BP Oil Spill Boosts Nuclear Power

Looking like they have been dipped in chocolate, pictures of oil-soaked pelicans fill the airwaves. Along with angry fishermen and teary-eyed beachgoers, the BP spill has become the ultimate public relations nightmare.

The problem is that, much like Freddy from Friday the 13th, the story of the cataclysm on the Deepwater Horizon is one that will never go away. From now until the end of time, the nightmare in the Gulf will never be forgotten.

Meanwhile, Plan F — otherwise known as "the containment cap" — has virtually assured that the streaming video of the live feed will continue to gush into August until the relief well is complete. At its best, the cap only seems to be able to stop a fraction of oily spill.

Everyday in between, however, the problem will grow and grow and grow — alongside the utter disgust of everyone in the Gulf and beyond.

As for BP p.l.c. (NYSE: BP), the calamity is as close to worse-case-scenario as it gets; investors have knocked off some $58 billion in market cap from the company in the blink of an eye.  

Our own Analyst Adam Sharp has even suggested that BP could go bust as the worst oil spill in U.S. history puts the company on the very brink and sets offshore drilling in the U.S. back to square one after years of steady progress.

The real irony of it all is that nuclear power will end up being one of the biggest winners in the great debate that will follow — even though the industry suffered through its own catastrophe only 31 years ago.

Not so far removed from the towers of Three Mile Island, the nuclear power industry is about to melt up versus down as the BP-led chorus against fossil fuels grows louder and louder...

BP oil spill boosts nuclear power

That’s right... Even after scaring the daylights out of everybody in the late 70s, nuclear power is on a comeback trail of its own.

Heck, even a scattering of “Greens” have gone nuclear. Greenpeace activist Patrick Moore, Gaia theorist James Lovelock, Greenpeace UK executive director Stephen Tindale, Friends of the Earth board member Bishop Hugh Montefiore and environmental icon Stewart Brand have all switched sides in the debate.

For all of its potential faults, nuclear power is the one energy source with the scale to meet our needs that can still be considered environmentally friendly — especially considering the movement to reduce greenhouse gases such as carbon dioxide.

Or as Duke Energy CEO Jim Rogers put it so plainly recently, "You can't be serious about carbon unless you're serious about nuclear."

That’s just one of the reasons why the Obama Administration recently tripled the budget request for nuclear power loan guarantees to $54 billion, and announced that the Energy Department had approved an $8.3 billion loan for the construction of two nuclear reactors in Georgia.

Bulldozers hired by Atlanta-based Southern Co. recently broke ground on the two reactors on the Atlanta site, marking the beginning of construction of the first new nuclear power plants in over thirty years. Once left for dead, the project is expected to take seven years to finish with a $15 billion price tag.

American efforts in Georgia to revamp nuclear are only a fraction of what's happening outside the U.S., as 52 new reactors are being built overseas, including 14 in China.

That also includes plants being built in Korea, where our own Nick Hodge is one to another big nuclear power winner.

What’s more, according to the International Energy Association (IEA), world electricity demand is likely to grow 2.7 percent a year from now until 2015 and then 2.4 percent annually until 2030 giving the nuclear bull market an even bigger boost.

One of the most interesting parts of today’s nuclear power game — to me, at least — is in what’s known as small modular nuclear reactors. As I wrote in an earlier story, they have the potential to be real game-changers.

Nuclear power plays

Factory-built and delivered on site, these modular units arrive ready to "plug and play" — dramatically changing the old model of time and cost.

That puts companies like Hyperion Power Generation and Toshiba Corp on the same playing field as nuclear giants General Electric and Areva SA in the battle for a market that has already delivered $135 billion in orders for traditional nuclear plants.

To that end, Hyperion Power intends to apply for a license “within a year” for plants that would power a small factory or towns located far off of the grid. Hyperion also has more than 150 purchase commitments from customers provided the technology is licensed.

At a price tag of $50 million for a 25-megawatt reactor, the Hyperion technology could power 20,000 homes with a reactor the size of a hot tub.

As for safety, the power-producing core of Hyperion’s reactor comes in multiple sealed chambers, which would contain any leak. The entire unit would also be installed in an underground vault to protect it from tampering and natural threats, the company explains.

One way to play this trend as is with a company called McDermott International Inc. (NYSE: MDR). Their Babcock and Wilcox division builds a small modular reactor the size of a railroad boxcar that can generate 135 to 140 megawatts of power. It’s called the mPhase and you can learn more about these new units by clicking here.

In the meantime, don’t expect the emotions in the Gulf to calm down anytime soon...

Forty-eight days into the crisis, the spill has already hit about 140 miles of shoreline in Louisiana, Alabama, and Mississippi — along with some 80 miles in Florida.

To make matters worse, according to Coast Guard Admiral Thad Allen, the process of getting oil out of marshlands and other habitats "will take years."

That’s bad news for everybody — including the pelicans.

Your bargain-hunting analyst,

Steve Christ
Editor, Wealth Daily

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