That BPL imbroglio
I have, admittedly, never been the least bit inclined to comment on “you say, I say” situations. Hence, though repeatedly asked to comment on the “he say, she say” scenario that eventually led to the dismissal of the BPL board (all but one) my answer was an unequivocal no. I don’t intend to comment now. Something has, however, been thrust into the public domain, whether intended or not, that is indeed deserving of commentary.
The general nature of the contract BPL intends to enter with Shell for construction of a new power plant has not yet been disclosed. However, based on all that has been made public I believe one would reasonably have been led to conclude that Shell would build, own and operate the plant and would sell electricity to BPL via a power/purchase agreement or some similar instrument. I certainly presumed as much. Kindly note that I deliberately chose “presume” rather than “assume”, lest in conclusion I make an ass of ‘you’ and me.
The disclosure that has come to light is that BPL’s board, at least some significant members of the board, were willing, in fact seemingly desirous, of BEC investing up to $100 million in the proposed plant.
That disclosure strongly suggests a mindset that Shell would build, own and operate the LNG storage and regasification facility and that Shell would build the power plant, but that BPL would own and operate it. Furthermore, the protestations being made on GE’s behalf suggest the power plant will be diesel engine-driven. That decision might well be deserving of review for several reasons. I will detail a few.
Clifton Pier was the first location anywhere in the world where a stationary (land-based), slow speed diesel engine-driven power plant, burning #6 fuel oil/heavy fuel oil/Bunker C, was constructed; BEC’s record of maintaining its diesel engine-driven power plants has, however, been abysmal. And, yes, I did serve as chief generation engineer in the ‘70s and as chairman for a grand total of 27 months.
In digression, my employment history also includes service as general manager of Freeport Power; general manager of Electrical Utilities Company Limited and West End Power and Light Limited; and as chief technical officer of Jamaica Public Service Company Limited (JPS), a wholly integrated electric utility, serving more than half a million customers. To dispel the oft repeated BEC/BPL complaint that the organization’s plant is old and undermaintained, I offer the following brief facts regarding equipment age and maintenance expenditure.
Regarding age, two #6 fuel oil burning, slow speed diesel engine-driven generators, supplied and installed by the same company that supplied BEC’s large diesel engine-driven generators, were installed at the Jamaica Private Power Company (JPPC) in the same time frame as the BEC units. The JPPC units have, however, recorded approximately 50 percent more operating hours and produced approximately 50 percent more electricity to the Jamaica grid compared to BEC’s units. Further, JPPC only recently signed a contract to continue producing and supplying a similar annual quantum of units to the Jamaica electricity grid over the next five years. BPL is invited to publicly disclose those comparative numbers.
Putting the foregoing in every day parlance: Two individuals purchase identical vehicles at the same time; over a five-year period, one vehicle amasses more than 150,000 miles while the other accumulates somewhat less than 100,000 miles. Yet, the owner of the vehicle with fewer miles claims the vehicle is old and ready for retirement (BPL’s posture) while the owner of the vehicle with significantly greater miles indicates the vehicle is still in excellent condition and available for continued, reliable service (JPPC’s posture).
Regarding maintenance expenditure, a brief perusal of the report produced by consulting firm Fichtner will reveal the following: “BEC consistently spends significantly more than the industry norm maintaining its diesel engine-driven plant, yet plant performance is significantly worse than the industry average”.
It is noteworthy that the Fichtner report further states that BEC has been spending less than the industry average maintaining its simple cycle and combined cycle gas turbine plant, yet the plants’ performances have eclipsed industry norms. (Fichtner did, however, note that protracted underspending might lead to problems in future).
Diesel engines remain the prime mover of choice for small power plants though solar has emerged as a viable alternative. For larger power plants, especially those exceeding 100 megawatts (MW), gas turbine plants, particularly combined cycle gas turbine power plants, are a decided base load alternative.
The decision to install diesel engine-driven plants in preference to gas turbine plants has historically been skewed by the fact that diesel engines, especially larger ones, could burn relatively inexpensive #6 oil whereas gas turbines could only burn more expensive #2 oil/diesel/automotive diesel oil or gas. Until recently, gas supplies have been unavailable at many plant sites. Installation of an LNG storage/regasification facility will mean both types of plant will burn the same fuel hence the issue of relative fuel cost is eliminated.
Eliminating fuel cost, the factors that ought to govern a plant selection are: capital cost, heat rate (efficiency), maintenance cost and reliability. Fichtner has already presented the case regarding maintenance cost and reliability for BPL’s various plants. BPL might care to publish the comparative numbers. Also, the heat rate (efficiency) of the BEC Clifton Pier diesel engine-driven plant and its Blue Hills combined cycle/STAG plant are quite similar. Again, BPL might wish to publish historical numbers.
The only very current numbers I don’t have are comparative capital cost figures. I do have a rather good idea regarding the numbers but opt not to disclose lest in conclusion I do make an ass of ‘you’ and me.
– Michael R. Moss