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Last but not least, the lenghty story below is what I have been talking abo=
ut with regards to the GE's versus the electrics on San Juan in conjunction= with Sun Devil. I'm afraid I've done a poor job at explaining my reasonin= g so, I put it on paper as best I could. I hope this helps clear the issue= up or at least provides enough information to allow you all to understand = the concept... thanks As usual this is pretty far fetched.... ---------------------- Forwarded by David Roensch/ET&S/Enron on 11/16/2001 = 03:21 PM --------------------------- David Roensch 11/16/2001 01:46 PM To:=09Norm Spalding/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc:=09=20 Subject:=09FW: TW Waste Heat Recovery Projects Sorry to be late with a response back but, I wanted to run a few things dow= n before getting back with you and explaining why I was really so intereste= d in this project. After visiting with you in the field this week you aske= d that I jot some of this down so this will be an attempt at my reasoning a= nd why I have such a sense of urgency about tie-ing this potential project = into a Sun Devil deal. Here goes nothing: As I understand it, the current senario for Sun Devil as it relates to the = San Juan section of this project includes: The addition of 15,000 hp at Bloomfield A compressor restage at Bisti A new 15,000 hp station at Standing Rock A larger compressor at Gallup Potentially a larger motor at Gallup A suggested change to this plan was to look at the 41,000 hp GE's at Bloomf= ield and Standing Rock allowing us to stand-down the Electrics on the San J= uan Lateral. The capital cost would increase by approximately $30 M but th= e capacity increase on the lateral would be around 80 mmcfd. (These are no= t by any means firm numbers) =20 The problem with the suggestion obviously is the term of the contracts with= ECS on the Electric drives. So, this is what I was thinking. I know we d= on't want to leave ECS holding the bag or stranding cost so, if the HRSG we= re to move forward at Station 1, maybe we could allow them to wheel the com= modity (the fuel gas) out there. We provide them with gas in trade for ele= ctricity currently. If we stand down the electrics, ECS would save dollars= paid now to the utilities but, they would loose large bucks from the sale = of natural gas that we provide them for the power. So, we could allow them= to keep the gas for the remaining term of the contracts and sell it to Gad= d's group on the HRSG project. Depending on the current margins, they may = be able to help Gadd's group cut some expense's as well and keep this proje= ct rolling??? (Motive is to get this HRSG going so Operations can generat= e some operating revenue off of this facility) See the example below to f= ollow along with this idea: ECS currently pays approximately $3,133,280 annually in electricity to prov= ide TW shaft horse power TW provides ECS with a commodity valued at $8,000,070 annually. (At $2.50 = per thousand) The difference is $4,866,790 TW pays ECS a demand charge of $2,794,000 between Bisti and Bloomfield. The $3,133,280 would be an expense ECS would no longer be required to have = if the Electrics were shut down. So, ECS should be able to allow TW out of= the $2,794,00 in annual demand charges for Bloomfield and Bisti and return= the $3 M in commodity value to TW. Now there is still the issue of the $8= ,000,070 in commodity value minus the $3,133,280 returned to TW. We can ke= ep ECS whole on this value ($4,866,790) by transfering the fuel sale to the= HRSG at Station 1 allowing them to simply sell the fuel there or market it= accordingly for the term of the current contract. As long as we keep ECS = whole on the value of this deal, in turn ECS should be able to negotiate a = deal at reduced rates to allow the HRSG project economics to become more ap= pealing... At least that was my idea. Pretty crazy huh? =20 None the less for an increase of 80 mmcfd on Sun Devil, the potential reven= ue from an operating agreement on the HRSG through EAMR, and the reduced ex= posure due to down time associated with the electric failures as compared t= o what GE is required to provide....... I thought