2:04 AM (11 hours ago)
North Dakota's NEW
If you thought mountains of wealth were made in the
Bakken, then check this out...
A strange side effect of this oil boom is set to pay out even
MORE regardless of how oil prices move...
Bakken, then check this out...
A strange side effect of this oil boom is set to pay out even
MORE regardless of how oil prices move...
Take a look at this nighttime satellite image of the Bakken oilfield, and you'll notice something peculiar...
The Bakken oilfield emits more light at night than the entire 147-year-old city of Minneapolis!
In fact, there are just 33,000 people in the Bakken region compared to over 400,000 in Minneapolis.
There aren't any skyscrapers or 24-hour business complexes in the Bakken, either.
Instead, all that light coming from one of America's richest oilfields is natural gas burned as waste — something known as flare gas.
Drillers are flaring so much natural gas that they are giving off more light than entire U.S. cities.
In fact, just from the Bakken field alone, drillers are burning off enough natural gas to power all of the homes in Chicago and Washington, D.C. combined.
According to the L.A. Times, drillers in North Dakota are flaring $1 BILLION worth of gas a year.
That's about a third of all the gas produced in the Bakken... every single year!
Why is this happening?
Because the hunt for oil is producing a massive surplus of natural gas.
You see, when they drill for oil, natural gas bubbles up to the surface as a byproduct.
The gas that rises with the crude is a phenomenon virtually all oil wells experience.
And drillers are finding so much of it that they can't store and transport it all. There is a severe lack of pipeline infrastructure and processing plants.
"Pipeline operators aren't building infrastructure fast enough to keep up with the growing output of South Texas's Eagle Ford and North Dakota's Bakken shale plays," reports the San Antonio Business Journal.
And unlike oil, which is often transported by truck or rail, natural gas is ONLY transported by pipeline.
So trains are useless in helping to solve the problem.
The bottom line is that it's far more profitable for drillers to sell the oil they find than it is to sell the gas.
Right now, natural gas in the U.S. is incredibly cheap, so companies have little incentive to build expensive pipelines. The cost to build one can run in the billions of dollars, if not tens of billions.
So they're just transporting the oil and flaring off the cheap gas — burning it right into the atmosphere!
It's not just happening in North Dakota, either. Flaring is happening across the U.S. in places like the Marcellus shale, the Haynesville shale, and the Permian Basin.
According to the EIA, over a third of the natural gas produced in both the Eagle Ford AND the Bakken can't be brought to market because of inadequate infrastructure.
Not only is flaring a waste of valuable resources, but it's also harmful to the people and the environment around it.
"Rotten noise, rotten smell, and terrible waste," says 57-year-old Frank Leppell, whose house sits 200 yards from a well that shoots a torch of burning gas skyward 24 hours a day with a force as loud as a jet engine.
And with every new well that gets drilled, this flaring problem grows even bigger.
It's becoming such a problem that North Dakota recently introduced new legislation aimed at reducing it.
There's even been a bill introduced at the federal level to reduce flaring!
So instead of burning it, drillers will NEED to find something to do with all of that gas.
Get this: The market for turning this wasted gas into useful energy is estimated to be worth a stunning $150 BILLION!
And the timing for investors simply couldn't be better...
That's because a group has secretly been working behind the scenes to harness North Dakota's huge flaring problem...
Its unique technology can turn the billions of dollars in wasted gas into obscene profits.
For those who act fast enough, this rapidly developing energy story could have an incredibly profound impact on your retirement...
Get in now, and you could be set to reap massive, growing profits for the next 10 years and beyond.
So let me give you the full details right now...
The Landowners Strike Back!
Landowners typically get paid royalties for oil and gas from their land that's sold in the market.
What they're not getting paid for is the gas from their land that gets flared off.
That's why landowners are now suing oil companies for lost royalties from flaring.
Continental Resources, the first company to drill a commercially viable well in the Bakken, estimates it owes landowners "between $136 million and $218 million" in lost royalties.
"It's a huge amount of money that is being burned off every month and a percentage of that is owed to the royalty owners," says Cody Balzer, a lawyer representing North Dakotans demanding royalties for the gas that was flared.
"Collectively, it's millions of dollars a day," Cody says.
More natural gas is being burned in North Dakota than any other state in the U.S.
They're losing over $100 million every single month in gas that could be heating homes and fueling power plants.
That’s why North Dakota has passed a new law in an attempt to limit flaring.
In order to drill new oil wells, companies must submit plans for capturing the gas that comes up alongside the oil.
If they fail to capture a certain amount, these companies face penalties, including limits placed on oil production.
Currently, drillers burn off 30% of all the gas produced from oil wells.
The state has set targets to reduce this to 23% of all gas produced by January 2015.
By 2020, the target will reduce to only 10% of gas produced, and beyond that, it could go as low as 5%.
North Dakota's governor has said, "We will reduce flaring — it's just that simple."
But here's the thing...
This massive oil and gas boom is about to get even BIGGER!
Lynn Helms, the director of North Dakota's Mineral Resources Department, says it will take roughly 16 to 18 years to fully develop the Bakken shale.
"We'll be a big gas producer two decades from now," Helms says.
A state-funded study found that the Bakken shale "will be mostly gas production" for the final 15 years of its economically viable lifespan.
Production of natural gas in North Dakota is expected to double by 2035, increasing flaring.
In short, this flaring problem isn't going away anytime soon.
According to Oil&GasMonitor.com, "Tens of thousands of wells in North Dakota still lack a connection to any pipeline or processing plant, and that number will only rise as more wells are drilled. Even wells that are connected to infrastructure are experiencing flaring."
