Natural Resources Committee on March 30th, 2010

[The Vice-Chair, Liberal, Alan Tonks]

If the committee is in agreement with that, that's fine, Mr. Pilkington. They went through security, I take it.

[William Pilkington]

With some difficulty.

This weld was actually made in a mock-up. It was made through a 12-centimetre opening some 30 feet away from the actual plate. This sample is made of ethyl material that is the thickness and the curvature of the vessel. This was actually done on November 15, mid-November. This was a test weld.

We went to the vessel and did the first repair on December 12. Through December, we completed a total of five repair sites and they went very well.

We believed the process would continue with the learning and that we would be able to get more efficient at doing these repairs as we progressed through the more difficult sites. That actually was not what occurred.

I don't know if you can see the back of the plate, but we've actually machined these samples to replicate the corrosion in the vessel. From all of the inspection we've done, we have a very accurate model of the corrosion in the vessel, so these plates have been machined to exactly replicate that. You can see this area.

This repair required changing technique because of the stress on the vessel, and this what is taking the additional time. In this case, we've actually had to add structural plates. This is not complete, by the way; this was a sample in process. These plates are actually structural and they're welded in with fillet welds around the plate before we move to weld buildup. I point out that these are nuclear-grade material. The welds and weld procedures are using nuclear-grade material and being done to nuclear standards.

Having put the plates in place on that repair site—and by the way, that is the site that is actually being repaired as we speak; we're actually doing this repair today—in the final repair, we have the plates and then we apply weld buildup below, above, and on both sides to complete the repair process. I would point out that you can probably see, even at a distance, that there is a significant amount of deformation in the sample plate. That is why we had to go to this type of a repair in order to reduce the stress on the vessel. It's the development of this that has taken significant time. On this plate, there are a number of defects. This was plate number 9. In fact, we produced 30 of these samples in order to be prepared to go in the vessel and complete the weld that we're doing today.

Finally, regarding the last site, if you look at the corrosion here, it actually stretches from end to end. This is the largest site. The area that is deeply corroded, with less than a millimetre of vessel wall remaining, is quite large in this area. For this repair—and this is not complete—we have completed the design, and it will involve nine thicker structural plates. Then we'll have to develop specific weld procedures—because these plates are spaced differently than the ones in the last sample—to in fact do the structural welds around the plates. Then we will, in similar fashion, build up below, above, and all the way across in order to cover the area of corrosion.

This is the job that lies ahead, and again, all of this meets nuclear standards. The repair is done by authorized authorities that carry certificates to do this type of repair, and all of the materials are nuclear materials. This will be inspected to meet all of the requirements for the vessel and will be accepted by the regulator when it's done. This will give us a lasting repair.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you, Mr. Pilkington.

I have just one comment. We recently had a puck put into the Hockey Hall of Fame. If there were a nuclear hall of fame, I would suggest that you put those plates in there.

We're very proud of the team that you lead. We hope that you'll extend our appreciation on the infinite amount of skill of AECL and the people being used to repair the NRU. It's an amazing accomplishment. We thank you for that.

Thank you for your testimony.

We'll go to our questioners. Mr. Regan will lead off.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you, Mr. Chair.

Maybe it is the welding hall of fame in this particular case.

I want to thank you both for coming today. Actually, I want to thank you for providing us with, by far, the best explanation and demonstration, really, that we've had to date of the complexity of this process. Up till now we had a vague idea that you had to go down three metres and so forth, and it's very complex and radioactive, so you don't go in there and just weld. I think today you've given us a very clear idea of the complexity of that.

As much as I'd like to ask more questions about the welding and all that, I'm not going to because it isn't where my focus ought to be today.

Last night at a briefing, apparently, finance department officials explained that the budget bill gives cabinet the authority to sell AECL without going through the Investment Canada Act. In other words, there will be no restrictions on foreign ownership and no national security test. Is that your understanding, Mr. MacDiarmid?

[Hugh MacDiarmid]

I don't have a detailed understanding, Mr. Regan, but I certainly do understand that the enabling legislation does provide for the government to have the authority to effect the restructuring transaction.

[Geoff Regan, Liberal, Halifax West, NS]

So you're not aware of whether it enables the government to bypass the Investment Canada Act and so forth.

[Hugh MacDiarmid]

From my perspective, it's really not a domain that I have spent a lot of time on in this transaction. It has been a process that's been very much led by government officials, with our support, and that's not a matter I've had direct involvement in.

