I have 10 minutes. I had a little speech to give for 10 minutes, and I could actually throw it all away after listening to my partners here. I'm going to go through it, though, as I would probably go on and on forever.
Energy Alberta was started as a corporation to be profitable as an energy provider at the lowest cost, utilizing nuclear power in Alberta. The need for alternatives to natural gas as a source of energy becomes apparent when you examine only the small area of Alberta energy demands, and that's in the oil sands.
The National Energy Board and others have forecast that oil sands productions could increase fourfold by 2015 in the SAGD projects alone, using natural gas cogeneration systems. We can see natural gas demand in the region skyrocket to over five billion cubic feet a day by 2015. This scenario is on the graph. You can see the graph on the side. It gives you an idea. Our strength allows us to provide a long-term competitive advantage for the off-takers.
First of all, we are an environmentally superior hedging alternative to natural gas. Nuclear energy emits nearly zero CO2 emissions over the life cycle of the facility. This can provide the oil sands off-takers with continued compliance with future environmental legislation and a long-term competitive, stable price.
Second, nuclear energy has a long-term stable fuel cost, contributes about $550 million per year for a single CANDU 6, where gas is at about $650 million per year at $7. So price-wise we're competitive, and as far as the CO2 emissions go, it's definitely a positive.
Our business plan reinforces nuclear energy's unique ability to act as a hedging tool. Our technology choice is best for the industry. AECL has a track record of building nuclear power plants on time, on budget, with a fixed turnkey price contract: this will be the model that we're proposing in Alberta.
Our business plan uses various insurance programs to mitigate the risk of unexpected cost overruns or project delays which would impact off-takers' revenue. This will ensure our ability to provide a long-term hedging option for energy output costs. Our energy outputs are stable for in situ development, be it SAGD or carbonate for upgraders and other interested parties.
Within the Clean Air Act, which was proposed legislation seeking to reduce greenhouse gas emissions by 65% of 2003 levels by 2050, a component of the emissions reduction strategy is to provide emission intensity targets to the energy industry. While this is not completely defined at this point, companies will be required to lower their emissions on a per unit of output basis.
Nuclear energy's proposed contribution to the Clean Air Act for the oil sands is based on a nuclear power plant's ability to drastically reduce nearly all the emissions required in the production or upgrading of bitumen. This would result in a project's having a near zero emissions intensity level over the life of the project.
Nuclear energy will result in displacement of nearly 3.3 million tonnes of CO2, amounting annually to about $70 million Canadian in savings, and it's expected to rise as values associated with carbon increases.
The nature of nuclear energy aids in its ability to act as a hedging tool against inflation and input fuel price fluctuations. Nuclear energy is a capital-intensive project with over 74% of the $550 million annual revenue requirement for the facilities related to the repayment of capital for the construction of the facility, including 2% for the decommissioning and spent fuel management; 26% of the revenue requirement is subject to inflation, including $8 million for nuclear fuel.
Comparing natural gas production, to produce the same amount of energy, natural gas fuel costs amount to 94% of the total annual revenue requirement of the facility. Energy Alberta brings to the table a long-term hedging option contract for nuclear energy at a stable and predictable price over the next 20-year period.
The inflation components have little impact. A doubling of the commodity price of uranium would only increase nuclear energy costs by about 3%. The ability to hedge is not only helping to develop the concept in Alberta, but is one of the reasons why nuclear is expanding across the globe.
We are living in a nuclear renaissance. There are over 442 reactors open around the world today. There are 28 new reactors under construction, and another 62 are in the planning stages. It is anticipated that the new Ontario reactor will be built by Atomic Energy of Canada using the CANDU technology. This will produce advantages for the new builds in Alberta.
A question that is commonly asked of us is whether or not Alberta is ready for nuclear. Before starting this project, we commissioned an Alberta-based public opinion poll. The results supported the project; 40% of Albertans favoured the proposal, and 36% were neutral to the concept. Over the past few months, Alberta has seen a strong public shift in the provincial mood towards nuclear power.
In early October, Alan Greenspan spoken about the need for alternative sources of energy to an audience of over 2,000 businessmen and businesswomen in Calgary. He made it clear that nuclear is an option Alberta could see in the oil sands.
In August of this year, we entered into an exclusivity agreement with Atomic Energy of Canada to market, own, and operate a CANDU 6 to support oil sands development. AECL is providing us with their nuclear experience.
AECL's track record for building CANDU 6 nuclear power plants is excellent. Since 1996 all six of the reactors have been built on time and on budget, and the current project in Romania is on time and on budget.
Spent fuel will be safely managed in accordance with Canadian regulatory procedures. Spent fuel management costs are built into the energy output prices, so we look after our waste. Long-term storage will be based on the recommendations that have been submitted to the federal government by the Nuclear Waste Management Organization.
This will likely be outside Alberta, and we would like to see the federal government provide clarity on this issue. We've spent about $1 billion so far, and the federal government have come up with a program, but they haven't passed it.
Since then, spent fuel is physically a small amount and the transportation of stored spent fuel is a fully insurable process happening around the world today. The off-takers are not responsible for it.
Working with consulting experts in the Lloyd's of London insurance market, Energy Alberta has developed a plan that will provide additional insurance against any risks associated with nuclear accidents. In addition to this, we have developed a plan to insure against unexpected cost overruns.
That being said, we understand we are facing labour and infrastructure challenges that are being experienced by oil sands operations in the regions. Given the importance of the oil sands to Canada and the delays associated with inadequate infrastructure, developing reliable infrastructure in the area should be an issue of national importance to the Canadian government.
The CANDU 6 reactor power plant will provide three streams of energy: steam, hot water, and electricity. Through electricity, hydrogen can be produced. In situ operators need steam and electricity for SAGD, and they need electricity to extract bitumen from the carbonate deposits. Mining operations require large quantities of hot water and electricity. All upgraders require large quantities of electricity and hydrogen. Last, and equally important, is the need for electricity by the non-oil sands sectors in Alberta for residents and the industry.
The federal regulatory process is well defined, and we will require Energy Alberta to apply for licensing for the site, construction, and the operator. These applications could be reviewed by the Canadian Nuclear Safety Commission in accordance with the process defined by the federal licensing process for new nuclear power plants in Canada.
The process also requires Energy Alberta to complete an environmental assessment. We hope we can use some of the existing ones to help us as well.
Combining the federal regulatory process with the provincial requirements is an issue that needs to be clarified. Various organizations may be involved in the federal process as stakeholders or may be unsure about how they could be involved in the process. It is important that there is regulatory clarity provided by the federal government to the provincial government. Such clarity should help ensure a reliable and effective regulatory process for all stakeholders.
In July 2005 the business concept to deploy nuclear power to support the oil sands develop was formed with Energy Alberta. Today we have an exclusivity agreement with the AECL to market, own, and operate a CANDU reactor power plant in support of the oil sands. The energy from this facility will either be contracted with direct agreements with an off-taker or will be an open season process to go for bid. By March 2008 we should be in a position to initiate the regulatory process and by 2016 the facility could be operating at full capacity.
Thank you.