Thirteen potential liquefied natural gas or propane providers responded to the V.I. Water and Power Authority’s October request for qualifications, WAPA announced Monday.
WAPA plans to convert its existing combustion generators on St. Thomas and St. Croix to use natural gas or propane as the primary fuel, to take advantage of much lower prices for those gasified fuels and to lessen the exorbitant sums spent on the fuel oil that currently provides 100 percent of the territory’s power generation.
WAPA entered the request for qualifications process to determine companies capable of implementing and operating a turnkey solution to supply natural gas and/or propane. WAPA’s Chief Operating Officer Gregory Rhymer, who chairs the evaluation team of in-house and external technical, legal and financial experts, said that the successful respondents must develop infrastructure to import and deliver natural gas or propane to St. Thomas’ Harley Power Plant and St. Croix’s Richmond Plant. The respondents must demonstrate a proven track record of implementing and operating such types of turnkey solutions, according to Rhymer.
Rhymer said WAPA plans to negotiate with one or more of the most qualified respondents. Qualifications have been assigned weighted measures, including project time line and project permitting process (35 percent); general qualifications and proposed solution (30 percent); financial capacity and financing plan (20 percent); and single point of accountability (15 percent).
In its recently published "Energy Production Action Plan," WAPA’s governing board found converting could save money, increase plant efficiency, reduce pollution and lower maintenance costs, among other benefits. The plan can be viewed at WAPA’s website: www.viwapa.vi.
Successful respondents must demonstrate how they can successfully overcome some of the challenges including shipping, safe unloading and storage facilities, permitting regulations, dock improvements and dredging that may be necessary, and unfavorable price volatility possible in the natural gas and propane market but outside of local control, according to WAPA.
Liquefied natural gas is created by cooling natural gas to a temperature of -285 degrees Fahrenheit. This process significantly reduces its volume allowing large quantities of the liquid to be transported and stored more efficiently. While natural gas is most often transported in large ships, the successful V.I. suppliers must be able to furnish small scale natural gas shipments, said Hodge in a statement from WAPA.
In the Caribbean region, one primary source of natural gas is Trinidad and Tobago. Another future potential source of natural gas would be from the Gulf and Atlantic coasts of the U.S. There are also transshipment terminals located in Puerto Rico and the Dominican Republic that present possible opportunities for agreements to re-export natural gas supplies from those terminals to the Virgin Islands.
These options represent an interim solution, Hodge said. Propane is widely distributed in the Caribbean region and is transported by refrigerated or pressurized propane ships which are generally significantly smaller than natural gas carriers and do not require access to marine facilities in deep water port, WAPA said.
Propane can be delivered from Trinidad and Tobago, West Africa or the U.S. Gulf Coast.
By Nov. 29, WAPA will notify the qualified respondents with the highest evaluation scores of its intention to engage in further discussions to define the commercial framework for proceeding with the project. By early 2013, the company or companies selected will be notified and scheduled for negotiations.
Five companies have submitted qualification packages to supply propane:
– Geogas Trading SA & Polaris Engineering Inc.;
– Empire Gas Company Inc.;
– Trafigura;
– TropiGas de Puerto Rico Inc.;
-and VITOL Group.
Eight companies have submitted qualification packages to supply liquefied natural gas:
– Argent Marine Management Inc. (Maresk Line Ltd & Shell Gas & Power Development Management);
– Carib Energy, BP, EC & SEA One AG;
– Cheniere Marketing LLC;
– Gas Fin Development SA;
– LNG Enterprises LLC;
– Pacific Rubiales Energy Corp.;
– S.S.M. LLC;
– WEC Bay LLC , VI Waller Marine, Inc. & ESI.
