With the rising electricity, raw material and fossil fuel prices, as well as the relatively low selling price of steel, the steel industry has been put under strain to produce steel as cost–effectively as possible. Ideally the industry requires a cost–effective, stable source of energy to cater for its electricity and energy needs. Modern High Temperature Reactors are in a position to provide industries with not only electricity, but also process heat. Therefore, a study was conducted into the economic viability of centering the steel industry on nuclear power. This study considered 3 technology options: a nuclear facility to cater for solely the electricity needs of the steel industry; a nuclear facility producing hydrogen for the process needs of the steel industry; and a nuclear facility co–generating electricity and process heat for the steel industry. An economic model for each of the 3 scenarios was developed that factored in the various cost considerations for each of the 3 options. In general, this included the construction costs, operational and maintenance cost, build time and interest rate of the financed amount. For each option, the model calculated the cost of production per unit output. The outputs were electricity for option 1, hydrogen for option 2, and both electricity and process heat for option 3. Each model was optimised based on a realistic best case scenario for the capital and operational costs and respective best case cost per unit outputs for each of the options were calculated. Using the optimised cost model, it was shown that electricity produced from nuclear power was more cost effective than current electricity prices in South Africa. Similarly, it was shown that a nuclear facility could produce heat at a more cost–effective means than by the combustion of natural gas. Hydrogen proved to be not cost effective compared to reformed natural gas as a reducing agent for iron ore. Based on the cost savings, a cash–flow analysis showed that the payback period for a nuclear power plant that produced electricity for the steel industry would be around 12 years at 0% interest and 15 years at 5% interest. Due to the long payback period and lack of certainty in the steel industry, any steel manufacturer would opt for purchasing electricity from a nuclear based electricity utility rather than building a facility themselves. Savings of over $70 million/year were achievable for a 2 million tonne/year electric arc furnace. Overall this analysis showed that electricity generation is the only viable means for nuclear power to be integrated with the steel manufacturing industry. / Thesis (M.Ing. (Nuclear Engineering))--North-West University, Potchefstroom Campus, 2012.

With the rising electricity, raw material and fossil fuel prices, as well as the relatively low selling price of steel, the steel industry has been put under strain to produce steel as cost–effectively as possible. Ideally the industry requires a cost–effective, stable source of energy to cater for its electricity and energy needs. Modern High Temperature Reactors are in a position to provide industries with not only electricity, but also process heat. Therefore, a study was conducted into the economic viability of centering the steel industry on nuclear power. This study considered 3 technology options: a nuclear facility to cater for solely the electricity needs of the steel industry; a nuclear facility producing hydrogen for the process needs of the steel industry; and a nuclear facility co–generating electricity and process heat for the steel industry. An economic model for each of the 3 scenarios was developed that factored in the various cost considerations for each of the 3 options. In general, this included the construction costs, operational and maintenance cost, build time and interest rate of the financed amount. For each option, the model calculated the cost of production per unit output. The outputs were electricity for option 1, hydrogen for option 2, and both electricity and process heat for option 3. Each model was optimised based on a realistic best case scenario for the capital and operational costs and respective best case cost per unit outputs for each of the options were calculated. Using the optimised cost model, it was shown that electricity produced from nuclear power was more cost effective than current electricity prices in South Africa. Similarly, it was shown that a nuclear facility could produce heat at a more cost–effective means than by the combustion of natural gas. Hydrogen proved to be not cost effective compared to reformed natural gas as a reducing agent for iron ore. Based on the cost savings, a cash–flow analysis showed that the payback period for a nuclear power plant that produced electricity for the steel industry would be around 12 years at 0% interest and 15 years at 5% interest. Due to the long payback period and lack of certainty in the steel industry, any steel manufacturer would opt for purchasing electricity from a nuclear based electricity utility rather than building a facility themselves. Savings of over $70 million/year were achievable for a 2 million tonne/year electric arc furnace. Overall this analysis showed that electricity generation is the only viable means for nuclear power to be integrated with the steel manufacturing industry. / Thesis (M.Ing. (Nuclear Engineering))--North-West University, Potchefstroom Campus, 2012.

This report offers a comparative valuation of two bitumen production technologies, using real options analysis (ROA) techniques to incorporate strategic flexibility into the investment scenario. By integrating a probabilistic cost model into a real options framework, the value of an oil recovery facility is modeled to reflect the realistic alternatives available to decision-makers, where the course of the investment can be altered as new information becomes available. This approach represents a distinct advantage to traditional discounted cash flow (DCF) estimation, which is unable to capture operational adaptability, including the ability to expand, delay, or abandon a project. The analysis focuses on the energy inputs required for the recovery of heavy oil bitumen from Alberta, Canada, and examines both natural gas and nuclear steam plants as heat sources. The ACR-1000 reactor is highlighted as a substitute for conventional natural gas-fueled means of production, in light of the recent volatility of natural gas prices and the potential for emissions compliance charges. The methodology includes a levelized cost assessment per barrel of bitumen and estimation of cost ranges for each component. A mean-reversion stochastic price model was also derived for the both natural gas and oil price. By incorporating cost ranges into a ROA framework, the benefit of retaining project flexibility is included in its valuation. Formulated as a decision tree, built-in options include the initial selection to pursue nuclear or natural gas, site selection and licensing, the ability to switch heat source in the planning stage, and the final commitment to construct. Each decision is influenced by uncertainties, including the course of bitumen and natural gas price, as well as emissions policy. By structuring the investment scenario to include these options, the overall value of the project increases by over $150 million. The ability to switch technology type allows for an assessment of the viability of nuclear steam, which becomes economically favorable given high natural gas prices or high emissions taxes. Given an initial selection of natural gas SAGD, there is a 25% probability that a switch to nuclear steam will occur, as evolving financial conditions make nuclear the optimal technology. / text