David Macaulay, Luke Morrison, Sharon Singh and Dayo Ogunyemi

Interest in the development and deployment of Small Modular Reactors (SMRs) continues to gain traction due to their size, design and the potential to help reduce greenhouse gas emissions.

On March 28, 2002, Alberta, Ontario, Saskatchewan and New Brunswick released their Strategic Plan for the Deployment of Small Modular Reactors. At the announcement, Alberta's Energy Minister Sonya Savage said, "There is great potential for SMRs to provide zero-emission energy for industrial operations in remote areas and to further reduce emissions from Alberta’s oil sands."

In its just-released 2022 budget, the federal government proposed new funding to support the development of SMRs.

Using small scale nuclear power in the oil sands has been discussed for over a decade. But today, the technology is already in use and more is expected. In December 2021, China connected the world's first SMR to a power grid with a 200-megawatt unit. In the U.S., the Department of Energy is supporting the construction of a SMR power plant in Idaho. Other announcements on advancing the technology have been made around the world.

SMRs offer numerous benefits and opportunities—as well as obstacles and challenges. The most relevant ones for the oil & gas industry are highlighted below.

Opportunities for Oil & Gas Companies and Communities

Transportable to any site: SMRs are small in both physical size and footprint, while still being able to produce sufficient power to support industrial applications or remote communities with limited grid capacity. SMRs are typically factory-built, portable/modular, scalable and can be transported as a unit to any site for assembly by truck, rail, or ship.

Heat source: SMRs can be used to create heat for industrial purposes. The heat generated from SMRs can be used for process heat for bitumen extraction, and steam supply for a wide variety of industrial uses.

Decarbonization: SMRs can play a important role in supporting Alberta's emissions reduction goals. Multiple proponents are looking at ways to integrate SMRs into hydrogen production, which may in turn be utilized by the electricity and transportation sectors for energy storage or as a fuel source for long haul transportation.

Economic partnerships with Indigenous communities: The four-province SMR Strategic Plan states that project proposals in Alberta, Ontario, Saskatchewan and New Brunswick will need to consider opportunities for Indigenous communities to participate in their development. This includes areas such as equity investments, employment, skills development and supplier arrangements.

Canadian know-how: Nuclear power plants have been producing electricity commercially in Canada since the early 1960s. While Alberta is new to nuclear power, it can reach out to Ontario and New Brunswick as fellow members of the four-province plan to adopt best-practices for regulating nuclear reactors.

Challenges for SMR Development

Regulatory uncertainty: The International Energy Agency says that federal government support for SMR projects is critical. Policy reform at both levels of government will also be required to allow for licensing and construction of demonstration projects. Given the significant expertise the Canadian Nuclear Safety Commission (CNSC) brings to the policy and regulatory framework for all reactor facilities, there should be a pathway to ensure that the current licensing requirements can be appropriately tailored using a risk-informed approach.

Waste management: While the regulatory framework for radioactive waste in Canada is well-established (management of waste is a component of CNSC licensing), SMR proponents and governments recognize the need for public dialogue to provide information regarding fuel waste from new or emerging reactor technologies. This includes engaging with multiple stakeholder groups to demonstrate how a proposed SMR project will meet waste storage and handling requirements and international standards.

Capital costs: Several analyses have shown that SMR capital costs per unit of power are comparatively lower than costs for large nuclear reactors or other sources of electricity such as diesel. However, proposed SMR projects face cost certainty issues in fuel source scarcity and reliability, logistical and transportation costs (both for fuel and for the modular SMR units) and limitations regarding spent fuel storage.

More engagement by the federal and provincial governments can be expected in 2022. Developments in SMR technology in Canada and around the world will be worth watching for oil & gas companies and communities.

A complete overview of Canada's SMR landscape may be found in Bennett Jones' article: Small Modular Reactors: A Key Component to a Low Carbon Future?