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Problems - May 14

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Australia Coal-Mine Floods Raise Costs of Cars, Planes, Washers

Jesse Riseborough, Bloomberg
At about 1 a.m. on Jan. 19, some of the heaviest rains in a century caused the Nogoa River in Queensland to burst its banks, sending 32 billion gallons of water into one of the largest coal mines in Australia.

``It was like watching Niagara Falls,'' said Peter Westerhuis, 46, general manager of operations for the mine's owner, Ensham Resources Pty. ``It filled the whole pit up in five hours.''

Almost four months later, two of Ensham's six coal mines, along with others owned by companies including Melbourne-based BHP Billiton Ltd., remain submerged. The greatest damage was in the Bowen Basin, the source of 40 percent of the world's steelmaking coal. As production fell, the price of coking coal tripled to a record $300 a metric ton last month, raising costs for the steel that goes into automobiles, airplanes and washers.
(12 May 2008)
Contributor Scott Chisholm Lamont writes:
More evidence of how tightly everything is connected in a global economy. Any energy supply disruption can have far-reaching consequences.


Chimneys sweep BP clean coal plan away

Nigel Wilson, The Australian
BP confirmed yesterday the $2 billion "hydrogen energy" coal-to-gas plant at Kwinana, south of Perth, would not proceed.

The plant was to have been constructed by Hydrogen Energy, a joint venture between BP and Rio Tinto, and was designed to burn coal, converting it into water, hydrogen and carbon dioxide.

The hydrogen was intended to be used as fuel for a 500MW power plant supplying electricity for 500,000 homes, while the CO2 was slated to be buried in geological strata between Fremantle and Rottnest Island, Perth's holiday playground.

The proposed onshore site was close to BP Kwinana oil refinery and Rio's HISmelt direct iron ore smelting plant.

But after more than two years of investigations and several million dollars of research, BP has now admitted that the geological formations off Perth contain gas "chimneys" that mean it is next to impossible to establish a seal in the strata that could contain the CO2.
(12 May 2008)


New Wave of Nuclear Plants Faces High Costs

Rebecca Smith, Wall Street Journal
A new generation of nuclear power plants is on the drawing boards in the U.S., but the projected cost is causing some sticker shock: $5 billion to $12 billion a plant, double to quadruple earlier rough estimates.

NRG Energy Inc. hopes to add two units to the South Texas Project nuclear site.

Nuclear power is regaining favor as an alternative to other sources of power generation, such as coal-fired plants, which have fallen out of favor because they are major polluters. But the high cost could lead to sharply higher electricity bills for consumers and inevitably reignite debate about the nuclear industry's suitability to meet growing energy needs.

Nuclear plants haven't been built in meaningful numbers in the U.S. since the 1980s. Part of the cost escalation is bad luck. Plants are being proposed in a period of skyrocketing costs for commodities such as cement, steel and copper; amid a growing shortage of skilled labor; and against the backdrop of a shrunken supplier network for the industry.

The price escalation is sobering because the industry and regulators have worked hard to make development more efficient, in hopes of eliminating problems that in the past produced harrowing cost overruns.
(13 May 2008)
Contributor DLC writes:

Figures quoted for UK nuclear schemes earlier this year were, disgracefully, a lot less than half the $5Bn to $12Bn per plant the WSJ reports - so much for impartial public servants in the UK Govt.

Given that Brazil has just set the global market for steel (via its massive iron-ore sales to China) to cause another doubling of steel prices,
and given the rapidly escalating coal-price impact on global concrete costs,
and given the growing global shortage of copper,
along with the ever less predictable cost of commercial credit,
Moody's is plainly right to turn a jaundiced eye onto the basic probity of nuclear schemes.

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