But as legislation starts to bear down on the industry, a lot of that unused, excess natural gas will have to go somewhere.
The opportunity for companies with the right technology to capitalize on this flaring issue is SPECTACULAR.
This could be one of the biggest wealth-creation events in the history of American energy.
And it could change the course of your family's financial future forever...
Why should you believe me?
Hi. My Name is Keith Kohl.
I’m the editor of the oil and gas investment newsletter Energy Investor.
Seven years ago, I alerted my readers to two small oil stocks that were drilling in North Dakota's Bakken oil field.
At the time, these stocks traded for less than $6 and $8 a share...
Back then, nobody had heard of the Bakken — and they definitely hadn't heard of the two stocks I recommended.
They were Brigham Exploration and Northern Oil & Gas.
Many of my readers who purchased Brigham back in 2008 have sold for +600% gains in just three years...
And Northern Oil & Gas has been as high as $32.55.
I’m happy to say these two stocks have changed the lives of many of the readers who followed my advice...
Like member Mike Leonard, who wrote in to say:
"Keith: I'd like you to know how much I've appreciated your Bakken coverage over the years. I sold my position in NOG in Feb 2010 for gains of 261%, 1/3 of my position in BEXP in Apr 2011 for gains of 361% (and bough the wife a new car), and sold the rest of BEXP in Oct 2011 for long term gains of 743%. Now holding a large position in your newest pick with unrealized gains of 365%. Thanks again!"
Here’s my favorite, from long-time subscriber Cheryl Burton:
"Hello Keith, I wanted to let you know that thanks to your Brigham calls over the last three years, I've safely paid off my daughter's entire 4-year college tuition. Keep the picks coming."
George made some quick cash:
"Keith, made $3K in a few trading days, all thanks to your quick call on Brigham. Can't wait for your next Bakken pick."
And Henry made over 1,200% on Brigham:
"Keith I hate to tell you this, but I missed your first rounds of trades on Brigham, but thankfully took your advice and bought BEXP in April 2009. Since then it went up 12 fold for me... never sold it until last week. So thanks a lot! Best regards..."
And those are just a few of the letters that filled my inbox over the years...
I spend endless hours poring over companies’ field production reports, lease acquisitions, landholdings, SEC filings, and CEO interviews...
I’ve been to the Bakken and Fort McMurray to get a firsthand look at the operations of some of my favorite oil and gas stocks...
And all this hard work is about to pay off for you again.
I've been following this unique flaring phenomenon in North Dakota's Bakken closely for the past year.
And it's unlike anything that's ever happened in America before.
A Never-Before-Seen Event
That Could Make You Rich
Thanks to horizontal drilling and hydraulic fracturing, America has not only discovered three trillion barrels worth of oil — three times the amount of oil that has ever been used on earth...
But we've also discovered 2.5 quadrillion cubic feet of natural gas.
That's enough gas to meet current U.S. consumption for the next 100 years.
And we are wasting no time extracting this energy.
In fact, in 2013, America became the world's largest natural gas producer.
Gas production in America's largest basins like the Bakken, Haynesville, and Eagle Ford has more than TRIPLED in the last several years.
And these levels continue to rise every day in every basin in America...
By 2015, America will knock Saudi Arabia off as the world's top energy producer...
A feat that was unthinkable only a few short years ago.
And yet we're nowhere near through...
As Ed Morse, the global head of commodities at Citigroup in New York, said, "The key issue is not whether production grows, it’s by how much. We’re only at the beginning of the first inning and this is a nine-inning game."
But here's the thing...
In the race to extract this massive newfound energy bounty, there's something that hasn't been able to keep up...
The infrastructure required to support America's ravenous oil and gas production.
Since 2006, the number of wells not connected to a pipeline in North Dakota has more than DOUBLED.
And its only set to go higher in the coming years...
The number of wells is expected to increase from 11,000 to 50,000 by 2050.
On top of that, 13% of existing wells with pipelines can't handle the volume of gas already being produced.
The lack of infrastructure, combined with the rapid development of oil and gas wells, has resulted in this huge flaring phenomenon I've been telling you about.
It's an unforeseen consequence of this raging energy boom... something America hasn't ever witnessed before.
The day is quickly approaching when our transport, storage, and processing facilities will no longer be able to keep up with our production.
But the good news is that this dire situation is also giving rise to an enormous opportunity for certain companies — and for savvy investors.
Let me explain...
The Great $200 Billion Build-Out
There's a massive build-out underway in the energy industry.
The magnitude of it is STAGGERING... and so is the wealth to be made from it.
Energy industry consultant Deloitte says pipeline and processing facility developers will NEED to invest a whopping $200 BILLION just to keep up with the demand of shale oil and gas producers.
In short, this boom is getting so big that it's forcing into place an extraordinary amount of investment in new infrastructure... new projects... and new methods to deal with all this newfound gas and oil.
More than a half a million miles of new pipeline will be built in the United States by 2035, according to a report by the Interstate Natural Gas Association of America.
That's enough pipeline to wrap around the earth 22 TIMES.
But it's not just more pipelines that the industry desperately needs...
It also needs the refining plants that these hundreds of thousands of miles of new pipelines will connect to.
Refining plants are in the greatest demand due to the increasing number of wells and the higher production rates from those wells.
They are easier to build than any other type of energy infrastructure.
A refinery can be built in less than 24 months — and in some cases less than a year.
They can be built on-site and can be tailor-made to meet the capacity requirements of a particular field or region.
According to the EIA, the amount of natural gas that can be processed from North Dakota's oil fields is expected to more than double by 2017.
That's why I've set my sights on companies that own and build BOTH the pipelines and the refineries.
