TER: Last week, the CEO of Exelon Corporation (NYSE:EXC)—one of the biggest uranium power producers in the U.S.—said that with gas prices where they are, it’s not remotely profitable to build a merchant nuclear plant. Does that mean uranium is mostly a long-term play?
EG: I think there’s a little bit of a difference between the U.S. and other countries on that score. U.S. gas prices are very depressed right now, and it really isn’t about a lack of demand. In fact, we just had a very hot summer in the United States—about 40% hotter than the 10-year average; and we had a very cold winter—about 20%–30% colder than average. Those seasons drove very strong demand for natural gas in electric power plants. What’s amazing is the growth in U.S. natural gas production from these shale fields, these unconventional natural gas fields around the U.S.
TER: Those supplies are keeping the price low.
EG: That’s exactly it. It’s truly astonishing to think that the United States is the world’s largest producer of natural gas, producing about 15% more than Russia. We produce almost as much gas in the U.S. as the entire Middle East and Africa combined. Just 10 years ago, we were hearing that U.S. gas production was declining. I think gas prices in the U.S. will remain relatively low for a long period of time; and, when I say “relatively low,” I imagine that ultimately a price around $6 per BTU will be required to encourage ongoing production and drilling.