Steam-powered electric generating plants: Possible or not?
By William H. Stewart
Special to the Saipan Tribune
Last of a six-part series
If a man takes no thought about what is distant, he will find sorrow near at hand.”
—Confucius
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.
A few weeks ago the Saipan Tribune reported that the Commonwealth Utilities Corp.’s fuel costs for the first four months of fiscal year 2005 was $17.5 million. Assuming that figure will prevail for the entire year (highly unlikely) 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.”
I’m not going to suggest solar panels or wind-powered generators as a replacement for oil-fired power generators, which 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.
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 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.
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 a barrel. Five years later in 2000 it had increased to $27.40 a barrel; and at one point in early 2005, it skyrocketed to $56.40 per barrel. Can you possibly imagine the repercussions if and when it reaches $75 or even $100 a barrel?
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 result 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 enterprises provide 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 experiences at any point where the results of their work indicate 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 cinder, which is 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 $50 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 seaport.
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—all would 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 conversation 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 the 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 with 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.)