In fact, these companies allow you to pile up energy-backed wealth, even if oil and gas prices crash.
How is that possible?
I'm sure you know the Big Oil companies own the gas and oil they sell. That's one of the main reasons they take a big hit when oil prices drop.
But these refining and pipeline companies are different. They're energy backed, yes. But they typically don't own any oil or gas.
Instead, they get paid to move, store, and process the oil and gas.
These pipelines flow oil and natural gas across deserts, across snow and ice fields, and even across mountain ranges. Some of the pipes are a mile long, while others stretch over 1,000 miles.
Many are hidden where you'll never see them: underground.
These pipes are typically full and flowing day and night. And the fees pour into these companies in a steady stream.
Even when oil and gas prices drop, these pipelines typically remain full... flowing fuel from deposits to refining facilities.
Now here's why gas and oil prices don't much matter...
In up markets, these pipelines flow oil and gas to refineries and shipping depots.
In down markets, the fuel still flows from refineries to storage.
But here's the real key...
You see, unlike the companies extracting the resources from the ground, these firms don't own the gas and oil. And so they don't lose on those assets when prices go down.
They make money on the volume of fuel flowing through their pipes. And the fees oil companies pay to use them are usually fixed. They even go up with inflation!
So the cash keeps flowing for savvy investors in these companies...
In a nutshell, that's how this opportunity can mean cash for you in ANY market. In some ways, it can be safer than holding straight dividend stocks.
It's that simple.
By owning shares in these types of companies, you can collect extraordinary dividends — which are growing year by year — for many years to come.
How Much You
Collect is Up to You
To give you just a quick example of the type of income you can expect...
If you had invested $10,000 in a company called Williams Partners LP (NYSE: WPZ) back in 2009, you would have already received more than $21,600 in payouts! And that’s on top of a massive 486% gain on the stock.
Your $10,000 investment would now be worth $78,000.
So you're getting huge capital gains on top of your quarterly dividend payouts.
And right now, you have a chance to buy while these companies are still cheap...
And there’s one company I’m particularly excited about.
See, the companies that build these pipelines and processing facilities already have a two-year backlog.
And one small Oklahoma builder in particular is on fire.
In fact, some estimates say it has a whopping $4 billion in revenue already booked for the next two years.
And it's no wonder...
It is operating at the heart of North Dakota's boom in the Williston Basin, helping companies to extract and process natural gas that would otherwise be burned off.
The Williston Basin now accounts for 90% of North Dakota's total oil production, where much of the gas coming up with the oil is flared...
We're talking upwards of an incredible $1 BILLION a year worth of gas!
This company is currently in the process of building or having completed 11 new natural gas refining plants — including eight in North Dakota's Williston Basin that cover 3 million acres of energy-rich land.
Remember, the amount of gas that can be processed in North Dakota's oil fields is expected to more than DOUBLE by 2017.
And this company will be in a prime position to capitalize on it, handing you hefty payouts in the process!
This small firm also has several more projects planned in Montana, Wyoming, and Oklahoma.
It's adding $1.2 billion worth of natural gas pipelines to handle the growing gas production.
The volume of gas this company is processing is expected to jump a whopping 29% this year alone.
As the company's CEO recently put it, "[our firm's] investments will reduce flaring significantly."
It gets even more amazing when you look at what all this development will do for this company's earnings...
Its earnings are expected to grow at 16% PER YEAR for the next five years — more than DOUBLE the growth rate of the rest of the industry!
Yet so far, this company has attracted the attention of only the most dedicated market watchers.
I believe that will change over the next six months as this flaring issue hits fever pitch.
The amazing story of this company’s future earnings will reach the general market. And that could send the stock skyrocketing.
As more and more gas keeps coming out of the ground, I expect its profits (and our payouts) to continue to soar.
In fact, its dividend payout has increased by a stunning 98% since 2011!
And today, I’d like to send you my full research on this company.
I've put all the details together on this situation for you in a brand new report...
It's called, "Flaring Fortune: How the Great $200 Billion Energy Build-Out Could Pay For Your Retirement."
It's called, "Flaring Fortune: How the Great $200 Billion Energy Build-Out Could Pay For Your Retirement."
Remember, this company still gets paid — which means you can still get paid — no matter how high or low the price of gas goes.
You can spend the income now, or you can let it pile up, building gains on top of gains.
That’s a great and really safe way to make sure you never, ever run out of money in retirement.
You’ll get access to this research free of charge as soon as you start a trial subscription to my monthly research advisory, Energy Investor.
I’ve included the company name, ticker symbol, and when and how to buy... everything you need to know to get started using this unique investment.
"The Best Money I've Ever Invested"
As I mentioned earlier, my name is Keith Kohl. I'm the energy analyst and investment strategist of Energy Investor, an investment advisory service.
I’ve built a very successful career at the forefront of new oil and natural gas discoveries.
And my cutting-edge investment research has helped thousands of individual investors make life-changing wealth from the best stocks in the energy sector.
In fact, Energy Investor members have made money on every significant oil and gas field — including the Eagle Ford and Haynesville in Texas, the Marcellus shale in Pennsylvania, the oil sands of Alberta, and of course, North Dakota’s Bakken shale oil field.
"I really enjoy Keith's commentary and his stock calls have been pretty much dead on. The Energy Investor has been the best money I've ever invested." — G. Thorman
Like I said, my readers and I practically discovered the Bakken as an investment back in 2007, when no one could imagine North Dakota would hold more oil than any OPEC member.
No one had heard about the Bakken; everyone was focused on oil sands in Canada. Yet the Bakken play became our backyard, our playground for fast gains — even in the worst economic times.
And we racked up a string of gargantuan triple-digit winners...
