WAPA's propane project receives support at St. Thomas CZM Committee meeting
Published: February 14, 2014
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ST. THOMAS - The V.I. Water and Power Authority's project to use propane to make electricity was before the St. Thomas Coastal Zone Management Committee for a public hearing Thursday.
A separate CZM application for the St. Croix propane conversion project was heard by that district's CZM committee earlier this week.
The St. Thomas project has been split into two CZM applications, one for the underground storage tanks and propane delivery systems at the existing power plant, and one for the dock facility.
The first permit application, for the land-based facility, was filed by Vitol Virgin Islands Corp.
The water application, for the docking facility, is filed by WAPA.
The permit for the land-based construction was the one considered at Thursday's public hearing.
In July, WAPA signed an agreement with Vitol to build storage terminal facilities at the St. Thomas and St. Croix power plants and to upgrade eight turbines to burn liquefied petroleum gas - better known as propane.
WAPA Executive Director Hugo Hodge Jr. said the agreement with Vitol is a "build, own, operate, transfer" project. Vitol is financing the $93 million project up front at no cost to WAPA. The utility will purchase the propane from Vitol, but only what it uses to create energy, Hodge said.
After seven years of operation, when Vitol has recouped its investment with a 10 percent return, the ownership of the facility will transfer to WAPA.
Vitol is the permit applicant because they will be the owners of the facility for the next seven years, Hodge said.
Hodge detailed the facility's operations for the St. Thomas CZM committee Thursday, going over the safety concerns, economic and environmental benefits and logistics of operations.
According to the permit application, Vitol will install 10 storage tanks, buried under two raised mounds on the hillside above the Harley Power Plant. A two-story office building and a road, along with drainage infrastructure, will be included in the construction.
The top of the hill will be cut down some to build the storage facility.
The overall size of the mounds will be 128 feet wide, 420 feet long, and 30 feet high.
Several people testified at Thursday's public hearing, including three local businessmen who supported the project and said they look forward to the lower energy costs it will bring to consumers.
Converting the utility's fuel source from oil to propane will reduce fuel costs by about 30 percent - about $90 million - a year, Hodge said.
Those savings will be passed on to the consumers as soon as October, Hodge said.
"It's really hard to stay in business right now," said Atlantic Seafood owner St. Claire Crabb. "It's been a real strain on the small businessmen, and 30 percent would mean a lot."
Erva Denham of the League of Women Voters of the Virgin Islands testified and asked a number of questions about the project. She was concerned about the price of propane going up, erasing the savings WAPA is projecting.
Hodge said that will not be an issue because Vitol is one of the largest suppliers of propane and the Virgin Islands is exempt from a law that prohibits ships sailing under foreign flags from delivering propane to the United States.
He also said WAPA can lock in prices by hedging or buying futures.
St. Thomas CZM Committee member Karl Percell asked about the lifespan of the storage tanks.
Mark Synnott, who designed the facility, said they can last for 45 to 50 years with proper maintenance.
Sarah Simmonds, another committee member, asked how the tanks will be inspected if they are underground.
"We inspect from the inside," Synnott said.
Hodge asked the committee to approve the permit as soon as possible.
"It is also vitally important that we complete this project on time so that we all realize the many benefits at the earliest possible time," Hodge said.
Committee chairman Austin Monsanto said he was pleased at the public hearing.
"I think this is one of the most encouraging public hearings we've held in a long time," he said.
The public has seven days to submit written comments to the CZM Division, and the board has 30 days to make a decision.
For more information about WAPA's propane project go to www.poweringvi.vi.
- Contact reporter Aldeth Lewin at 714-9111 or email email@example.com.