WAPA officials react with caution to ideas pitched at meeting
Published: March 7, 2012
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ST. CROIX - The territory's energy future was the focus of conversation Tuesday night in the St. Croix office of Sen. Sammuel Sanes.
To spur discussion on the topic, Sanes invited industry representatives to present V.I. Water and Power Authority officials and members of the public with a series of proposals and ideas about the importation of liquified natural gas, or LNG.
Sanes pointed out that he was not in support of any company and only is trying to initiate a conversion and get information to the public.
WAPA officials also reminded the participants that any decision the WAPA board made would have to go through the procurement process.
The question posed in the tight quarters of Sanes' office over coffee and doughnuts was not whether LNG would make it to the region, instead the discussion was about how active a role the territory should play in the process.
"It's going to come, but it's going to take some time," said Rodney George, the vice president of power plants for Wartsila Caribbean Inc.
The issue for George was whether the territory would be ready to begin using LNG once it is made available, and he said Wartsila could build more efficient power plants that could burn diesel fuel and LNG.
"Let's do something now to be ready when natural gas is available and at the same time improve some efficiency and have some real savings," he said.
WAPA officials were cautious and expressed a number of concerns, including whether such a facility could be permitted by the U.S. Environmental Protection Agency.
"We don't have the money to go down a dead-end road," said V.I. Energy Office Director Karl Knight, who also is a member of the WAPA board.
A proposed 33-megawatt plant for St. Croix would cost more than $40 million, and WAPA would need assurance that it could pass EPA standards before investing time and money in such a project, said WAPA board member Gerry Groner.
Carib Energy LLC, another company attending the meeting, already is licensed to ship LNG and has developed a method which would eliminate much of the harrowing up-front infrastructure costs, said Carib Energy President Greg Buffington. The company has LNG storage units that can be shipped on commercial vessels, such as Tropical Shipping, every four days, Buffington said.
The gas could be delivered for 20 percent less than what WAPA currently pays for fuel oil, he said.
All parties said that Carib Energy's system was not a good long-term option, but Buffington pitched its scalability.
WAPA officials also expressed skepticism that Wartsila's proposal could cut down on oil consumption by half and pay itself off in the first year through cost savings.
"I stand by the savings," George said. "It's really simple thermodynamics and really simple arithmetics."
George admitted, however, that the EPA could cause a snag because the agency is less likely to permit a diesel-burning facility than one burning a cleaner fuel, such as natural gas.
Until LNG becomes an option, however, WAPA could use the same type of fuel it currently uses and burn it more efficiently in reciprocating engines, George said. Such a facility would result in burning a reduced amount of fuel, he said.
"If we're cutting the fuel consumption of WAPA in half, the EPA should consider that," George said.
While most at the meeting agreed the LNG would inevitably replace fuel oil in most of the Caribbean nations, it was unclear how long it would for LNG to reach the region.
"We have a desire to transition to liquified natural gas as a preferred fossil fuel, and we're always interested in the incremental steps that can move us in that direction," Knight said. "From what I'm hearing, the LNG solution is still a few years away, but there's some progress being made."
WAPA also has been considering whether it can be a leader in bringing LNG to the region and act as a trans-shipment point, according to Groner.
"Certainly, there's a great deal of appeal to LNG," he said. "We see that there is going to be a market here because there are so many other Caribbean nations who are dependent on fuel oil."
As the infrastructure costs became visible, however, "it started to be not as financially an appealing a solution in the near term," Groner said.
WAPA is more interested in a gradual approach through converting a number of turbines to be able to process natural gas, officials said.
- Contact Daniel Shea at 714-9127 or email email@example.com.