MARITIME PROGRAM, 1968, AND NS "SAVANNAH"

THURSDAY, MAY 25, 1967

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON MERCHANT MARINE

OF THE COMMITTEE ON MERCHANT MARINE AND FISHERIES,

Washington, D.C. The subcommittee met at 10:15 a.m., pursuant to recess, in room 1334, Longworth House Office Building, Hon. Edward A. Garmatz (chairman of the committee) presiding.

The CHAIRMAN. The meeting will please come to order.

This is a continuation of the series of hearings we have been holding concerning the proposed layup of the NS Savannah.

Since the first day of hearings, on March 7, we have heard a number of witnesses from the Department of Commerce/Maritime Administration, ship operators, naval architects, reactor manufacturers, and the Atomic Energy Commission.

When that hearing was recessed, it appeared that there might be a number of other questions to be asked of Mr. Shaw and he very kindly consented to return. He is here this morning and available for further questioning.

In addition, Mr. Hettena, vice president of the Maritime Overseas Corp., could not be heard on the day he was previously scheduled. Mr. Hettena is with us this morning, and we will be pleased to receive his statement at the conclusion of Mr. Shaw's testimony.

You may proceed, Mr. Shaw, if you have any statement. We do have some questions here. I am wondering if you may want to add something before we ask some of these questions.

STATEMENT OF MILTON SHAW, DIRECTOR, DIVISION OF REACTOR DEVELOPMENT AND TECHNOLOGY, ATOMIC ENERGY COMMISSION; ACCOMPANIED BY DR. GEORGE M. KAVANAGH, ASSISTANT GENERAL MANAGER FOR REACTORS; AND IRVING HOFFMAN, AEC PROJECT MANAGER FOR THE MARITIME PROGRAM-Resumed Mr. SHAW. No, sir; I have nothing to add. I am prepared to answer your questions, sir.

The CHAIRMAN. On page 244, line 25, you stated 25 percent as a possible reduction in cost through a R. & D. program. Would this be done by the AEC or the reactor manufacturers, and briefly how would this be accomplished?

Mr. SHAW. Mr. Chairman, the point I was trying to make is that there are really two ways of effecting improvements in cost. One is by what is commonly referred to as a "product improvement ap

proach" which, in effect, says that as manufacturers gain experience through either mass production or improved engineering approaches in turning out plants, they can effect product improvements which can result in cost reductions. I have some information on this as it relates to civilian reactor plants. I can show you how these trends

occur.

In addition, I pointed out that if one is going after significant gains, for example, a 25-percent reduction in cost, we believe a more basic R. & D. program would be required to be done by the Atomic Energy Commission.

We feel that such a program would be, in a sense, a longer term approach. It would involve some risk, because you are really trying to make significant gains in engineering technologies; therefore it would require, in our estimate a program of about $100 million if one is to attempt to achieve such gains as associated with a significant reduction in cost.

I think I can illustrate this with one of the slides I have. The chart which appears before you (chart 6) is a plot of capital cost versus megawatt electrical capacity installed in light water civilian power plants.

The vertical line shows dollars per kilowatt electric installed. When I speak of kilowatts electric, for practical purposes here it can be interpreted to imply shaft horsepower.

On the bottom scale we have the size of the plants of megawatt's electrical. What can be noted here is the reduction in cost from the

early days of small plants. The early plant capital costs ran as high as $600 down to $500 or $400 per kilowatt installed, and as the plant sizes grew larger, the cost reductions became very significant, even approacing $100 per kilowatt.

These are cost reductions that are associated with plant size, and we think these are most significant because this is where the tremendous economic gains have appeared. The difference in the dots on the chart is really related to product improvement, that is, number of reactors sold.

For example, instead of putting in seven circuits in the large system, the reactor manufacturers are only putting in two or three. This reduces capital costs even though bigger components are used. Overlaid on this chart are some of the more recent plants that have been sold since January of 1966 (chart 7). Again you notice the cost

spread there is significant. That is, some one who is buying a reactor plant today can estimate his cost as low as maybe $100 per kilowatt, but since there is a fiercely competitive situation now and the reactor plant manufacturers are pretty well committed, one may have to settle for a pricing situation that may be as high as 50 percent more. So there is such a variation in terms of the sale of proven reactor plant types right now.

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Of course, important to this committee is the fact that we are talking about plants of less than 100 megawatts electrical shown in the area to the far left side of the chart. It is very obvious that the spread and uncertainty in this power region is less predictable than in that region

which is associated with the plant sizes that are currently being offered by the commercial reactor vendors.

The CHAIRMAN. On page 247, line 4, what studies has the AEC completed with respect to the merchant marine application and are these available to the committee?

Mr. SHAW. The number of studies we have made, dating back I think probably 3 years, were related to the use of various technologies for maritime application; that is, trying to answer the question as to which of the various coolant systems-gas or water or organics would offer the most promise for maritime application.

These studies were both technical and economic assessments. I think the studies themselves were published, and these can be made available to the committee, but I think it should be pointed out that they were done in the 1964 period and are probably outdated. Our most recent study about the future of the AEC's plans on the maritime program was forwarded to the Joint Committee in February, as I recall, of 1966. The summary report of this study can be made available to the committee.