[Geoff Regan, Liberal, Halifax West, NS]

The sense that I have, and I've had letters to this effect from people who follow the industry and so forth, is that after the criticism, sometimes, of the government and AECL by the private sector, and perhaps in this committee, the government decided to accelerate the process and appears bent on a fast and furious fire sale to avoid more embarrassment over its handling of the isotope crisis and of the Ontario sale. That should be a grave concern, it seems to me.

[Hugh MacDiarmid]

Without responding directly to those comments, sir, I would simply say that the government has made a clear policy decision. They seem intent on executing it. It is indeed important that if we're going down this path, it be done quickly and efficiently, because we do have a business to conduct and need to keep the business going forward.

[Geoff Regan, Liberal, Halifax West, NS]

How confident are you that the end of July deadline will be reached?

[Hugh MacDiarmid]

I'm never confident in any deadline in a transaction, so I think we need to await the outcome of the process. In the meantime, I need to keep the wheels on and keep the business moving forward.

[Geoff Regan, Liberal, Halifax West, NS]

Just to refresh our memory, since the leak was discovered on May 15 of last year, how many times has there been a change of return-to-service-date announcements?

[Hugh MacDiarmid]

We issued what I consider, really, the first definitive guidance around the month of August. At that time we had done enough examination to allow us to put a timeframe of the first quarter of 2010. That guidance held for at least six months. As Bill explained, we ended up in the months of January and February, and to this point in March, encountering challenges in the more complex welds that have caused us to extend that guidance now twice. I believe we're now in a mode where we've changed the guidance a third time.

[Geoff Regan, Liberal, Halifax West, NS]

I guess it seemed to me that the various notices with different dates given on the AECL website would have been six times at this point. At any rate, let me move on.

There were media reports last week where the medical community raised concerns. In fact, we heard concerns from Dr. Eric Turcotte, who appeared via teleconference at the committee. There were media reports in which concerns were raised that “the repair might not be successful, and that would definitely be tragic”. I mentioned Dr. Turcotte. He expressed the concern that doctors are very frustrated with the delays and the constantly changing projections. He used the word that it was a farce, in fact, and that nobody takes those projections seriously any more. I'm hoping that's perhaps why you've chosen a longer period now to build in, as you say, some contingency, some cushion.

Do you think this crisis has damaged AECL's reputation? What do you need me to do restore it?

[Hugh MacDiarmid]

I would respond to the schedule issue by saying that making predictions is a challenge in an environment where you are dealing with first-of-a-kind technology, and you have now seen the complexity of the challenges we face.

We had adopted a philosophy from the outset that we would base our guidance on the best available evidence and rely on the facts and evidence as we have them, as opposed to speculating. That perhaps put us in a position where we were forced to re-estimate that project schedule on a couple of occasions, more than would be ideal.

At the same time, AECL's management made absolutely the best efforts to be transparent and to provide the best guidance possible. We supported those efforts with external advice from experts in the provision of those estimates, so you have been seeing, in a sense, a reflection of the complexity of the project and the very real requirements to reset the timetable based on the evolution of the weld repairs.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you.

Minister Paradis recently said that getting the NRU back online is the top priority of his government, and he is disappointed with the ongoing delays. That reminds me a bit of what we heard from the previous minister, who expressed disappointment with AECL trying to shift the blame. That was my perception, certainly, of that.

What kind of pressure has the government been exerting on AECL? How often do you communicate with the minister's office? Do they get weekly updates, daily updates, hourly updates? What is the situation?

[Hugh MacDiarmid]

First of all, the minister has been very clear that this indeed is the number one priority for AECL from his perspective, and he has given clear guidance that we're to proceed with every resource at our disposal to bring the reactor back into service as quickly as possible, consistent with safety and quality.

We do brief the minister on a weekly basis, and we also have a regular weekly briefing session with senior officials from his office and from Natural Resources Canada through a vehicle we call the project coordination committee. The PCC is perhaps the main senior-level grouping of officials, including Mr. Pilkington and me. It provides the oversight of the project and formulates the communications decisions we make with respect to issuing guidance.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you, Mr. Regan.

Madame Brunelle, go ahead for seven minutes.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Good day, gentlemen. Thank you for coming.

