Mr. McGEE. I cannot speak for other companies. In our case that is so, yes, sir; we had no AEC geological information on which we based our exploration. Other companies may have had.

ESTIMATED FUTURE EXPENDITURES FOR NUCLEAR POWERPLANTS

Representative ASPINALL. Now, to the next question. You have a figure that cumulative expenditures for commercial nuclear electric powerplants in the United States are estimated to be in the range of 1 to 2 billion by 1970 and 10 to 15 billion by 1980. Whose figures are those?

Mr. McGEE. These are figures that came from our technical consultants.

Representative ASPINALL. Do you think they are sufficiently definite so that the Commission can go ahead and make arrangements as far as finding reserves are concerned?

Mr. McGEE. I am not sure. But I would be glad to review the matter with them and write you a letter about it if that would help.

Representative ASPINALL. Providing that you can get the protective provisions in the legislation, you folks are willing to do your part; is that right?

Mr. MCGEE. The protective provisions for a very short period. Representative ASPINALL. What is your very short period?

Mr. McGEE. By the AEC estimate it is 5 years. I think it could be less than that.

Representative ASPINALL. Do you think it will be definitely known, Mr. McGee, by 1968 or 1969 what our power reactor demands are going to be for the latter part of the 1970's?

Mr. McGEE. You have me in an area where I am not competent.

Representative ASPINALL. You have testified to it and that is the thing that bothers me. We are all bothered about this particular matter. I am not going to argue with you. I just wondered what your foundation was.

Mr. McGEE. I would be glad to consult with our technical people and give you an answer to your question.

(Mr. McGee subsequently submitted the following information:) The estimate contained in my testimony for the nuclear electric industry's investment in 1970 is consistent with the attached tabulation (attachment 1) taken from Electrical World of May 18, 1964, showing an investment in U.S. nuclear electric power stations now planned for completion before 1970 of $1.3 billion. If expenditures for the dual purpose new production reactor at Hanford were added, the total would be more than $1.5 billion. If $0.2 billion for plants not now firmly planned but which could be completed before 1970 were added, the total would be about $1.7 billion. If these numbers are further increased to cover the investment for fuel inventory, the total by 1970 could reach $2 billion.

The information contained in attachment 2 indicates that the Federal Power Commission and industry estimates of installed U.S. nuclear electric power capacity range from about 68 to 100 million electric kilowatts by 1980. This is consistent with estimates by our technical consultants. If the average cost of the installed capacity is $100 per electric kilowatt, the cumulative investment plus the then current fuel inventory of $3 to $4 billion would range be tween $9.8 and $14 billion.

35-369-64——13

ESTIMATED INVESTMENT IN U.S. NUCLEAR ELECTRIC PLANTS BY 1980

(1) Chairman Seaborg, in his testimony before the JCAE on June 11, 1964, said “the FPC staff and various industry sources have recently estimated a growth of nuclear power in this country in the period through 1980, some 70 to 150 percent above the estimate on which the Commission based its 1962 civilian power report to the President." He also said the value of the fuel inventory for U.S. reactors in 1980 might be $3 to $4 billion.

(2) The AEC Report to the President indicated that U.S. installed nuclear electric capacity could be 40 million electric kilowatts by 1980.1

(3) Therefore, the FPC and industry estimates alluded to above, must range from about 68 to 100 million electric kilowatts by 1980.

(4) If the average capital cost of these plants turns out to be $100 electric kilowatts (Oyster Creek is estimated to be $134 electric kilowatts at rated power), and the fuel inventory of $3 to $4 billion in 1980 (per Dr. Seaborg's testimony) then the cumulative capital investment plus the then current fuel inventory investment to 1980 would range between $9.8 and $14 billion, as follows:

68X10 ekwX$100/ekw+$3×10o (for fuel inventory)=$9.8×109
100×10 ekwX$100/ekw+$4×10o (for fuel inventory)=$14×10°

which could be rounded to a range of from $10 to $15 billion.

