Mr. RUNION. For the purpose that we planned, yes. I would like to point out, however, at one point the Commission was developing the personnel requirements that they thought should be assigned to a conceptual plant which was the basis of making their changes and charges. This conceptual plant also was conceived as a routine 300day-a-year production facility. In that plant they assigned some 90 people as opposed to our 129 people. I daresay if that plant had contemplated a large R. & D. aspect they would have allowed for more people. Also if you had to imagine a permanent staff covering startup I think you would add more people. We think we can bring startup people from the other plants if needed. We think we will have to add additional people if we go into research and development. For the normal routine production our judgment is that this is an adequate staff. (Additional material submitted for the record by Mr. Runion follows:) NFS COMMENT ON PLANT MANPOWER ESTIMATES During the course of the hearing on May 14, 1963, the question was raised that a panel of consultants of the AEC, in December 1962, had indicated a need for a larger complement of manpower in the NFS plant. The panel suggested a total of 267 men for the plant compared to an NFS projection of 129 men. The estimation of manpower is no more than a judgment of the persons making the estimate. NFS believes that the 129 men will be adequate for the intended production operations at the NFS plant. NFS has additional manpower available in its management and in its Erwin, Tenn., and Port Hope, Ontario, plants that could be called upon for short periods for assistance in startup and emergency situations should such be necessary. It should be emphasized, however, that the mission of this plant is the chemical processing of spent nuclear fuel on a production basis. To the extent that the NFS plant is engaged in research and development work in this area, additional manpower would be required. The AEC "conceptual plant" which has set the standard of chemical processing pricing for the nuclear industry allowed for only 90 people in its cost development. AVAILABILITY OF LOAD FOR NFS PLANT Representative PRICE. Nuclear Fuel Services estimates that a load of 1,500 units will be available while AEC estimates 1,200. Where will the extra 300 units come from? Mr. RUNION. I think again you are getting into the realm of two different technical groups making a judgment of what is going to happen 3 to 5 years away. I think we have some explanations that can account for part of the difference. I believe also that we agree largely with the AEC insofar as they have gone with their estimates. But, for example, I believe they stopped their load period in July 19 Representative PRICE. 1970. They started in 1960. They stop in 1970. Mr. RUNION. I think we have a difference of 6 months in the interval for which they are accumulating their load figures. At least that was true at one point. In other words, we are estimating our load from the 66 period and I think they estimated theirs from the 65 period. Excuse me, they are talking fiscal years and I am talking calendar years. There is a 6 months' difference. Representative PRICE. They probably are talking in terms of fiscal years. It doesn't state here. For the purposes of the record would you make a formal comment on both these two subjects just mentioned, the staffing and the load factor? That is, the figures on the staffing of 129 employees as against the technical consultant's judgment that you would require twice that number of employees, and the estimates of 1,500 units as against 1,200 units of load. Mr. RUNION. First I will take the load figure. I believe there is a 6-month interval in which the AEC is using and we are using. I believe this would as I say add some portions of load to the AEC figure if they were on the same basis we were. Representative PRICE. There is obviously a difference of judgment. Just for the purposes of the record you look it up and analyze your position on it and furnish it for the record. Mr. RUNION. Yes, sir. (The statement referred to follows:) NFS COMMENT ON CHEMICAL PROCESSING LOAD AVAILABLE TO THE NFS PLANT DURING ITS FIRST 5 YEARS OF COMMERCIAL OPERATION The AEC has used the figure of 1,200 revenue units available to the NFS plant in computing potential earnings and cash flow of NFS during the first 5 years of commercial operation. This load will be made up of 625 revenue units of AEC baseload and the remainder from privately owned reactors. NFS has stated a need for 300 revenue units of chemical processing annually in order to make a modest return on its investment, which would total 1,500 revenue units for the first 5 years of commercial operation. NFS believes that this load will be available to it. As we understand the AEC's load analysis, their projections substantially coincide with ours. However, there are five significant considerations which could account for the differences in the magnitude of our respective projections. (1) Delay in plant startup.