St. Croix Avis
Tuesday, October 2, 2012
By Andrew Wilkins
St. Croix -- The Virgin Islands Water and Power Authority is officially seeking companies to provide liquid natural gas and liquid propane gas for its generators.
Two requests for qualifications went up on the utility's website Monday, one for LNG and another for LPG. The company chosen for the first project would be responsible for the development of the infrastructure to import and deliver the gas to WAPA's Harley Power Plant on St. Thomas and the Richmond Power Plant on St. Croix.
"WAPA anticipates that the time frame for securing LNG transportation and receiving infrastructure may take several years," according to a WAPA news release.
For the second project, WAPA is seeking a "bridge" supply of fuel such as LPG until the LNG infrastructure is ready.
"Bids will be due January 9, 2013, shortly after which we'll shortlist the bidders and expedite the process that leads to a selection of developer(s)," Hugo Hodge Jr., chief executive officer of WAPA, said.
At Thursday's board meeting where the RFQ was announced, WAPA officials also discussed their new Energy Production Action Plan and said that the list of fuel oil bidders has been narrowed down to three.
The plans to switch from higher-priced fuel oil has become even more critical in the face of WAPA's rising electricity rates. Hovensa is tapering off the $50 million annual fuel discount given to WAPA, and at the end of the year WAPA will have to buy its fuel on the open market.
Several months ago, Gov. John de Jongh Jr. estimated power prices would jump 20 to 25 percent -- and in October, WAPA will add 16 percent to the Levelized Energy Adjustment Clause, the biggest increase ever.
LNG is cheaper, cleaner and more efficient than the fuel oil WAPA uses now. It also doesn't cause as much wear on the generators, according to Mark Jensen, chief operating officer of LNG Enterprises.
LNG Enterprises is a two-year-old St. Croix-based company that Jensen said is excited to bid on the WAPA contracts.
"We're excited there's a solution coming down path. It could be two years or 18 months, but this is a good solution for the island even though we still have to weather this short-term storm," Jensen said.
Puerto Rico and the Dominican Republic are both using LNG, but Jensen said right now no small Caribbean islands are using it. Jensen said his company is in discussions to bring LNG to several small Caribbean nations, and he thinks in the near future they will all make the switch.
The design of the terminal they are planning for St. Croix has been used at 20 locations in Europe, Jensen said. He said people should know that LNG is much more efficient than fuel oil, so more electricity can be generated from less product.
His team all lives here, Jensen said, and they too feel the pain of the electricity costs. Once power prices come down, more utilities will consider moving here, he believes. Jensen also said his company has plans to supply natural gas for automobiles on St. Croix. the price is much more affordable than regular gasoline, he said, and the island is small enough to be supplied by three stations with natural gas.
Jensen understands there is still a competitive bidding process, but he said he is excited about the price they can bring -- and if another company can beat that price, it just means better cost savings for the territory.
WAPA spokesperson Cassandra Dunn said that the RFQ process gives companies a chance to describe their experience, qualifications and how they will do their pricing. Once WAPA finds a company that's qualified, price negotiations will begin, she said.
WAPA will be responsible for converting their generators to running on LNG or LPG. Three of the four generators on each island will be converted to begin, Dunn said, and the rest will be converted as more funding becomes available. WAPA is receiving funds from the recently-doubled gas tax to help finance the conversion, Dunn said.
The Virgin Islands Daily News
Friday, September 28, 2012
WAPA moves ahead in transition to relying on liquefied natural gas
By Aldeth Lewin
ST. THOMAS -- The VI Water and Power Authority is taking the next step in moving the territory away from high-priced fuel oil and toward liquid natural gas.
WAPA Executive Director Hugo Hodge Jr. told board members Thursday that a request for qualifications will go out the first week in October for a company to provide liquid natural gas and liquid propane gas as a fuel for the authority's power generators in both districts.
The authority actually is issuing two separate RFQs, one for propane and one for natural gas. According to the RFQ, propane would be used as a "bridge" fuel until the natural gas infrastructure is in place and operational.
Requests for qualifications differ from requests for proposals in that RFQs are a chance for companies to introduce themselves, share their experience and present financial information about the company. In addition, the responses will include proposals to develop a system for WAPA to use gas or propane and provide prices for the various services.
An RFQ allows a company to submit a proposal that offers an open-ended opportunity to present a more comprehensive plan, whereas an RFP generally has more rigid parameters that companies to which companies must adhere.
WAPA is looking for a gas supplier, but the proposals must include the whole system -- obtaining, shipping, unloading and storage.
Hodge said WAPA would prefer to choose one company for everything but will consider selecting multiple vendors for different aspects of a liquid natural gas system.
In conjunction with the RFQ, WAPA is working on converting its oil generators to burn gas. Hodge said the conversion process is largely the same for liquid natural gas or liquid propane gas, only the nozzle is different.
Hodge said that while the process is beginning now, it will be several years before a working system is in place and WAPA is able to generate power from gas.
Although WAPA anticipates that propane is suitable only as a bridge fuel -- because of pricing -- the utility will consider it as a long-term alternative if respondents can provide competitive pricing for a long-term supply, according to the RFQ.
Hodge said the RFQ will go out next week, and the top proposals will be selected by January.
The RFQwill go out globally, he said. The ads will appear in trade magazines and will be given to trade associations to circulate to members, in addition to sending the requests directly to multiple liquid natural gas companies.
"This is a big step," WAPA board chairman Gerald Groner said. "We all know that getting off oil is our burden."
In a different effort to move WAPA away from 100 percent reliance on oil, the board adopted a draft Energy Generation Action Plan on Thursday.
The 22-page document compiles information about the utility's existing infrastructure and policies for the future of the utility.
Once the plan is finalized, it will be available to the public and given to the WAPA staff to use as a guiding document.
The plan includes guidelines for converting oil-fired generators to liquid natural gas, interconnecting to the Puerto Rico grid, diversifying the territory's power generation with solar and wind and exploring biomass and thermal energy solutions.