$700 Million Coal-Fired Turbine Plant Bid Details Awaited as Decision Delays Drag on Mexico's Energy Plans

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Observers of Mexico's energy industry are accustomed to delays, hesitancy and second guesses when it comes to implementation of policies and the project decisions which flow from those policies.

Privatization and deregulation in an historical environment of rooted state and political monopolies was never going to be easy. It is also said that Mexico's memories of the fight to keep some grip on national oil rights and resources in the face of acquisitive U.S. interests in the 1930's are still alive in the nation's psyche.

The $2.5 billion Project Phoenix, aimed at rejuvenating the country's petrochemical industry, has had its first phase stalled by state owned Pemex as government agencies work out financial details and maybe cock an ear to cries of political interests and the old guard which has been strengthened by recent poll results. In May, Pemex also had to respond to a debt account shortfall of $15.6 billion unearthed by the federal auditors. Shortfalls of that magnitude are nearly always 'due to misunderstandings' and inevitably lead to more.

The government is also working on plans to make the exploitation of its hydrocarbon reserve resources more attractive to foreign investment. More flexible terms are being developed for the contract terms of exploration and production for the energy sector's upstream activities. This would mean loosening the ties of the current monopoly hold Pemex has on these activities.

Despite official policy which requires a switch from heavy fuels to gas in the power generation industry it is forecast that because of limited (available) reserves imports from the US will rise from 100 Bcf per annum to 700 Bcf in 2010. Gas demand is forecast to rise from 1.6 Tcf in 2000 to 3.5 Tcf in 2010. With up to 80 percent of Mexico's hydrocarbon basins unexplored, supply and demand pressures are exerting forces which could create heavy distortions in plans for the sector unless some radically swift and clear decisions are forthcoming.

Into this scenario comes an opportunity for the latest coal-fired turbine technology in the form of the $700 Petacalco power plant project which will be an expansion to the existing 2,100 MW plant in Guerrero state which runs six 350 MW coal fired turbines. The new plant would add another 680/700 MW to the existing capacity. The state power company CFE states that the winning bidder will make decide whether to use two 350 MW units or a single 700 MW turbine.

But BNamericas reports that CFE has delayed publishing the bidding rules for an engineering, procurement, construction (EPC) contract until the end of July. CFE is still looking to receive bids by December and award the three-year contract in the first quarter of 2004. It appears that CFE needed more time to define technical aspects of the project and so missed the original target date of mid-June.

The existing seawater cooling system will be used and the existing coal terminal at Lazaro Cardenas may be expanded, as the new project will require two million tons of coal per year. Techint (Italy/Argentina) built the $390 million coal import terminal for the 1998 first phase. The terminal has a current feed capacity of 20,000 tpd for the 2,100 MW plant and has a 355 meter x 44 meter dock, a 14 kilometer conveyor system, two 1,500 tph ship unloaders and two 3,000/2,200 tph 40 meter boom stacker/reclaimers.

If the process now proceeds as indicated, without further delays, the new plant will begin operations in 2007 and, it is claimed, will save a chunky $140,000 per day for each 350 MW turbine (pro rata for single 700MW) by using coal instead of fuel oil.

A number of major international power and turbine companies are waiting for the end of July in hope of progress on the bidding rules.