-The AEC has assumed full operation of the NFS plant by July 1, 1965. NFS expects to be onstream in late 1965, and in full operation in early 1966. The 6-month period from July 1, 1965, to January 1, 1966, which is required in order to achieve full operation, and which has been provided for with "preoperational funds," results in the 5-year period under consideration ending on January 1, 1971, as opposed to July 1, 1970, if the AEC assumption were to be valid. This additional 6 months will enable NFS to accumulate the corresponding amount of fuel generated in that period, resulting in an increased load available to NFS during the first 5 years of commercial operation. (2) Delays in reactors in reaching full power.-In projecting the potential load the AEC has assumed that reactors which are to come onstream in subsequent years will experience delays in startup and will require several months to attain full power. It is believed that for standard UO2 reactors sufficient experience has been gained that these delays will be significantly shorter than for the first reactor that went into operation. (3) PRDC.-The AEC load projections do not include the processing of the Enrico Fermi fuel. We have negotiated a chemical processing contract with PRDC for this fuel, and such could provide significant additional material for processing during the first 5 years of commercial operation. Even if the Fermi reactor operates at relatively low power levels and load factors, there are still two cores which have already been fabricated and which we can be reasonably assured will become available to NFS for reprocessing. (4) Foreign load.-The AEC has not included any foreign load in their load projections. Since the reprocessing facilities available in Europe are limited in capacity for limited fuel types, and in many respects are experimental in nature, it is expected that the economics will favor the reprocessing of some of these fuels in the NFS plant until such time as production processing facilities are available in Europe, assuming reasonable resolution of problems. This should provide an additional load to the NFS plant during the first 5 years of commercial operations. (5) Batching.-The AEC has assumed in their load projections that each reactor operator will hold his fuel until he generates a processing load sufficiently large to obtain the most economical reprocessing costs. This could mean that fuel generated in the first 5 years would not be available until some point in the second 5-year period. NFS has provided in the contracts with the various utility companies for the batching of fuels between utility companies which obviates the need for storing and thus increases the load available to the NFS plant during the first 5 years of commercial operation. It is the belief of NFS that the AEC load projections plus the 5 considerations outlined above provide a reasonable basis for projecting that about 1,500 revenue units of chemical processing will be available to the NFS plant during the first 5 years of its commercial operation. GOVERNMENT SUPPORT AFTER EXPIRATION OF PROPOSED CONTRACT Representative PRICE. How long do you think you will need Government help in the form of reprocessing load from the Government? Will the initial 5-year contract be sufficient? Mr. RUNION. I will say this. That the subject of load is one of the most difficult aspects of this entire project to evaluate and it is one that we have looked at, I believe, in the greatest depth. We have done our analysis ourselves. We have had these analyses reviewed by a man like Manson Benedict as an independent expert. We had a more recent review of our load figures and load projections carried out by Pickert, Warren & Lowe, as consultants to NFS. We have reviewed the AEC's load projections and we find a widespread difference in these various opinions. If we take the most optimistic growth of the business we can see another plant built within 5 years with enough load to occupy both of us. On the other hand if we take the most conservative basis we still may be able to keep the doors open but it would be a tight picture for us. RESEARCH AND DEVELOPMENT SUPPORT TO BE PROVIDED BY AEC Representative PRICE. You made some proposals on research_and development assistance which were not acted upon by the Commission. Do you believe you will need research and development contracts from the Government before you complete this program or if you are called upon to expand the plant in any way, would you need research and development assistance? Mr. RUNION. There are no elements of R. & D. in the proposals, that is the main proposal we have made to the Commission, nor do the proposals we made carry any specific R. & D. as a contingency. We certainly hope that the Commission as they have indicated will continue to carry on the program they have had up to date. As I have indicated we hope they will expand it because the results that they generally are going to obtain will be helpful to us. We have also reviewed this program with them, and as we have seen the specific problems that have grown out of our efforts to get a plant started, we have made them aware of them and have suggested this as a course of direction they might include