it was worth a shot. If = you think this is too far fetched....just say so Norm.. Not carrying anyth= ing on my shoulder here. Have a good day and sorry this dang note was so l= ong... =20 Oh yea, I would have thrown Gallups numbers into this mix as well but, thos= e agreements are so complicated I have a hard time understanding and/or rel= aying information about them... However, understand, when I say stand the= electrics down on the San Juan lateral that includes, Bloomfield, Bisti an= d Gallup..... R. Matthews ran the modeling info and that is who I have bee= n chatting with about this thought. Like in school: I thought I would show you my work... Bisit currently has a conversion factor of .0198 that multiplys into horse = power to determine how much fuel gas we owe them for shaft power. They als= o have a contract with PNM that determines the rate ECS pays per Mega Watt = for the power they provide TW. (I will use $2.50 for the price of gas in = examples) ECS pays approximately $25 per meg for power at Bisti. 10,000 hp x .0198 x $2.50 =3D $495 per hour $495 / (10,000 x .7546) =3D $.0663 per kw=20 10,000 x .0198 x 8760 x $2.50 =3D $4,336,200 annually in fuel provided to E= CS (10,000 x .7546) / 1000 x $25 =3D $188.65 per hour in electric cost $188.65 x 8760 =3D $1,652,574 annually in electric cost Bloomfield currently has a conversion factor of .0239. Power rate I think = is more in the range of $32 dollars a meg. 7000 hp x .0198 x $2.50 =3D $418 per hour $418 / (7000 x .7546) =3D .08 per kw=20 7000 x .0239 x 8760 x $2.50 =3D $3,663,870 annually in fuel provided to ECS (7000 x .7546) / 1000 x $32 =3D $169.03 per hour in electric cost $169.03 x 8760 =3D $1,480,706 annually in electric cost Ok, enough of all that. The bottom line expenses are as follows: Bisti fuel commodity cost - $4,336,200 Bisti electricity cost - $1,652,574 Bisti demand fee paid to ECS - $2,017,000 Bloomfield fuel commodity cost - $3,663,870 Bloomfield electricity cost - $1,480,706 Bloomfield demand fee paid to ECS - $777,000 ---------------------- Forwarded by David Roensch/ET&S/Enron on 11/16/2001 = 12:38 PM --------------------------- From:=09Norm Spalding/ENRON@enronXgate on 11/12/2001 02:28 PM CST To:=09Rich Jolly/ET&S/Enron@ENRON, David Roensch/ET&S/Enron@ENRON cc:=09=20 Subject:=09FW: TW Waste Heat Recovery Projects FYI. As promised, I'm looking into your questions from last week. I haven= 't heard back yet on the other issues. Let me know if you want to do anyth= ing about this one. Thanks again for inviting me last week. Take care, N= orm -----Original Message----- From: =09Millar, John =20 Sent:=09Monday, November 12, 2001 7:53 AM To:=09Gadd, Eric; Spalding, Norm Subject:=09RE: TW Waste Heat Recovery Projects Norm,=20 We've been trying to develop a project at Station 1 due to its close proxim= ity to the Round Valley substation. Although we've considered several desi= gns ranging from a 15MW steam cycle to a 60MW plant with an LM6000, the req= uired power price is always about $45/MWh, which is out of the market. Our= current objective is to find a counter-party who is willing to build a pla= nt and purchase waste heat, land, water, shared facilities, and operating s= ervices from TW. A few parties are interested and we're pressing on. =20 I would be happy to meet with you and your team to share ideas and answer q= uestions. John 5-8920 -----Original Message----- From: =09Gadd, Eric =20 Sent:=09Friday, November 09, 2001 5:16 PM To:=09Spalding, Norm Cc:=09Millar, John Subject:=09RE: TW Waste Heat Recovery Projects Norm, John Millar is progressing WHR opportunities and can provide an update. -----Original Message----- From: =09Spalding, Norm =20 Sent:=09Thursday, November 08, 2001 8:29 AM To:=09Gadd, Eric; Eisenstein, Arnold L. Subject:=09RE: TW Waste Heat Recovery Projects -----Original Message----- From: =09Spalding, Norm =20 Sent:=09Wednesday, November 07, 2001 6:35 PM To:=09Gadd, Eric; Eisenstein, Arnold L. Subject:=09TW Waste Heat Recovery Projects I was in the Region Meetings today with the TW personnel. They were asking= if WHR was still being contemplated for Stations 1 through 3. Can one of = you give me an update? Thanks, Norm
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