- Northern Oil & Gas spiked 103% in just two months.
- Brigham Exploration popped 316% in just 16 months.
- Kodiak Oil & Gas — with its 228,000 acres in the Bakken — has soared 6,741% in the past four years.
- Triangle Petroleum has rallied 1,077% since 2010!
We've had an amazing run of profits over the last seven years, which include...
- Crescent Point Energy — 69.6%
- Brigham Exploration — 315%
- Petrobank Energy — 103%
- Continental Resources — 48%
- Brigham Exploration — 256%
- PowerShares DB Crude Oil — 124%
- American Oil and Gas — 215%
But we're nowhere near done...
Because America is entering a NEW PHASE in this huge energy boom:
The massive infrastructure build-out in places like the Bakken to accommodate the raging oil and gas production.
And it could deliver you even BIGGER returns than ever before.
The extreme shortage of facilities for capturing the excess gas is creating incredible opportunities for certain companies in the oil and gas sector.
It's a new age of American industrialism. There are millions to be made by investors who sit on the right side of the fence.
Yes, this new oil and gas boom has been going on for nearly six years now, but if this were a baseball game, we’d still be in the first inning.
In other words, what we’ve seen so far ain’t nothin’ yet.
As one analyst for the International Energy Agency put it, "We keep raising our forecasts, and we keep underestimating production."
And the wealth has just started. A lot more money will be made.
More everyday Americans will be able to afford the luxury homes they've dreamed of... and even quietly create a legacy of wealth for their children — a phenomenon that once seemed impossible.
It would be foolish to just sit aside and not be a part of this.
Whether it’s a small exploration company with a new discovery or an established major that’s undervalued, you’ll know about it — and profit from it — thanks to Angel's Energy Investor...
When you sign up for Energy Investor, you'll immediately get access to the blockbuster Special Report, "Flaring Fortune: How the Great $200 Billion Energy Build-Out Could Pay For Your Retirement."
I'll show you how to get your hands on your copy in a bit...
But first, you're probably wondering by now how much a fast-paced energy service like Energy Investor costs...
I think Energy Investor is an incredible bargain considering the amount of time and money that goes into each recommendation... and considering the returns these recommendations could generate for you.
Fast-piling gains like 251% on America Oil & Gas in nine months or 103% on Northern Oil & Gas in two months (just to remind you of the moneymaking power I'm talking about here).
And you can only experience these kinds of plays with timely and quick on-the-ground research.
Even better, you have six full months to find out for yourself.
The World's BEST Energy Research
for Just Pennies a Day!
My readers are making more than top hedge funds, mutual funds, and even the savviest individual investors.
The proven ability to uncover life-changing wealth in the stock market is a valuable skill. That said, there's no doubt I could name my price for a membership to Angel Publishing's Energy Investor...
Is $2,000 too much to ask for 574%, 478%, 286%, 118%, and 114% profits?
How about $1,500? $1,000?
The fact is top energy hedge funds will charge thousands a year in fees — and they'll take part of your profits, too.
But you won't pay anywhere near that much for Energy Investor...
If you act now, you can receive Energy Investor for an entire year — 12 months of profitable research and Special Reports — for the ultra-low price of just $49.
That’s just $4 and change a month to discover consistent, market-beating profits from the best energy investments in the world...
Mere pennies a day for the high-level research that can double or triple your money!
Why so cheap?
Simple: This new energy boom is unlike any other in American history. It's bigger — it has and will continue to dwarf every other previous boom that created the likes of John Rockefeller, Cornelius Vanderbilt, Andrew Carnegie, Henry Ford, Bill Gates, and Steve Jobs.
I want Americans to have the opportunity to profit from it.
So I make my research and investment advice as cheap as possible.
And the truth is if I didn't believe in the research my team and I are doing, we wouldn't spend weeks traveling to the Barnett shale, Alberta, Wyoming, North Dakota, or Montana...
When you join Energy Investor today, you will receive:
- 12 Monthly Issues of Energy Investor: You'll receive every copy by email, quickly and efficiently.
- Real-Time Buy and Sell Alerts: In this fast-moving market, opportune buy and sell points can come at any time.
- Specific Entry, Exit, and Target Prices: You’ll never have to guess if a stock is a good buy or not. We’ll always give you specific entry points, sell prices, and realistic targets for our recommendations.
- Complete Research for Every Recommendation: You’ll always know exactly why we recommend a stock. You’ll know what catalysts to expect and what hurdles to watch out for... that way, you can invest — and profit — with confidence.
- Live Customer Service: If you ever have a question or concern about an issue or investment recommendation, please call one of my lovely customer service agents. They're here to answer your questions Monday through Friday from 9:30 a.m. to 4 p.m. (EST).
And don't forget these profitable Special Reports:
Research Report #1: "Flaring Fortune: How the Great $200 Billion Energy Build-Out Could Pay For Your Retirement" —
Drillers in North Dakota's Bakken are now extracting so much gas that
the existing pipelines can't handle it all. So they're burning it into
the atmosphere unused. Billions of dollars' worth of gas is going up in
flames every single day. But now, new legislation is being passed to
crack down on this wasteful practice. The companies with the expertise
for harnessing this wasted gas stand to capture hundreds of millions in
profit. I've identified one company exploiting this flaring problem in
the Bakken that could hand you big capital gains — and growing payouts — for years to come.
