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Adjustment to Schedule for Propane Projects on STT & STX

(Thursday, August 14, 2014)

Today the Virgin Islands Water and Power Authority (WAPA) announced that its transition to propane as its primary fuel source, which will lead to a decrease in WAPA customers’ utility bills, is scheduled to begin in the first quarter of 2015. 

WAPA Executive Director Hugo V. Hodge, Jr. stated, “The new construction schedule will not impact the amount of savings expected for WAPA’s customers or the improvements in air quality that the conversion project will deliver for the territory. We still anticipate a 30% reduction in the cost of fuel, which will be passed along directly to customers.  While this schedule represents an adjustment of a few months we look forward with great anticipation to providing these benefits to the community.  Our entire team is focused on finishing this complex project as quickly and safely as possible.”

Since the initial project announcement on July 25, 2013, WAPA has implemented a very aggressive construction schedule to deliver the benefits of the propane conversion to the Territory as soon as possible.  To accomplish this goal, the Project proceeded with Front End Engineering and Design (FEED) in parallel with procurement and vendor selection and contracting.  To date WAPA has expedited the procurement of long-lead time items and implemented other time-saving measures to compensate for normal permitting and construction delays, including non-availability of construction materials and prolonged vendor negotiations. 

Hodge further commented, “From the beginning, we adopted an aggressive strategy that allowed contractors to begin their work and to get this Project completed as early as possible.  Normally, the FEED and the final detailed design are finished sequentially, and only then contractors are engaged.  In our case, because of our desire to advance this project, we did the FEED, detailed design, and procurement, essentially simultaneously.”  Hodge continued, “Since we announced the Project in July 2013, we have made great progress, including moving forward with construction at both facilities and the fabrication and delivery of world class propane tanks designed specifically to safely store propane on WAPA’s existing plants on St. Thomas and St. Croix. Even with this new schedule the conversion to propane will be finished in an impressively short amount of time given the magnitude of this project.”

Adjustments to the project schedule are primarily the result of mandatory expansion of the project scope. The expansion in scope relates to various aspects of permitting and construction that were unforeseen at the time the project was launched last year. WAPA and its contractor, Vitol, are doing everything possible to complete the project as quickly as possible.  These steps include: working six days a week, 10 hours a day; committing to the long lead items necessary for the Project as early as possible; working in parallel on all remaining phases of the Project; and taking steps to allow propane to be introduced in individual turbines as each one becomes converted instead of completing all of the turbines first before propane is used.

Major reasons for the schedule adjustment include:

  • Extended work on the design, procurement, and installation of the necessary resources to upgrade the Authority’s existing fire protection, controls, and systems for the safe use of propane.      
  • Undocumented soil conditions and underground obstacles on St. Croix.
  • The volume of rock needed to be moved on St. Thomas was greater than anticipated.
  • The complexity of permitting, contracting, demolishing, and disposing of structures with lead-based paint.
  • Greater challenges than anticipated in coordinating the conversion of the power plants to safely burn propane while simultaneously operating power generating facilities to meet daily electricity demand.
  • The reality of global sourcing of all the materials and equipment for the Project.
  • Adverse weather conditions in the early phases of the Project.
  • Compliance with additional regulatory requirements to assure the safety and the security of the marine aspect of the Project, including necessary redesigns.  

The Project, which entails building the infrastructure needed to handle and store propane and converting seven (7) of WAPA’s GE turbines to burn propane, is expected to reduce WAPA’s fuel cost by approximately 30%, or $90 million annually, which will be realized by ratepayers. The project will also reduce emissions of greenhouse gases by approximately 20%.  The schedule adjustment will not alter these benefits.

The Project has already achieved many accomplishments including, completing all major permitting, fabrication of 18 propane storage tanks in Belgium, delivery of 10 tanks to date, building new propane delivery vessels (the Epic Curacao and Epic Caledonia) to deliver liquefied propane to WAPA’s facilities, execution of a propane supply agreement between Vitol and WAPA, construction site preparation, and commencement of work to convert WAPA’s generating units to burn propane.

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