Steam powered electric generating plants—possible or not?

By WILLIAM H. STEWART
Special to the Saipan Tribune

If a man takes no thought about what is distant,he will find sorrow near at hand.” —Confucius

Members of the Association of Pacific Island Legislators currently meeting on Saipan might consider the following idea which first appeared in this paper about a year ago. It’s a concept for a possible long-term alternative solution to the island’s dependence on imported fuel oil for their island’s electric power.

In thinking about the various islands of the Pacific and the direction each will take as we move through the 21st century, I have been curious about a possible project that may appear to be somewhat radical at first glance—but a potential project that I think is worth exploring for those islands that generate their electricity by government-owned oil-fired generators.

About this time last year, the Saipan Tribune reported that CUC’s fuel costs for the first four months of FY ‘05 was $17.5 million. Assuming that figure prevailed for the entire year the total annual cost would then be $52.5 million. When the price of oil hit $56 a barrel an oil executive in Venezuela said, “Forget about oil ever becoming cheaper.” He was right, it’s now over $70 a barrel.

I’m not going to suggest solar panels or wind powered generators as a replacement for oil-fired power generators that we have all heard discussed at one time or another. I suggest that the CNMI, the Federated States of Micronesia, the Republic of Palau and the Marshalls, Guam and perhaps those island governments south of the equator consider joining together to collectively finance a “pre-feasibility study” to determine the plausibility for the eventual conversion, over the long-term, of government-owned oil-fired, generators to that of coal burning, steam turbines. I understand that the government of Okinawa has just completed its conversion to coal.

Oil prices will never decline. If anything, we can expect to see continuous increases in all oil using activities and electric rates in particular. This has been true since the oil crises of 1973. Since that date all of the Pacific islands have experienced spiraling inflation. None will ever be able to purchase their own Middle East oil well. But together they may be able to jointly purchase—through some form of association of member states—a consortium owned coal mine in Australia, Indonesia, China, the United States or elsewhere. This consortium might also purchase or lease the vessels to deliver this mined fuel over a “round-robin” sea route to each member state where the material would be used in coal-fired, steam generators. Certainly the bulk delivery of coal to island destinations will have the higher fuel oil costs added but the cost of generating electric power may be reduced considerably over the long-term.

The information available to me is that the real cost several years ago for generating one (1) Kwh on Saipan was from 22 to 26 cents. That would be the approximate rate that would have to be charged if CUC expected to hope for full cost recovery for burning oil. Something CUC does not now achieve.

Depending upon the season, political environment of the Middle East and the geographic location of the consumer, the price of oil represents the classic consequence of supply and demand pressure. In the United States 10 years ago in 1995, oil was $16.75 per barrel, five years later in 2000 it had increased to $27.40 a barrel and, at one point in early 2005, skyrocketed to $56.40 per barrel. Can you possibly imagine the repercussions if and when it reaches $85 or even $100 a barrel? It is certainly headed in that direction.

The pre-feasibility study I suggest differs from a full-fledged feasibility analysis that would address, in extreme detail, the cost-benefit of the endeavor for each participating nation or entity. The pre-feasibility study would simply evaluate the plausibility of the concept. Should the results look promising then the second phase could be undertaken to prepare the full-fledged detailed financial and economic analyses to determine the cost and benefit to each participating state that presently operates their own power generating facilities as opposed to those areas where private enterprise provides the source of power. I don’t want to interfere with private enterprise since I am a proponent of this economic alternative to government-operated plants. Upon completion of the first phase of the pre-feasibility study, if it is determined that it would be worthwhile to undertake the second, detailed phase, any consultant employed to perform the work should be advised to cease occurring expenses at any point where the results of their work indicate that that the endeavor would not be financially viable.

I am only suggesting a study to determine if it would be economically viable over the long- term. With oil you get two things: fumes up the stack and power. With coal you get three things: fumes up the stack, power and cinders which are a useful aggregate for construction blocks and other uses. Coal mines can be purchased which have recoverable reserves that would last the region for many decades, perhaps even one-half century or longer. For example, at one time the state of West Virginia with its thousands of privately owned coal mines had enough recoverable reserves of coal to meet the world demand for coal for the next 400 years.

Up until the late 1950s almost all electric power in the world was produced by coal-fired, steam driven, generators. When Middle East oil fields were developed and oil prices were $2.50 a barrel everyone switched to this cheaper fuel and away from the use of coal. Now oil prices are around $70 a barrel and it might be worthwhile to again consider returning to the use of coal with due consideration given the environment since the cinders from spent coal will leach an acid into the soil and this most certainly must be mitigated. Also, the discharge from the stacks into the atmosphere will have to be controlled by new, existing technology called “scrubbers.” This equipment cleans the discharge as it is released into the environment. The generating plants would, of course, have to be situated to take advantage of the prevailing winds and obviously be located adjacent a sea port.

Following the completion of the pre-feasibility study any recommended second phase leading to the detailed cost-benefit study would have to be comprehensive in scope and thus it would be expensive and would have to be conducted by professional consultants experienced in this type of power generation. The cost of the coal mine and its operation; the vessels; delivery to port and the various ultimate destinations; port and construction of the discharge terminals; storage areas; power plants and their operation would all have to be analyzed for each potential member in the consortium. Indeed, the cost of the regional organization and its administrative expenses would have to be studied. Should the second phase determine that such a project is feasible over the long term, the consortium would only jointly own the coal mine and possibly the vessels, if such ships were not leased by the group. Each individual member would be responsible for financing their own shore side facilities and scheduling the timing of the conversion from oil to steam. That this endeavor would be both complicated and controversial—particularly on the part of existing oil producers and brokers—is a certainty. It all boils down to economics and a vision of the future.

Over the years there has been much discussion among the islands’ leadership in the western Pacific about regional cooperation. This might be a concept that should be considered and perhaps Interior’s Office of Insular Affairs in conjunction with the Asian Development Bank will consider the relative merits of financing such a pre-feasibility study since the days of cheap oil are over.

For those that advocate wind and solar energy, these are worth evaluating but each has its limitations and I doubt that the islandwide demand for power can be satisfied by those alternatives.

Henry Ford II once made a statement that could be applied to this recommendation when he observed, “Nobody can really guarantee the future. The best we can do is size up the chances, calculate the risks involved, estimate our ability to deal with them and make our plans with confidence.”

All I’m recommending at this point is to examine the possibility of the concept suggested above. That’s what a pre-feasibility study is all about.

(William H. Stewart is an economist, historian, and military cartographer.)