Research Report #2: "Bakken Billions: 3 Bakken Stocks for Triple-Digit Gains" — The Wall Street Journal
calls it the biggest find in the Lower 48 in over 50 years. Insiders
believe there are more than 24 billion barrels of light, sweet crude in
the Bakken shale formation. Invest now, and build your own Bakken
Research Report #3: "890% Windfall from the 'Octopus' Technology" —
It's an eco-friendly technology making shale drilling eight times more
powerful... and it will create a new wave of millionaires as America
reclaims global oil dominance. Some
of the small energy companies using this technology stand to provide
some of the biggest, quickest gains in the process. These are the small
players that provide explosive gains at any moment. I'm talking
potential gains of 890% here. And based on past experience, it could
happen in a matter of weeks.
- And Best of All: A Full 100% Money-Back Guarantee: If you don't agree Energy Investor delivers the safest and most lucrative energy investment ideas and recommendations you've ever received, just let us know within six months. I'll see that you receive full reimbursement for the money you've paid.
And the Special Reports — including "Flaring Fortune: How the Great $200 Billion Energy Build-Out Could Pay For Your Retirement" — are yours to keep FREE OF CHARGE, no matter what.
But you need to act fast if you want to secure your share of American energy boom profits.
These stocks are on investors' radars now — and some big moves are coming soon...
I urge you to start cashing in on this gas-flaring windfall today by clicking here.
Investment Director, Energy Investor
Breaking Energy US Nuclear Investigation: Exports of Highly Enriched Uranium not ‘Definitively Reconciled’
By Roman Kilisek
Breaking Energy obtained detailed correspondence between members of congress and the US Nuclear Regulatory Commission through a Freedom of Information Act (FOIA) request that raises important questions about the US nuclear industry, international relations, public health and non-proliferation. The series entitled “Breaking Energy US Nuclear Investigation” will highlight critical questions and findings revealed from our review of the documents. The first article included below details US exports of highly enriched uranium, which is a practice that dates back to the 1950’s and continues today.
A Nuclear Regulatory Commission report entitled “Report to Congress on the Current Disposition of Highly Enriched Uranium Exports Used as Fuel or Targets in Nuclear Research or Test Reactors, January 9, 2014,” reveals some striking findings with regard to US exports of highly enriched uranium (HEU). Records indicate that since 1957 the US has exported a total of about 22,600 kilograms (kg) of HEU to a total of 35 countries either – in the majority of cases – directly or indirectly. These countries are listed in the table below.
Stunningly, given the characteristics of HEU and given the fact that the HEU issue seems to be at the center of every Nuclear Security Summit held to date, NRC staff points out in the report that it was “not able to definitively reconcile records for approximately 1,600 kg of HEU” due to various factors, which include the “lack of historical records from all of the foreign countries, inherent accounting and other uncertainties associated with the overall HEU RTR [Research or Test Reactors] fuel cycle and medical isotope processing operations.”
Note the inclusion of countries like Iran and Pakistan in the above table. Most likely, both countries received HEU decades ago – Iran under Mohamed Reza Shah’s rule and Pakistan as critical US ally in South Asia during the Cold War. Obviously, the 1979 Iranian Revolution brought an abrupt end to the civilian nuclear cooperation agreement with Iran and thus ended US exports of HEU.
What is evident from the NRC report, and quite surprising, is the fact that the US government does not require foreign recipients of US-supplied HEU “to regularly report on their inventories of these materials beyond acknowledging initial receipt and, if applicable, submitting safeguards declarations to the IAEA.” Consequently, data on foreign government-declared holdings of US-exported HEU is not entered into the US national database while the US government “accepts that foreign nations are responsible for the materials they import within their borders consistent with national law and international obligations.”
Nevertheless, the report stresses that NRC staff has “neither any evidence to suggest nor any reason to believe that any U.S.-exported HEU has been stolen from a foreign facility or diverted to non-peaceful uses.” And importantly, the 1,600 kg of HEU in question is believed to reside somewhere within the European Union. As such, the lack of precise documentation regarding the disposition of this material is more of a “housekeeping issue” than a hard national security concern, Professor of Practice at Harvard University’s John F. Kennedy School of Government Matthew Bunn told Breaking Energy. Bunn is a leading expert on nuclear theft and terrorism, nuclear proliferation and measures to control it.
The US government currently has no plans to increase reporting requirement intensity on behalf of countries that maintain stockpiles of US-exported HEU. The NRC report provides the following reasoning for this position: “Adding new inventory reconciliation or other requirements to U.S. 123 agreements or other international instruments would be a major change to the status quo and may not be in the national interests of other countries. Furthermore, any unilateral change in U.S. legal requirements along these lines would need to take into account reciprocity, and requirements for the United States to likewise share facility-specific sensitive information with dozens of other countries.” Sources told Breaking Energy this rationale is due in part to the fact that the NRC does not want to increase costs to industry or decrease the competitiveness of US companies in market.
Yet, it may be a good idea to revert to stricter US verification procedures following the late President Reagan’s adage about “trust, but verify”. Written or verbal assurances alone, even from allies, should never be taken at face value as governments, alliances and geopolitical constellations can change in an instant. These issues also raise the question as to whether the US should cease HEU exports altogether, given that LEU [low enriched uranium] can be used as an adequate substitute in most applications. It may also be time to update the nine criteria that dictate the terms of nuclear cooperation with other states as maintained under the 123 agreements, according to some industry stakeholders.
Clearly, the export of HEU from the US remains controversial and questionable. If the practice continues, at the very least, changes to the legal and regulatory structures that govern US HEU exports could be on the horizon.
The full article which includes detailed background, context and data from the NRC report can be read below.
Breaking Energy US Nuclear Investigation: US Exports of Highly Enriched Uranium not ‘Definitively Reconciled’
Given serious nuclear security implications and from a non-proliferation perspective, the US highly enriched uranium export program bears scrutiny.