in their basic and general objectives. We certainly hope the door is not shut to us for research and development contracts although we have not given it as a basic requirement of going on with the plant. Such programs will give us increased assurance wherever the Commission carries out these programs each time we look at a new fuel if the Commission has gone through such programs. SCHEDULE OF THE PROJECT Representative PRICE. What time deadlines are there on proceeding with the project? Mr. RUNION. We have a very critical deadline. Representative PRICE. I think you mentioned it in your statement, but I would like to have it referred to. Mr. RUNION. We have a critical deadline on initiating ground breaking at the site. Bechtel is going with all steps necessary to begin actual ground breaking within a week's time. There are plans for labor conferences. There are purchases of concrete and reinforcing steel already made and moving toward the site. We propose to execute the contract with Bechtel very shortly in the absence of any developments that indicate we should not. Mr. CONWAY. You have already done some site clearance? Mr. RUNION. There is a small lot contractor in the field now who is fencing the site, who is clearing railroad right-of-way, and making some other minor construction work. DELAYS IN STARTUP OF PLANT Representative PRICE. Would you care to comment on the consequences of a year's delay or a 2-year delay or even a few months' delay on the time when the plant would be in operation? Mr. MCGUIRK. I would like to comment to that question. We have Dr. DeSimo and Dr. Davis of Bechtel and I think they could give you an indication that it would be something like $80,000 to $100,000 a month in terms of the normal escalation of costs and inflation factor that would result from any delay. In other words, 1 year would cost us roughly a million dollars. I think you might ask Dr. Davis to comment on them. Representative PRICE. We could have a comment from either one or both. Dr. DAVIS. That is approximately correct. Representative PRICE. What was your comment again? Dr. DAVIS. The cost which would be incurred in simply delaying the project at this point and delaying the start of construction through excavation and overhead costs and so forth would be certainly in the range of roughly a million a year that was quoted, at $80,000 to $100,000 a month. In addition to that, it is quite critical as Dr. Runion has pointed out to start construction immediately if you are to get indoors by next winter which is quite severe in that area. SCHEDULE OF THE PROJECT Representative PRICE. Thank you. How confident are you that you will be able to complete this plant on schedule? Mr. MCGUIRK. I think that is properly addressed to Dr. Davis. Representative PRICE. We have another question for you, Dr. Davis. How confident are you that you will be able to complete the plant on schedule? Dr. DAVIS. We are very confident we can. The contract is based to start May 1, 1963, and completing construction by April 1, 1965. Representative PRICE. What is the starting date? Dr. DAVIS. May 1, 1963. Representative PRICE. I don't think you will make that one. Unless you can call the ground preparation a start. You probably meant the actual heavy construction start; is that right? Dr. DAVIS. Yes, sir. We are ready to go just as soon as we possibly can. Representative PRICE. You put that schedule in your statement. Mr. RUNION. We could give you a specific construction schedule. Representative PRICE. I thought you referred to it in your state ment. Mr. RUNION. No, we will put that in the record. Representative PRICE. We would like to have a schedule of construction for the record. (The schedule referred to follows:) ESTIMATED SCHEDULE FOR NFS PLANT May 20, 1963: Start plant construction. November 15, 1963: Plant substructure construction complete. January 1, 1965: Complete construction of fuel receiving and storage facilities and commence receiving and storage of fuel. July 1, 1965: Complete construction of all plant facilities and initiate startup operations. January 1, 1966: Complete shakedown operations and achieve design operation. BECHTEL CORP., Subject: Bechtel Job No. 4413; Nuclear Fuel Services, Inc.; spent fuel processing plant; Progress Report No. 5. BL-202. Mr. C. W. TAYLOR, Nuclear Fuel Services, Inc. Washington, D.C. DEAR MR. TAYLOR: We are forwarding 12 copies of our progress report covering design, procurement, and construction of your spent fuel processing plant as of May 1, 1963. Engineering work is proceeding in all areas with emphasis on finalization of piping and instrument diagrams, plant layout, and structural design of the fuel pool and waste tank areas. Quotations have been requested on 28 vessels, 2 tanks, 40 exchangers, 8 compressors, 2 boilers, 34 pumps, and 43 miscellaneous items. The outdoor switch station and power transformer were released for purchase. Seventy-two drawings have been issued for quotations and/or approval and nine for construction. Engineering is 22 percent complete overall. Very truly yours, JOHN F. O'CONNELL, Vice President, Refinery and Chemical Division. |