Consulting for Coal Purchasing and Coal Handling

Client

CMS Energy 330 Town Center Drive Dearborn, Michigan 48126

in association with

Magellan Utilities Development Corporation Ortigas Building Ortigas Avenue, Pasig Metro Manila, Philippines

Completion Date
September, 1994

Project Description
CMS Energy engaged Energy Associates to provide consulting services on coal related issues for a new coal-fired power plant in Batangas, Philippines. The plant is being built by CMS Energy and Magellan Utilities Development Corporation (MUDC). The first unit of the 2 x 300 MW plant will be constructed on a turnkey basis by East China Electric Power Design Institute, Shanghai, China. Six primary objectives were identified by CMS Energy:

1. Assess the current overall fuel strategy in light of sourcing, international risks, transportation, etc.

2. Assess the planned fuel handling facilities.

3. Assess the fuel spec to boiler performance expectations.

4. Assess the integration approach to fuel inventory in light of the expected plant load factors, seasonal considerations, etc.

5. Assist in the preparation of new bids for fuel supply.

6. Assess the appropriate duration and split between contract and spot supplies.

Since coal will be the largest single operating cost for the plant, the ability to secure low cost supplies is important. A number of items were examined in the coal quality review. These included sulfur level, heating value, moisture content, grindability, and ash content/characteristics. Three design coals were identified by MUDC for the steam generator and auxiliaries. Candidate coal suppliers would have to satisfy these characteristics and the requirements for the environmental emission standards. The draft coal contract was reviewed for technical and commercial issues.

Imported coal will be received via ocean going vessels. The design basis for the dock was Panamax size vessels (60,000 dwt). Because vessel size is a determining factor in freight rates, MUDC was considering the possibility of increasing the plant's capability to receive larger vessels, up to Cape size (120,000 dwt). The economic issues that influence this decision were identified and evaluated. Ocean freight rates are dependent upon a number of factors. A primary factor which makes larger ships more economical is the voyage distance. Longer voyages favor larger vessels. Current market conditions also influence incremental costs between Panamax and Cape vessels. These were evaluated and reviewed with CMS/MUDC, including the capability of the plant's coal stockpile capacity to meet the more demanding requirements of the Cape size vessels.

The preliminary design of the coal handling system itself was examined. Several issues were reviewed including: stacking, blending, sampling, weighing, crushing, trippers, and the general design. Potential improvements that would enhance blending control, increase system reliability, and reduce spillage/clean-up problems were identified.

Energy Associates assisted in the technical and commercial aspects of coal procurement. The coal bid specification, prepared by MUDC and legal counsel, and resulting supplier quotations were reviewed. Energy Associates prepared the technical/commercial evaluation of coal bids.