(5) These estimates do not include (1) expenditures by the AEC for R. & D.; (2) fixed or working capital investments by industry in fuel cycle processing and other supporting operations; (3) investments by electric utilities in transmission and distribution facilities which would be served by the nuclear plants.

IMPORTATION OF FOREIGN URANIUM FOR DOMESTIC USE

Representative ASPINALL. On page 6 you have a statement: Finally, access to the domestic market for foreign uranium must be subject to the need for an orderly reduction of AEC inventories in excess of quantities required for the national security and other governmental purposes. The study of the Committee on Mining and Milling properly observes that—

1 "Development, Growth, and State of the Atomic Energy Industry," pt. 1, 1963, p. 467.

Then you gave quote there.

Why is this necessary?

Mr. MCGEE. Without a supply of uranium in this country, we are building or the whole industry will be building on a very shaky basis. In short range the foreign uranium may be low priced, but long range it wouldn't be.

(Mr. McGee subsequently submitted the following information :)

My answer to Representative Aspinall's question was not responsive to his inquiry as to why we felt that foreign uranium importation must be subject to the need for an orderly reduction of AEC inventories in excess of quantities required for the national security.

It is our belief that excess AEC inventories, as well as the condition of the domestic mining and milling industry must be considered by the AEC in connection with a determination of the proper rate at which uranium importation should be permitted. If the AEC stocks of uranium are excessive, we feel that these stocks should be liquidated over some reasonable period of time and of necessity must be considered in connection with the overall uranium situation within the United States.

Representative ASPINALL. I have tried to correlate your statement that you gave us under date of May 18 with the statement that you have given us today concerning your prerequisites for private ownership legislation. Your May 18 statement suggests that the proposed bill should contain among other things the provision not to permit substantial importation of foreign uranium except for reexport. In your statement today you state that the present restriction against the importation of foreign special nuclear material for domestic use should be continued. There is a variance there, I think, in the thought that you wish to express. Would you please try to correlate your statement of May 18 with your statement today?

Mr. McGEE. I didn't feel that they were in conflict, sir. I think our statement today is more specific and spells it out in more detail.

Representative ASPINALL. Then what do you mean in your May 18 statement, where you are apparently speaking about not permitting substantial importation of foreign uranium?

Mr. MCGEE. We thought there might be isotopes of uranium for special uses that would need to be imported into this country. Isotopes and special materials. We have no way of knowing what special needs there might be.

Representative ASPINALL. Maybe I just don't understand this. I thought you meant ore.

Mr. MCGEE. No. We intended to include special nuclear materials as well. On page 5 of our statement of May 18 we suggested that the proposed bill should:

C. Not permit substantial importation of foreign uranium, except for reexport, until such time as the AEC determines that the domestic market has grown sufficiently to support a competitive domestic industry * * *.

Representative ASPINALL. In other words, you are not favorable toward the importation of any amount of foreign produced uranium ore or uranium oxide.

Mr. McGEE. Not during the period that the AEC would determine that the domestic market could not yet absorb it.

Representative HOSMER. I thought you wanted that particular thing legislated in this bill and you were not ready to trust the AEC on this.

Mr. McGEE. No. We said in this statement that the AEC should make that determination but it should be reviewed by the Joint Committee.

Representative HOSMER. You want kind of a standard.

Mr. McGEE. A standard, yes, sir.

Representative HOSMER. Which the AEC would implement day by day and the Joint Committee would oversee?

Mr. MCGEE. That is right. We are perfectly willing to accept the AEC's judgment, reviewed by the committee.

Representative ASPINALL. Mr. McGee, you folks are interested in many other natural resource products, especially oil. Do you think that the Atomic Energy Commission is going to be the one to make this determination, or do you think it will be made by another department of Government?

Mr. McGEE. I would assume it would be the Atomic Energy Commission, especially if it were provided in the legislation.

Representative HOSMER. You would not want the Secretary of the Interior to do it?

Mr. McGEE. I would prefer the Atomic Energy Commission.
Representative HOSMER. How about the Secretary of State?

Mr. MCGEE. I think what we are proposing here is that these standards be set up in the legislation as to who would do it.