President Obama called nuclear terrorism “the most immediate and extreme threat to global security” in a 2009 speech in Prague and followed these remarks by hosting the first Nuclear Security Summit (NSS) in Washington, DC in 2010. The President met with 47 other heads of state to discuss tangible actions in order to increase security for nuclear materials and put the international community on a better footing to prevent acts of nuclear terrorism and trafficking.
Significantly, one crucial agenda item addressed in the Joint Communiqué issued by the Washington Nuclear Security Summit was that world leaders “recognize that highly enriched uranium [HEU] and separated plutonium require special precautions and agree to promote measures to secure, account for, and consolidate these materials, as appropriate; and encourage the conversion of reactors from highly enriched to low enriched uranium [LEU] fuel and minimization of use of highly enriched uranium, where technically and economically feasible.”
At the subsequent Seoul NSS in 2012, Belgium, France, the Netherlands, and the US agreed that “in the longer term, the use of HEU will be completely eliminated for medical isotopes that are produced in Belgium, France, and The Netherlands and used in those countries and in the United States” (‘Belgium-France-Netherlands-United States Joint Statement: Minimization of HEU and the Reliable Supply of Medical Radioisotopes’).
To date, the last NSS took place in The Hague in 2014. The NSS 2014 final joint communiqué built on the results of the prior summits and world leaders affirmed that:
“[o]ver the past four years we have made considerable progress in safe, secure and timely consolidation inside countries and in removal to other countries for disposal. Furthermore, a considerable amount of HEU has been down-blended to low-enriched uranium (LEU) (…). We encourage States to minimise their stocks of HEU and to keep their stockpile of separated plutonium to the minimum level, both as consistent with national requirements. (…) Similarly, we will continue to encourage and support efforts to use non-HEU technologies for the production of radioisotopes, including financial incentives, taking into account the need for an assured and reliable supply of medical isotopes.”
Newly addressed agenda items included cyber security and nuclear forensics. With regard to the latter, the communiqué reads: “Nuclear forensics is developing into an effective tool for determining the origin of nuclear and other radioactive materials and providing evidence for the prosecution of acts of illicit trafficking and other malicious acts.” Finally, the document also designated the US to host the upcoming 2016 NSS.
The main takeaway from these summits is that there is a general recognition among world leaders that the continuous use of HEU poses a serious threat to international security. Even though progress has ostensibly been made, real hard action – i.e. ‘elimination’ instead of ‘minimization’ of civilian HEU use – and thus tangible results are only slow to materialize. Miles A. Pomper, together with Philippe Mauger, sums this up in a policy analysis brief for The Stanley Foundation: “For nearly four decades, the United States has sought to secure and minimize the worldwide use of this material of choice for would-be nuclear terrorists. However, HEU has continued to power some civilian nuclear research facilities, to fuel some Russian icebreakers, and to be used in the production of a key medical isotope for medical diagnosis. (…) Russia is the only country in the world that uses HEU for civilian naval propulsion. A subsidiary of Russia’s state-owned nuclear giant Rosatom called Atomflot operates four HEU-powered ice-breakers.”
In addition, this policy brief provides important background on why HEU represents such a highly attractive target for terrorists, summarizing:
“HEU can be used to create the simplest nuclear explosive device, a so-called gun-type weapon. Using a gun-type design, such a device would explosively collide one subcritical piece of HEU with another in order to form the supercritical mass required for a nuclear detonation. This process is well publicized, and there is consensus among experts that the creation of an improvised nuclear device based on this design is within the technical reach of a financially and organizationally strong terrorist group. To make matters worse, because HEU is only weakly radioactive, it is relatively safe to handle and hard to detect. Even HEU waste is less radioactive than one might hope from a security-oriented standpoint.”
This last point in particular makes very clear why HEU should ideally be removed from ‘global circulation’. According to the Arms Control Association, global stockpile of “HEU and separated plutonium is estimated at approximately 2,000 tons” with the vast majority of that nuclear material located in the US and Russia. It may not be readily obvious that South Africa’s pursuit of a nuclear weapons program, which started in 1974 until it was abandoned in 1989, produced several hundred kilograms of HEU. The stockpile is kept in storage and is considered a strategic national asset, according to NTI analysis. Note, South Africa does neither export nor import HEU.
Where are HEU Stockpiles Located and How are they Monitored?
In this context, let’s examine closer the US track record and regulations with regard to civilian nuclear trade in HEU, which is an ongoing practice. Breaking Energy obtained important records through a Freedom of Information Act (FOIA) request filing. Allison M. Macfarlane, chair of the US Nuclear Regulatory Commission (NRC), in a letter dated January 9, 2014 and addressed to the Chairman of the House of Representatives’ Committee on Energy and Commerce, Congressman Fred Upton, submitted a report entitled “Report to Congress on the Current Disposition of Highly Enriched Uranium Exports Used as Fuel or Targets in Nuclear Research or Test Reactors”. This report, which builds on the January 1993 report that the NRC submitted to Congress on the disposition of HEU exports, and a non-public annex to the report – containing additional country-specific information designated “Confidential/Foreign Government Information” and thus not part of the FOIA release – provide information based on records dating back to 1950.
Note, information on HEU exported for purposes other than “used as fuel or targets in nuclear research or test reactors” is not included, based on the direction in Section 3175 of the National Defense Authorization Act for Fiscal Year 2013 (NDAA, Public Law 112-239, Jan. 2, 2013). HEU is defined here as “uranium enriched to 20 percent or more in the isotope U–235”.
