By Rebecca Smith
Of THE WALL STREET JOURNAL
In a vote of confidence in the future of nuclear power, Fluor
Corp. (FLR) is coming to the rescue of NuScale Energy Inc., a
cash-strapped technology company that hopes to commercialize a
small-scale nuclear reactor.
Fluor, the largest publicly traded engineering-and-construction
firm in the U.S., is expected to announce Thursday that it has
purchased a majority stake in NuScale, which is based in Corvallis,
Ore., for $30 million.
Fluor plans to help NuScale get regulatory approval for its
reactor, which at 45 megawatts is far smaller than conventional
reactors that can produce more than 1,000 megawatts of power. The
Department of Energy is supporting development of small reactors as
an alternative to large ones that are vastly more expensive.
Smaller reactors, which can be built in factories, are also
meant to be safer than such bigger reactors as the multiunit
Fukushima Daiichi nuclear plant in Japan, which suffered a
catastrophic accident earlier this year after a devastating
earthquake and tsunami.
The March accident in Japan has led some countries to reconsider
their use of nuclear power.
Fluor, which ended the second quarter with $2.2 billion of cash
and an order backlog valued at $40 billion, said it is making the
investment in NuScale in order to participate in a potentially
important trend in the nuclear industry favoring less costly
reactors.
"We're planning for the future," said John Hopkins, group
executive for corporate development at Fluor, which is based in
Irving, Texas.
He added that Fluor, which built about 20 large reactors in the
1970s and 1980s, wants to do more nuclear work and would probably
help with engineering and construction of the NuScale units.
Fluor is buying the stake formerly held by a Connecticut hedge
fund whose assets were frozen earlier this year after securities
regulators accused the fund's manager of misappropriating money
from investors. A lawyer for the fund manager, Francisco
Illarramendi, said his client had pleaded guilty to federal fraud
charges but hasn't been sentenced.
A receiver appointed by a federal judge in New Haven, Conn., has
signed off on Fluor's purchase of the stake, which will also
provide NuScale with working capital.
"This is a game-changing day for us," said Paul Lorenzini, chief
executive of NuScale.
One of Fluor's primary competitors, Bechtel Corp., is partnering
with another nuclear-technology company, McDermott International
Inc.'s Babcock & Wilcox Co., which also has a design for a
small, modular reactor that it hopes to get approved for commercial
sale in the U.S.
Oregon State University developed NuScale's technology and
licensed it to the company in exchange for a small equity
stake.
Harold McFarlane, interim associate director for nuclear
technology at the Idaho National Lab, said NuScale will probably be
able to get its design approved by federal regulators. "I think
they're in pretty good shape, technically," he said.
Some utilities are looking at small reactors as a possible
replacement for coal-fired plants that are being retired to meet
new pollution rules, he added.
NuScale plans to seek design certification from the Nuclear
Regulatory Commission in 2013, and the company hopes to have units
operating by 2020.