My question is primarily about the very worrisome situation. We know that there will be a shortage of 60% of the isotope supply because of the reactor closing in the Netherlands. Its return to service has been postponed for the sixth time. I understand that you are doing all you can in the circumstances, but I am very worried because doctors and people in the medical field tell us that they are using alternative sources such as thallium, which is an undesirable isotope. As for magnetic resonance, that is difficult. There are no more timeslots available for examinations and the hospitals doing their utmost to run extra hours on evenings and weekends. Doctors tell us that we have to be able to prioritize the necessity for each exam, but it is often a question of life and death. It is really hard.

I would like to quote Eric Turcotte, a medical specialist in nuclear medicine at Sherbrooke, who told us last week, with regard to your announcements about the progress in repairs to the NRU reactor:

...honestly, in medical circles, it has almost become a joke to get an AECL report talking about 30%, 35% or 40%. Medically speaking, this is irrelevant. We only want the reactor to become operational again. The repeated postponements that have been announced since January have meant that we no longer take AECL seriously.

Unfortunately, we can see that the confidence of the doctors has been shattered. How can you, in AECL, be sure that the reactor will go back into service this summer?

[Hugh MacDiarmid]

I regret that my translation didn't work perfectly for the first half of your comments, but I'll do my best.

Certainly we can understand the needs and concerns of all stakeholders in this matter. As I said, we all understand the implications of the delays. It was certainly our goal, very clearly, to have the NRU back in service before the Petten reactor went down. That was a very strong consideration in our earlier scheduled plan. But we also have to be realistic about what's required to effect the repairs. I think you can see the complexity we're dealing with.

The latest end-of-July guidance was prepared with input and advice from a very qualified panel of experts, and it does include what we consider a prudent contingency. It is my sincere hope that will be the last scheduled guidance revision that we have to make.

We've done our level best to be straightforward, to be transparent, and to base our scheduled forecast on the evidence we have at hand. The changes in this situation have been ones that have compelled us to make the revisions we did.

With respect to restoring confidence, I suspect that confidence will come from us producing isotopes. And from our point of view, we can't wait for July to happen.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Of course, we have a lot of questions, especially since there has been talk of privatizing AECL. We wonder what is going on.

According to the figures I have obtained, the taxpayers of Canada and Quebec have invested $8 billion in AECL over its lifetime. We are not sure how much it is worth at present. But we can see in the budget that $300 million will be invested in AECL to cover its commercial losses.

I wonder whether that is a gift for potential investors. Will the restructuring or privatization of AECL include a future for the lab workers in Chalk River? AECL has a Montreal office where 40 people work; they would like to know what the future holds for them.

[Hugh MacDiarmid]

Merci, Madame.

To respond to your comments, to the best of my knowledge the $8-billion figure that you reference is accurate in terms of the accumulated government support in AECL. A very substantial portion of that is for the support of the laboratory, which is by definition a pre-commercial institution. It's not designed to be profitable. It's designed to provide support for pre-commercial research for the nuclear sector. Indeed the amount of funding support provided in Canada could be characterized as modest in comparison to some other nuclear countries, so that price tag does not surprise me.

If we look at the impact of the nuclear sector on the Canadian economy over that period of time, the economic benefits have been many multiples of that investment, through the production of electricity that's been reliable and safe and low cost in Canada, and from reactors we have sold abroad.

The $300 million in funding support being provided for this year is to support a number of activities, some of which are related to the repair of the NRU and the preparation for the relicensing or the licence extension of the NRU. The majority of that amount is earmarked for the unexpected financial requirements associated with the completion of the life-extension projects at Bruce Power and Point Lepreau. I think I've talked before about the other requirements that we have under our contracts: the need to complete those projects safely and with good quality, and to meet our customer expectations in those life-extension projects.

I believe the future of Chalk River Laboratories is a bright one, if we are able to move forward with the plans as they currently are laid out and the laboratory is able to continue with its mission of providing research, development, and innovation support for Canada's nuclear industry. That is vitally important for the future of the CANDU brand worldwide.

With respect to your specific question about the Montreal office, that office will be very heavily occupied for the next while in supporting the life extension of the Gentilly-2 reactor for Hydro-Québec. That project is going to be commencing activity on the work site very quickly.

[The Vice-Chair, Liberal, Alan Tonks]

We're now out of time on that.

We'll have to go to Mr. Cullen now, please.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair, and welcome back, Mr. MacDiarmid.

[Hugh MacDiarmid]

Thank you.