The report provides information about US HEU exports for use as fuel or targets in research and test reactors (RTRs) and re-imports, as it is recorded in the NRC’s Nuclear Materials Management & Safeguards System (NMMSS) database through December 31, 2012. The records show that the US still exported 196.12 kg of HEU for civilian use in 2012 after only 7.46 kg in 2011. Remember, the first NSS, at which HEU was identified as a serious global issue, took place in 2010. The compiled information is based on NRC staff analyzing data from a plethora of sources such as export license records, reports by and technical discussions with staff from the National Nuclear Security Administration (NNSA) Global Threat Reduction Initiative (NNSA/GTRI) et alia.
Most importantly, the report reveals some striking findings with regard to US exports of HEU: Records indicate that since 1957 the US has exported a total of about 22,600 kilograms (kg) of HEU for use as fuel or targets in RTRs to a total of 35 countries either – in the majority of cases – directly or indirectly (i.e. re-transfers between those countries). As of the issuance of the report, about 6,100 kg of that US-supplied HEU remains in 20 countries, with 95 per cent of that material located in five of those countries, while the remaining 15 of the initial 35 countries no longer possess any HEU – having shut down respective facilities or having converted facilities to low enriched uranium (LEU).
Since 1957, approximately 7,700 kg of HEU has been imported back to the US primarily as irradiated fuel. Available information also indicate that more than 4,300 kg of the US-supplied HEU has been eliminated by down-blending to LEU; about 500 kg of HEU has been eliminated in highly-dilute processing waste; and at least 2,400 kg of HEU has been burned up through irradiation in RTRs.
Stunningly, given the characteristics of HEU (see above) and given the fact that the HEU issue seems to be at the center of every NSS, NRC staff also points out in the report that it was “not able to definitively reconcile records for approximately 1,600 kg of HEU” due to various factors, which include the “lack of historical records from all of the foreign countries, inherent accounting and other uncertainties associated with the overall HEU RTR fuel cycle and medical isotope processing operations.”
Nevertheless, the report stresses that NRC staff has “neither any evidence to suggest nor any reason to believe that any U.S.-exported HEU has been stolen from a foreign facility or diverted to non-peaceful uses.” And importantly, the 1,600 kg of HEU in question is believed to reside somewhere within the EU in accordance with various intergovernmental agreements. As such, the lack of precise documentation regarding the disposition of this material is more of a “housekeeping issue” than a hard national security concern, Professor of Practice at Harvard University’s John F. Kennedy School of Government Matthew Bunn told Breaking Energy. Bunn is a leading expert on nuclear theft and terrorism, nuclear proliferation and measures to control it.
Suffice it to say the table above includes countries like Iran and Pakistan. Both countries received HEU decades ago – Iran under Mohamed Reza Shah’s rule and Pakistan as critical US ally in South Asia during the Cold War. As for Iran, it is of note that – as Ariana Rowberry, Scoville Fellow at Brookings, recounts one instance in her article on the “Atoms of Peace”– in “1967, the United States supplied Iran with a 5 megawatt nuclear research reactor along with highly enriched uranium [allegedly 5.58kg] to fuel the reactor, housed at the [Tehran Nuclear Research Center] TRNC.”
Obviously, the 1979 Iranian Revolution brought an abrupt end to the civilian nuclear cooperation agreement with Iran and HEU exports ceased at that point. According to David Albright and Andrea Stricker writing on Iran’s nuclear program for the United States Institute of Peace, the US provided HEU fuel “for the first several years of the reactor’s operation” and concluded a nuclear agreement in 1978 securing “the right to the return and storage of spent reactor fuel from any reactors it built in Iran.”
Historically, as the following chart and two tables from the NRC report illustrate, the bulk of the HEU exports occurred in the 1960s and 1970s with “nearly 95 percent of HEU exports occurring before 1990,” and with “[m]uch of the HEU returns also [taking] place from 1964 to 1988 under the ‘Off-Site Fuels Policy’”.
Unsurprisingly, given the serious security implications associated with the uranium trade, the export of nuclear materials is governed by a regulatory framework with domestic US regulations complemented by international ones in the form of multilateral treaties, as well as International Atomic Energy Agency IAEA safeguards. In the US, the Atomic Energy Act (AEA) specifies requirements and procedures for licensing exports of nuclear material, equipment, or technology to states with which the US has peaceful nuclear cooperation agreements.
According to a Congressional Research Service (CRS) report on “Nuclear Cooperation with Other Countries”, such so-called “Section 123” agreements, “which are ‘congressional-executive agreements’ requiring congressional approval, (…) set the terms of reference and authorize cooperation.” Thus, the “Section 123” agreements are a precondition for the export of any US nuclear material requiring, in particular, “that any agreement for nuclear cooperation meet nine nonproliferation criteria and that the President submit any such agreement to the House Committee on Foreign Affairs and the Senate Committee on Foreign Relations.” The NRC is required to meet criteria outlined in Sections 127 and 128 for authorizing export licenses.
The NRC report obtained by Breaking Energy through a FOIA request filing writes about the US having “bilateral 123 agreements with 20 individual countries, with the European Atomic Energy Community (EURATOM), the IAEA, and Taiwan.” Over time and with the emergence as well as strengthening of an international nuclear nonproliferation regime, the scope and content of such nuclear cooperation agreements has evolved significantly. Currently, non-public checklists “contain highly detailed information about application HEU inventories, production requirements and schedules, and waste and scrap streams and other information,” which makes for a much more transparent export licensing process.
In this respect, the NRC report details how nuclear material export licensing reviews are to be conducted:
“…the NRC must seek the judgment of relevant US Government executive branch agencies as to whether approving a proposed export would be consistent with US statutory and foreign policy requirements. The NRC cannot issue an export license if the Executive Branch recommends denying the license; however, if the Executive Branch recommends approval and the NRC disagrees, the license application must be referred to the President of the United States for action, which is subject to Congressional review.”
