather than a solid fuel based on uranium.  Indeed, company’s unusual name draws from the table of elements  - LiF for lithium fluoride and BeF2 for beryllium fluoride.

Molten FliBe

The idea of using thorium as a nuclear fuel is not new.  In the early years of nuclear development the focus on wartime objectives rather than power generation took scientists and engineers down the uranium path, because their work showed thorium reactions held little promise for weapons.  Our first generation nuclear power reactor designs were largely an effort to capitalize on the work already completed while building the nuclear bomb.  Those somewhat myopic days are over and developers are returning to thorium alternative to uranium. 

One of the first attractions of thorium as a fuel is economy.  It is a more common element than uranium and available worldwide.  Furthermore, thorium-fueled reactors can be built out of more common materials and would require far less nuclear fuel to generate a given amount of electrical power. 

Taking it one step further, a design using liquid molten salts rather than solid fuel also means the nuclear reaction takes place under higher temperatures but lower pressures.  Operating at lower pressures reduces the mechanical stress endured by the system and simplifies reactor design.  Some even think molten salt reactors could ultimately cost less to build than coal power plants.  This also means molten salt reactors offer much improved safety profile especially for operators with limited available land.  If you are not sold just yet, consider also the significant reduction in nuclear waste from molten salt reactions.

Now Flibe management is ready to build a prototype of its Liquid-Flouride Thorium Reactor (LFTR)  -  and make a big entrance into the nuclear energy market.  The company has benefitted from federal government support for its development work in large part because the military needs a viable power source off the grid and nuclear offers the discreet, closed loop profile for needed by military installations.  Proprietary energy sources will ensure domestic military installations have power in the event a natural disaster or terrorist attack disrupts commercial utility services.  

Management hopes to locate its first operational LFTR at the military base near Huntsville, Alabama and get operating help from the Army Corps of Engineers.  Proving the value of this reactor design for military purposes and gaining military approvals would ensure a good demand source even before Flibe heads to the U.S. Nuclear Energy Agency for certification in the commercial market.

Flibe has yet another trick up its corporate sleeve.  Power generation gets most of the attention in the nuclear conversation.  However, there is also a small, but critical market for medical therapeutic radioisotopes such as molybdenum 99.  Moly 99 as it is called decays into Technetium-99m (Tc-99m), which used in some 50 million medical diagnostic imaging procedures each year.  With a half-life of only six hours, Tc-99m is too short-lived to be transported to hospitals so is produced near where it is needed in nuclear generators containing Moly 99.

That corner of the North American nuclear industry is in turmoil because the only producer of Moly 99 is going out of production in 2016.  Canada’s NRU plant has been the single supplier of Moly 99 for some time and Canada’s earlier attempts to develop new reactors to take its place have failed.  Exacerbating the problem is that very short shelf life, which makes it difficult for the four European suppliers to fill North American orders when Canada leaves the market.  Thus, it is a small, but critical problem that has hospitals and medical researchers worried.

One nuclear power generator in the U.S. has already signaled its intention to address the Moly 99 market.  The Clinton Nuclear Power Plant in Illinois could be set to make the vital isotope according to a study completed by the plant’s operator Exelon and General Electric (GE:  NYSE).  GE designed the reactors at Clinton and is trying to bolt in a new design to allow the insertion and removal of activated molybdenum.  Even if successful the design jigger is expected to result in supply sufficient to serve only 50% of demand for Moly 99 in North America.

Management at Flibe thinks their molten salts reactor is a better source of Moly 99 anyway.  Unlike operators of solid fuel designs, reliance on the molten salts liquid fuel makes it possible to extract by-products from the reaction process without shutting down the reactor or fussing over special design fixes.  So Flibe expects to offer Moly 99 to the commercial market even before it contributes even a kilowatt of electricity to a commercial power grid.  Flibe’s corporate counsel Kirk Dorius believes the company can be ready by 2016, to serve the Moly 99 market by with the company’s first reactor.

Flibe’s is counting on this latter nuance in its business model to turn the heads of prospective investors and strategic partners.  Thus far the private company has relied on financial support from angel investors to support research and development costs not otherwise covered under contracts with the federal government.  The next stage is likely to require more serious capital investment, so do not be surprised to see a private offering by Flibe.  I would also expect the near-term revenue streams from Moly 99 sales to create a more interesting return on investment profile than offered by most nuclear projects.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

1 comment:

Tom Konrad said...

How can you add Flibe to your index if it's not publicly listed?