Diageo to produce its own power to ensure continued production
Published: February 25, 2013
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ST. CROIX - Officials at Diageo USVI hope that by the end of next month, they no longer will have to rely on power from the V.I. Water and Power Authority.
Instead, Diageo plans to generate all the electricity needed to run operations at its distillery site - which produces all the rum for sale under the Captain Morgan brand in the United States - using liquid propane gas, said Dan Kirby, vice-president of Diageo USVI.
"We'll use that to generate our electricity and our steam," Kirby said.
Although officials plan to run the entire Diageo distillery operation on liquid propane, the Diageo warehouse - on a separate plot of land several miles away in Estate Diamond - will continue to run on WAPA power for now, Kirby said.
"Like most businesses, we're concerned about the potential costs and availability of power," Kirby said. "It really has the potential to impact our ability to continue to operate in a prudent and cost-efficient manner."
Kirby said the distillery's switch to generating its own power, fueled by liquid propane gas, has been in the works for about 11 months.
Officials hope to make the changeover to liquid propane by the end of March, he said.
Two 75,000-gallon propane tanks have been set up on the property, and Diageo has purchased a 4-megawatt turbine with a heat recovery steam generator to make its own electricity.
Waste heat from the process will be used to generate steam, with a little bit of supplemental propane, Kirby said.
The end to HOVENSA's refining operation was one factor that played into the decision by Diageo to generate its own electricity.
"We looked at a lot of different factors out there, and obviously the closing of HOVENSA was one of them," Kirby said.
The move was necessary to "ensure operational continuity," Kirby said.
"It's more around our continuity of supply and ensuring we can continue to produce," he said.
He declined to say how much Diageo was spending on its monthly power bills with WAPA, or how much it spent to purchase and install the equipment necessary to generate the power to run the distillery operation, saying only that "it's a significant investment in the distillery."
"It's really going to support our environmental goals," Kirby said.
Kirby also declined to say how much Diageo anticipates in future cost-savings with the change to generating its own electricity, noting that it would be difficult to predict because some factors - such as the cost of propane - fluctuate.
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