Who better than to explain the LES puzzle than Jim Ferland? As president of Louisiana Energy Services, Ferland came onboard nearly three years ago. At the time, the LES project was still in Tennessee, but rapidly losing traction. Ferland admits the situation had gotten so bad in Tennessee that his management team had to look elsewhere.

First, we wanted to clarify exactly who owns LES. Conflicting news reports, found in the news items after LES was awarded the first NRC license for a nuclear facility in nearly thirty years, confused us. Ferland straightened us out on this point, too. LES is incorporated in Delaware. Its a limited partnership. Ill give you a quick rundown on the ownership. It is confusing. Six month ago, Westinghouse Electric owned 24.5 percent of LES. British Nuclear Fuels, which owns a one-third stake in Urenco, owned Westinghouse. On March 3rd of this year, Urenco bought Westinghouses minority interest in LES.

Wait, it gets more confusing. Back in the original LES, which was back in Louisiana in the early 1990s, the utilities did have an equity share at that time, Ferland explained. When the Urenco picked the project back up, to restart it in 2002, the utilities tagged along. The utilities, though, did not have an equity ownership share. According to Ferland, Urenco bought out the three U.S. utilities Entergy, Exelon and Duke in exchange for some cash and more cash payments going forward. All that is happening now is the utilities earn the rest of their money back as LES meets certain milestones going forward, said Ferland. One of those milestones was (achieved) the day LES received the NRC license. As of 2002, these three utilities had no management say and no equity participation. They simply had some rights to some future cash flows, depending upon whether or not LES was successful. Essentially, were paying the utilities back for the investment they made in the early 1990s.

The upshot is simple. Louisiana Energy Services is a wholly owned subsidiary of Urenco Ltd. But then again, get ready for a tad more confusion on the ownership issue.

Urencos British partner wants to sell its one-third stake in the company. We asked Ferland if perhaps British Nuclear Fuels (BNFL) was unhappy with the New Mexico enrichment facility. I dont think so, he answered. This is my personal opinion because Im certainly not a member of management of BNFL. BNFL is looking to get out of the nuclear business completely. Recognize that BNFL is a government-owned entity. I think the government has decided they dont need to be in the nuclear business. Theyve done many things. They are in the process of closing the transaction of selling Westinghouse. Their nuclear decommissioning group is up for sale. The last major piece of the BNFL nuclear business is the one-third ownership they have in Urenco. Naturally, given that theyre selling the other two, they have some interest in divesting that ownership piece as well.

Who will finally own BNFL, and thus become one-third owner of Urenco, and indirectly an owner of the New Mexico enrichment facility? Last week, Londons Daily Telegraph reported the French nuclear power firm, EDF, had offered to buy the BNFL stake for about two billion pounds sterling. An EDF spokesman denied an offer had been made. According to Reuters, both the German and Dutch stakeholders would oppose EDFs participation.

This latest wrinkle is just one in another of several disruptive episodes as LES moves forward into operations. We talked with Ferland about charges of environmental racism in Louisiana, where LES first began its long journey to obtain an NRC license. As with every question and concern we voiced, Ferland did not dither or back down, but instead methodically responded, Urenco and its partners did begin the licensing process for LES around 1990. Come 1997, they still did not have the NRC license. Seven years pursuing a license is a long time. There were a variety of issues. One of them was environmental justice.

Ferland hadnt yet arrived at the time, but he had studied the charges. Heres my take as to why they took so long, he began. Environmental justice, at that time, was a relatively new concept. There were not a lot of rules or regulations in place about how you approve whether or not environmental racism was going on. They spent a long time, arguing back and forth about how to make that decision. How do you do those calculations?

So what happened? It is my understanding, at the end of all that, LES was found to be in the clear on that particular issue. What took so long and why the unusual accusation? I think it was, Ferland started, but paused for a moment. Anti-nuclear opponents will do whatever they can to slow down the licensing process. It was a successful effort by the anti-nuclear folks to put massive delay into the licensing process to the point where the owner finally walked away.

Finally, how did Louisiana Energy Services end up in New Mexico? Abandoning the project in Louisiana, the company moved to Tennessee. Some report the locals chased LES out of the state. Ferland surprised us with his answer, LES never submitted the license application to the NRC.

But whats the real story, here? Ill be very blunt about it, Ferland warned us. Management credibility was lost with the local population in Tennessee. A company like ours doing a project like this, even though its extremely safe and extremely environmentally friendly, its a nuclear project. And this is advice to anyone hoping to cash in on the nuclear renaissance, And if you dont have the credibility and trust of the public, in all honesty, you can not proceed with the project. Ferland cleared the air, Management had some issues in the way they addressed the public and the press in Tennessee that caused them to lose credibility, and probably rightly so. The situation had gone so bad, Ferland admitted, We could not turn that around.

Based upon our interviews with state senators and representatives, New Mexicos reaction was magical compared to what LES endured for the past 16 years. Marshall Cohen and his team did a very good job in New Mexico, Ferland explained. We have, if it is done correctly, a relatively good project to sell. We can take folks to see the operating enrichment facility in Europe, which we are essentially copying. LES did that just that. We interviewed New Mexico State Senators Leavell and Kernan, who both gave Urencos Almelo facility their blessing. Its ultra clean, ultra high tech and has an extremely good environmental record for as long as its been in existence, which is 25-plus years. Ferland said with steel in his voice, If you do it right, its a pretty easy project to sell, and if you do it wrong, you can drive it into the ditch very quickly.

CONCLUSION

The LES project has gone past the selling phase. Ground breaking is in late August. Ferland told us construction began this past week. LES will provide Lea County, New Mexico and Andrews County, Texas with more that 800 construction jobs to build the National Enrichment Facility (NEF). We expect the first cascade to go online in late 2008, said Ferland. Because this is a modular design, more cascades will go online through 2013, when the plant reaches its full capacity.

We hope to deliver our first product in early 2009, he added. This will be a relatively small amount. Ballpark, well roughly come up with 20 percent of our output per year, Ferland explained. This comes to about 600,000 SWU (Separative Work Units).

It takes about 10 pounds of U3O8, which utilities provide to the enrichment facility, to create one SWU. Its a three million SWU facility, Ferland told us. Three million SWU is about 25 percent of the U.S. requirement, he added.

From all indications, Ferland is running a tight ship. Urenco appears to be solidly behind this tenacious, but level-headed corporate executive. He knows how to run this business, hes built his team, and theyve created a miracle in New Mexico the first step in New Mexicos nuclear renaissance.