(The summary report follows:)

CIVILIAN MARITIME NUCLEAR PROPULSION PROGRAM

THE OBJECTIVE

1. The long range objective of the Civilian Maritime Nuclear Propulsion Program of the AEC is to develop nuclear propulsion systems that, together with improved cargo handling and other non-nuclear innovations, can contribute to the productivity and commercial competitiveness of the U.S. Merchant Marine. 2. AEC Program Plan. The program plan recognizes that the AEC and the Department of Commerce must work closely together and in cooperation with interested segments of industry if a commercially competitive nuclear merchant marine is to be achieved. The program contemplates leadership by the AEC in the research and development programs for the reactor plants and by the Department of Commerce in the non-nuclear areas such as those effecting improvements in ship design, cargo handling and operating procedures. Cooperative Government-industry development of the most promising nuclear propulsion plant concepts, at appropriate stages, also is visualized.

3. The technical feasibility of the use of pressurized water reactors for ship propulsion has been successfully demonstrated. The main questions to be resolved relate to whether improved designs of pressurized water reactors specifically for the civilian maritime application can be achieved within the required performance, cost, reliability and safety envelopes; and whether, if attained, these characteristics, plus potential improvements, would be sufficient to assure reasonable economics for merchant marine application.

4. Research, the development and testing of components and testing of selected reactor systems may proceed in parallel with shipboard application. The combination of results obtained from these activities could facilitate an accelerated rate of progress and assist significantly in promoting the use of nuclear power which is one of the basic objectives of the Atomic Energy Commission.

5. Encouragement of cooperative arrangements between Government and industry as an important part of the total development and demonstration program is based upon the expectation that such arrangements would reduce Government expenditures and provide maximum incentives for effectiveness in cost reduction in a program whose basic objective is strongly economics oriented. As has proven effective in other AEC programs, the cooperative efforts should be carried out in a manner which recognizes that (a) maximum involvement of industry would be desirable, (b) the competitive system should be strengthened, and (c) results should be available for the common good.

6. The AEC program proposes a near term and long term effort. The initial effort will be directed to studies and formulation of the reactor plant criteria,

including the preliminary design and the detailed specifications and standards, which would be required for practical civilian maritime application.

7. When agreement has been reached on the Department of Commerce objectives and requirements and if it is determined that the benefits from the program are worth the costs involved, a more extensive research and development program would be in order. A land-based test facility would probably be a vital element to achieve the desired objectives. Reasons for this include the following: a. Since reliability of shipboard reactors, as well as economic performance, is essential, extensive testing of individual components and of the assembled advanced reactor system would be necessary.

b. Experience with Savannah illustrated limitations in using a shipboard reactor for development and testing.

c. A test facility could permit utilization of extensive test and operational instrumentation and procedures, particularly that required to measure reliability, detailed plant and in-core performances as they may affect design margins, transient performance and safety, cost and abnormal plant operating conditions and casualty control.

d. The facility could serve as an engineering test bed on which competitive and back-up component designs and arrangements from a number of reactor plant contractors and component vendors could be evaluated and improved, and in general could serve as a multi-purpose test facility in which follow-on R&D can be performed.

e. Time and money could be saved in reaching long range goals by use of land-based facilities for testing components and systems. For example, land-based facilities can assist in the validation of design, engineering and construction characteristics including capital, operating and maintenance costs, and permit essential and/or desirable design changes and improvements to be accomplished and proven at minimum cost and delay to the plant design and to any related ship program.

f. Training opportunities could be made available to companies wishing to use them.

8. Assuming that analysis of economic and other advantages relative to costs indicated the desirability of proceeding with substantial development programs for nuclear powered merchant ship reactors, a land-based test facilitity need not be a prerequisite to ship construction. Near term interest has been expressed recently in highly reliable, high speed, nuclear powered ships handling large volums of special cargo and serving specific very long distance trade routes. Some ship operators have expressed interest in investing capital in anticipation of this potential market and possible increases in high value cargo volume which could result from such service. Their willingness to undertake these investments is, of course, contingent upon a Government contribution roughly equal to the excess of construction and operating costs over those of conventionally powered ships. The following advantages could result from a nuclear powered ship construction program:

a. Nuclear industry would gain additional experience.

b. Ship operators would obtain familiarity with nuclear power technology which cannot be duplicated in a land-based test facility.

c. Participation and interest in the maritime nuclear power program would be sustained which would help reduce costs and effect improvements. These could be particularly useful to the AEC's longer range research and development program.

d. Such efforts could contribute to resolution to resolution of nuclear ship operating questions such as those relating to safety, indemnification and port clearance.

9. Thus, the civilian maritime reactor program should be flexible enough (1) to pursue advanced reactor programs to achieve major improvements in plant performance and economics, and (2) to support industry-based nuclear maritime efforts and engineering development in connection with direct shipboard application.

10. Reactor Plant Technology Status. Nuclear power systems using two basically different reactor concepts have been considered for use as propulsion plants in the merchant marine in recent years. One of these is the pressurized water concept; the other uses the gas cyclé. Recent investigations and comparisons of these efforts have concluded that, clearly, the much greater experience with pressurized water reactors make them a logical choice for near term exploitation.

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