US Virgin Island propane power plans delayed

OREANDA-NEWS. April 14, 2015. Plans to convert US Virgin Islands power plants to run on LPG have been pushed back again as the Water and Power Authority (Wapa) of the islands continues to run into "unforeseen circumstances."

The power plant conversions in St Croix and St Thomas have been pushed back by at least two months to June and July, respectively, Wapa executive director Hugo V. Hodge told the Virgin Islands Committee of Energy and Environmental Protection last week.

The majority of pending upgrades to the facilities hinge on receiving a permit from the US Army Corps of Engineers. If the permit is received by the end of this month, the new June/July timeline is achievable, Hodge said.

European trader Vitol has invested more than \\$100mn in the project that will use propane as a generating fuel instead of No. 2 fuel oil, which has become a more costly feedstock since the 2012 shut-down of the jointly owned 350,000 b/d Hovensa refinery in St Croix by Hess and PDVSA.

Vitol and Wapa's conversion project aims to pass on \\$90mn of annual savings to Wapa customers by using a cheap propane feedstock. Displacing fuel oil with propane saves 30pc on power generation costs from \\$23/Btu to \\$15/Btu, Vitol said. The trader's \\$100mn investment came with a seven-year contract to supply 250,000 t/y.

In September Vitol said the project was 80pc complete with an expected start date in January. But Hodge last week said the project is now estimated to be 65pc finished on St Thomas and 75pc on St Croix. In mid-January Wapa announced plans to start St Thomas operations in late April.

"The Authority has always anticipated that the duration of construction and operations of the facilities on LPG would be approximately 12-14 months after the completion of the front end engineering and design, which was completed in October 2014," Hodge said in his testimony.

Aside from adverse weather conditions and undocumented soil conditions and environmental obstacles, the project has been pushed back due to mechanical issues as well as permitting and regulatory hurdles. Hodge noted ongoing challenges in coordinating the conversion while safely operating the facilities to meet continued daily power demand.

Wapa also ran into hold-ups attributed to the "complexity of permitting, contracting, demolishing and disposing of structures with lead-based paint," and has struggled with sourcing materials and equipment for the project.

While these issues have held up the project's start-up, several logistical developments have already been completed, including the delivery of 18 propane storage tanks. Eight tanks were delivered to the St Croix Richmond facility while 10 were moved to St Thomas Krum Bay, all of which are currently being installed.

Construction and delivery of two shuttle vessels, the Epic Curacao and Epic Caledonia, were also completed along with advance navigator simulations between Virgin Island Wapa docking facilities.

Once operational, the two 1,500-2,500t shuttle tankers will move propane from a VLGC to docking facilities to comply with island conservation rules for vessel discharge.