Representative ASPINALL. And they be set up in the private ownership legislation as of this year or next year or whenever we pass this legislation even though we are talking about a period 5, 10, 12, or 15 years hence?

Mr. McGEE. Yes, sir.

Representative ASPINALL. That is all, Mr. Chairman.

PROVIDING PROTECTION FOR URANIUM INDUSTRY IN PRIVATE OWNERSHIP

LEGISLATION

Representative HOLIFIELD. You made quite a thoughtful statement here, Mr. McGee, and you have suggested a number of restrictions and regulations. In the event that these suggestions of yours are not written into the legislation, would you still be in support of the private ownership program?

Mr. MCGEE. Yes, sir. I think at that point, Mr. Chairman, we would have to make a business judgment as to whether we wanted to continue in exploration for uranium. I am still in favor of the private ownership bill.

Representative HOLIFIELD. That determination would, then, be directed toward whether you intend to do additional exploration? Mr. McGEE. And invest additional money in the business.

Representative ASPINALL. Mr. Chairman, would you yield there?
Representative HOLIFIELD. Yes.

Representative ASPINALL. You have stated here some place in one of these statements that you were thinking about putting a million and a half dollars into some fabrication or processing program. Do you remember what that was?

Mr. MCGEE. Yes. I don't believe it is in the statement, sir. I think this was a news release. We are building a conversion facility. (Article from Nucleonics Week, Apr. 30, 1964, follows:)

[From Nucleonics Week, Apr. 30, 1964]

Kerr-McGee is building a $1.5 million fuel fabrication plant on a 1,000-acre tract north of Oklahoma City near the Cimarron River. Slated for completion in 10 to 12 months, the plant will process uranium oxide fuel for commercial reactors. "We will operate primarily in oxides and whatever carbides and uranium metal and alloys are needed by our customers," said a company spokesman. He added that his firm would recover its own internally generated scrap as well as scrap and residue from AEC and other customers, including both low enriched and high enriched special nuclear material. Kerr-McGee's present nuclear laboratories, located in Cushing, Okla., will be transferred and merged into the new facility upon completion. Firm said the expected growth of the nuclear power industry prompted construction of the plant.

Representative ASPINALL. To convert what?

Mr. MCGEE. To convert enriched material (UF) into some feed materials for fuel elements.

Representative ASPINALL. Would you continue with that program providing we passed this bill without the safeguards that you have in mind?

Mr. McGEE. I think so. We have already made the commitment.
Representative HOSMER. Would you yield?
Representative ASPINALL. Yes, I will yield.

Representative HOSMER. If we fail totally to provide these safeguards that you suggested, would you look forward to an orderly liquidation of Kermac after you used up your discovered reserves?

Mr. McGEE. As I said to the chairman, I think we would have to make the business judgments at the time. I think if we had to make it now, this is what we would look forward to, yes.

Representative HOSMER. Despite all of the rosy predictions as to the growth and sturdiness of the industry in general?

Mr. MCGEE. I don't believe it will be a sturdy industry during the first few years following 1970 if we have low-cost foreign uranium imported into this country.

Representative HOSMER. Your viewpoint is that you just won't do business unless you get so much of these aids or props from Uncle Sam!

Mr. McGEE. Our point is that we can't do business at less than our cost very long.

Representative HOSMER. I understand that. But we are also told that one of the virtues of this private ownership is that the competitiveness that it will engender will drive costs all the way down. We assume that we are headed toward a rosy future.

Mr. MCGEE. Again in the natural resource business the physical conditions surrounding a deposit of a natural resource have a lot more to do with the cost than the operations of processing do. If you have a real good low-cost deposit of uranium you are in a much better competitive situation than if you have a deep underground mine. If you have a stripping operation against a deep underground mine. These costs are in much greater magnitude than the cost differential in processing.

Representative HOSMER. The things you fear are the disposition of the Government stockpile and foreign competition ?

Mr. McGEE. We really don't fear the Government stockpile, because we feel that the Atomic Energy Commission will not destroy a business that it worked so hard to build up.