What is evident from the NRC report and quite surprising is the fact that the US government does not require foreign recipients of US-supplied HEU “to regularly report on their inventories of these materials beyond acknowledging initial receipt and, if applicable, submitting safeguards declarations to the IAEA.” Consequently, data on foreign government-declared holdings of US-exported HEU is not entered into the US national database while the US government “accepts that foreign nations are responsible for the materials they import within their borders consistent with national law and international obligations.”
This also means that assurances/guarantees seem to replace strict US verification with respect to implementation and maintenance of the controls necessary to ensure that nuclear materials are used as intended, controlled and safeguarded properly. The NRC report provides the following reasoning for this seemingly counterintuitive modus operandi: “Adding new inventory reconciliation or other requirements to U.S. 123 agreements or other international instruments would be a major change to the status quo and may not be in the national interests of other countries. Furthermore, any unilateral change in U.S. legal requirements along these lines would need to take into account reciprocity, and requirements for the United States to likewise share facility-specific sensitive information with dozens of other countries.” Sources told Breaking Energy this rationale is due in part to the fact that the NRC does not want to increase costs to industry or decrease the competitiveness of US companies in market.
The report also appears to downplay the above verification concern: “No country has ever notified the U.S. Government that they lost or did not receive U.S.-supplied HEU or that they relinquished control over the material once they were finished with it. International safeguards containment, surveillance, and verification measures, and IAEA inspections provide additional confidence that no U.S. HEU has been stolen or diverted.”
Yet, it may be a good idea to revert to stricter US verification procedures following the late President Reagan’s adage about “trust, but verify”. Written or verbal assurances alone, even from allies, should never be taken at face value as governments, alliances and geopolitical constellations can change in an instant. These issues also raise the question as to whether the US should cease HEU exports altogether, given that LEU can be used as an adequate substitute in most applications. It may also be time to update the nine criteria that dictate the terms of nuclear cooperation with other states as maintained under the 123 agreements, according to some industry stakeholders.
Clearly, the export of HEU from the US remains controversial and questionable. If the practice continues, at the very least, changes to the legal and regulatory structures that govern US HEU exports could be on the horizon.
By Alberto D’Antoni
The first and probably the most relevant constraint to electricity markets is transmission grid capacity. Despite the liberalization of the sector, in many countries congestion continues to be a hindrance for competitive prices. Italy is one such country. Data on day-ahead market prices show a decrease in the last few years which has been principally driven by technological variables. Just think about the fact that Italy covers 38.6% of its power production with renewable energy sources (wind and solar). In Figure 1 the unique price is compared between 2013 and 2014 and a significant decrease is evident. Otherwise, in this article we will focus also on zonal price interaction.
Figure 1: Annual average Unique Price on Italian Power EXchange (IPEX)
So firstly, what is the mechanism to determine electricity prices on a power exchange? And further, what is the weight of congestion on the network? Italy adopted a Zonal pricing model, which differs from US power exchanges – PJM as example – which instead adopted Nodal pricing. The network is divided in market zones and electricity flows between them. In power transmission the rule of “communicating vessels” is literally applied. The capacity of connection between two zones is fundamental information to the day-ahead market.
If the transit limits are observed then the market is unique and prices between two zones perfectly match. Where the flows overcharge the connections, the market is then split in two different zonal markets and zonal prices diverge. In particular, the importing zone will get a higher price than the exporting zone. This problem is exacerbated when the grid is poorly cross-linked. An example of this network setting is represented by the following Figure 2 which consists of a “tree connection” where electricity must necessarily flow through zone 2 to get from zone 1 to zone 3. Figure 2 is aimed only to represent a simulation of the tree-like connection between three zones, since Italy has at least six geographical zones and several virtual trading zones.
This example illustrates the importance and usefulness of a mashed grid when current flows could congest the connection between zones 1 and 2.
Further, finding the combination of zonal prices and quantities, means resolving an optimization problem, where the surplus of consumers and producers (buyers and sellers) is maximized under several constraints:
- The Kirchhoff’s first law (which can be considered as a general non-storability constraint);
- A maximum quantity to be transmitted related to the available capacity installed;
- The maximum charge flow between two zones related to the capacity of the grid and connections.
Lagrangian can be used freely but, you cannot escape the lack of significant storage and poor connection between zones. One could think that only in the ancillary services market such problems could intervene, and instead these technical constraints are strong enough to manifest themselves in the resolution of the price in a typically economical market, such as the day-ahead. Since it is supposed that shadow prices do their work, in the case of strong use of the network (as to cause congestions), the divergence between prices causes in its turn a separation of market areas as presented in Figure 3.
Figure 3: Market Splitting
The two economic assessments are quite different and the equilibrium prices are found to be different as well. Since the zones are, of course, in the same country, then the mechanism of the unique price is applied. As a result of this exercise, the different prices are represented in a graph (Figure 4) which shows these variations.
Figure 4: Zonal Prices
Is this able to match Italy’s great need to easily dispatch the energy produced from renewable sources, such as wind in the south or solar in the central region? And further, is it in line with the necessity of an electrical system dedicated to the transmission of electricity, not only at the national level but also European-wide? This analysis highlights the difficulty in integrating renewables into such a system, as long as paradoxically, the case of an only renewable production at zero marginal price becomes a problem at the level of network management.
For more on this issue, see: “The More Renewables You Have The More Transmission You’ll Need”.
Alberto D’Antoni holds a M.S. in Economics and a Postgraduated Degree in Energy Management. He is a member Italian Association of Energy Economists the local affiliate of IAEE.