Fluor a Finalist for Contract to Manage Reactor Project : Energy: The Irvine firm received $4 million for preliminary work on construction feasibility and cost estimates for the replacement.

The Energy Department said Monday that it has named Irvine-based Fluor Corp. as one of two finalists for a multi-year contract worth $2 billion to manage construction of a new reactor to produce a radioactive gas critical to the manufacture of nuclear weapons.

The company’s Fluor Daniel unit and a subsidiary of Bechtel Group Inc. of San Francisco each received contracts worth up to $4 million for preliminary work on construction feasibility and cost estimates for a new reactor to replace the three aged and leaking reactors at Savannah River, S.C., that were closed in 1988.

The Energy Department said Monday that depending on which reactor design it selects late this year, either Fluor will manage construction of a modular high-temperature gas-cooled reactor or Bechtel will oversee the building of a so-called heavy water reactor.

Alan H. Dorsey, an analyst with Dillon Read & Co. in New York, said that the construction management contract would be a significant one for either company and suggested that Fluor might be better positioned to win the nod than Bechtel National Inc.

While Bechtel “has a knack” for winning major government contracts, he said, its heavy involvement in the eventual rebuilding of Kuwait might make Energy Department officials concerned that it would be stretched too thin if it received the Savannah River pact as well. Bechtel already has a letter of intent from Kuwait’s government to oversee a study of rebuilding the country’s devastated oil fields.

Fluor, however, is also heavily involved in the Mideast. In addition to winning a multibillion-dollar, 10-year pact last year to help refurbish Saudi Arabia’s vast oil and natural gas facilities, the company also is talking to Kuwaiti officials about a role in that nation’s reconstruction in the wake of the Persian Gulf War.

Without including any of those contracts, Fluor already has a backlog of $9.5 billion in contracts. But less than $1 billion of that is in government work, Dorsey said.

While the initial study contract for the reactor project is very small, it underscores Fluor’s determination to increase its government work, said Mark Altman, an analyst with PaineWebber Inc. in New York.

Fluor Daniel officials could not be reached for comment. Fluor spokeswoman Deborah Land said the company submitted its bid on the project in December. She was unable to say how many other companies were involved in the bidding.

Both Fluor and Bechtel have designed, built and managed construction of several nuclear reactor facilities. Fluor also is construction manager for the nuclear waste storage project at Hanford, Wash. That project involves construction of a facility for embedding radioactive waste in glass.

The Energy Department last month unveiled a sweeping plan for redesigning of the entire U.S. nuclear weapons complex, aimed at making it more compact, more centralized and less costly to operate.

The Savannah River reactors, which began operating 39 years ago, were the only ones producing tritium, a radioactive gas that boosts the explosive power of nuclear warheads. Because it decays in radioactivity relatively quickly, tritium must be periodically replenished in warheads.

The three reactors, which were built by E.I. Du Pont de Nemours & Co., were shut down in August, 1988, after repeated leaks and other safety problems occurred.

Westinghouse Electric Corp. assumed operation of the 300-square-mile complex in April, 1989. A series of new problems since then first delayed the planned reopening of the reactors and finally led to the decision to go ahead with a replacement.

The Energy Department originally planned to build two reactors--one of each design--with the heavy water reactor slated for the Savannah River site and the gas-cooled reactor to be located in Idaho.

However, because of budget constraints, the department recently announced that it would proceed with only one reactor, with a final choice expected to be announced in December, 1991.

Until then, the department said both Bechtel and Fluor Daniel would conduct only preliminary activities, such as construction feasibility studies and cost estimates. After one reactor design is selected, work on the other reactor will be terminated.