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PACIFIC COAL TRADE:.- U 21 014 ..ECONOMIC OPPORTUNITIES FOR CNMI COAL MOVEMENT IN THE PACIFIC. BASIN STUDY CANADA K A JAPAN USA IPACI.FICI OCEAN OTAIWAN "AWAI I 0 SAIPAN 10 GUAM t Of 'C omm.eree s nvoartmnn Library center KOAA C n ivanue 2234 SC, U1 char:lest' 5 2 413 ',,,.tfAERICAN SAMOA f J @_@,AU.STRALIA F@Prop,Oz- b oz, "A'0A The Research Institute Pacific.Basm' Development Council Suite 620 o 567 South King Street 0 Honolulu,, Hawaii 96815. t CLAS Telephone (808) 523-9325OTelex 743-0668 PACIFIC COALTRADE: ECONOMIC OPPORTUNITIES FOR CNMI MOVEMENT IN THE PACIFIC BASIN STVDY....@. ILI URIG A, PREPARED FOR THE COMMONWEALTH OF, THE NORTHERN. MARIANA ISLANDS U1 BY MARCELINO K. ACTOUKA PROJECT COORDINATOR %,k and RAYMOND W. JEN KI NIS DR. WALTER MIKLIUS JUNE -1983 AMMIKA &%A" The Research Institute Pacific Basin Development Council'r Suite 620 o 567 South King Street 0 Honolulu, Hawaii 96815 Telephone (808) 523-9325oTelex 743-0668 MAS W- LA. 3 EXECUTIVE SUMMARY ACKNOWLEDGEMENTS The Research Institute of the Pacific Basin Development Council is indebted to many individuals, government agencies, institutes and the private sector for assisting and encouraging this study to go forward. Of special recognition are Mr. Raymond Jenkins whose extensive knowledge of coal industry contributed a lot to the sections on the coal transshipment center and coal utilization; Or Walter Miklius, a transportations economist, who developed the economic model for cost-benefit,of coal transshipment; and'the U. S. Army Corps of Engineers who share their expertise and experiences in the cost and design of ports and harbors in the Commonwealth of the Northern Mariana Islands. This study could not have been realized without the financial and logistical support of the Coastal Resources Management Office of the Planning and Budget Office of CNHI Governmen't.@ The editing and typing could not have been done without the dedication of Melody M. Actouka, Christol Allen and Joanne Howard. The guidance and support of Jerry B. Norris and Carolyn K. Imamura were instrumental in the formulation and the completion of this report. Special recognition goes to the Open Grants Of the East-West Center for giving me the time and supporting my leave to work with the Research Institute of the Pacific Basin Development Council. The authors are responsible for the accuracy and the usefulness of this document. Marcelino K. Actouka Project Coordinator L `7, p CONTRIBUTORS Marcelino K. Actouka Project Coordinator, Research Institute of the Pacific Basin Development Council. B.S., Electrical Engineering; Masters in Urban and Regional Planning; and Ph.D. Candidate at the University of Hawaii on -LLA an East-West Center Grant. Former Energy Planner for the U. S. Trust Territory of the Pacific Islands. Raymond W. Jenkins Mining Consultant. B.S., Mining and Metallurgy, University of North Dakota. Currently consultant to the State of Hawaii Department of Planning and Economic Development (Manganese Nodule Mining and Processing) -A is and Dillingham Corporation. While with Ralph Fi. Parsons, provided engineering and construction advice in development of phosphate, sulphur and coal ventures in the U. S. and various foreign countries. Dr. Walter Miklius Ph.D., Economics, University of California at Los Angeles. Professor of Economics and Agricultural Economics, Department of Economics, University of Hawaii, Recently completed a special assignment with the U. S. Department of Transportation in Washington, D. C. Planning Branch, Port and Harbor Cost Estimates and Preliminary U. S. Army Corps of Design. Conduct of reconnaissance and Engineers, Pacific Ocean Division design work for CNMI ports and harbors. AM LU ABBREVIATIONS Btu British thermal unit C.I.F. Cost + insurance + freight CNMI Commonwealth of the Northern Mariana Islands CTC Coal Transshipment Center DOE U. S. Department of Energy DOI U. S. Department of Interior. UA DWT Dead Weight Ton EPA U. S. Environmental Protection Agency f.o.b. Free on board GWH Gigawatt = 1,000,000 watts of electricity HECO Hawaiian Electric Company JPN Japan k kilo = 1,000 m meter MBtu Million Btu ui; Mt metric ton (2,205 lbs) Mt/y metric ton per year Mw megawatt = 1,000 kilowatts electricity nm nautical miles NSW New South Wales, Australia PBDC Pacific Basin Development-Council QSLD Queensland RFO Residual fuel oil st short ton (2,000 lbs) t/h ton per hour TIN Tinian TTPI Trust Territory of the Pacific Islands TABLE OF CONTENTS Page EXECUTIVE SUMMARY SUMMARY OF FINDINGS ............................. ........ ...... 1 INTRODUCTION .................................. *..* ...... ........ I FINDINGS ........................... ...... 3 SITE VERIFICATION ...o ...... o .... .. o. ........ ... 10 COAL TRADE IN THE PACIFIC REGION ....... oo...- ......... o.o.o. 17 ENUMERATION OF COSTS . .... o ..... ooo ........- ....... 040.0606 16 . 0 0 0 23 PRELIMINARY ASSESSMENT OF FEASIBILITY ........ .......... 25 LF RECOMMENDATIONS 30 TECHNICAL REPORT EF- INTRO .D.UCTION ........... ........ 31 . I PROBLEMS AND CONSTRAINTS ....... .... 31 BACKGROUND .33 SCOPE OF WORK ............ ............... 33 STUDY OBJECTIVES ............... 34 STUDY APPROACH o ................. 35 ISSUES AND CONCERNS ...o ................... .... 36 DESIGN STUDY CRITERIA o .......... ....... ....... ..... 41 EXISTING CONDITIONS .... oo ......... - .... ... o...... ..... 42 GENERAL CONDITIONS ...... 0.0 ........... 0.0. 42 Saipan ................. ...... ................. 42 Rota ......... 46 Tinian ...................... ...... 50 ELECTRIC POWER GENERATION AND TRANSMISSION SYSTEMS ....... o.. 50 Saipan Power System .... ....... ........... o.......... 51 Tinian and Rota Power Systems ............... o.......... oo ... 53 Power and Coal Storage Scenarios ..... oo .......... oo.o 53 COAL IN THE PACIFIC ...... ...... ooooo. ..... 56 HAWAII 56 GUAM AND THE NORTHERN MARIANA ISLANDS ............. 57 JAPAN ......................... s........ ....... ... 58 10 Page POTENTIAL COAL USERS ........................................ ... 60 JAPAN'S COAL SUPPLIERS ................ *......... **.* .......... 63 THE RECEIVING PORTS .............................................. 65 THE NOMINATED USER, JAPANESE ELECTRICAL UTILITIES ................ 66 ADDITIONAL BENEFITS TO THE AREA ............................. 0.0.. 73 TRANSSHIPMENT .................................. 74 SOURCES OF USER SAVINGS .......................... * ............... 74 SAVINGS FROM UTILIZATION OF LARGE SIZE SHIPS ..................... 74 L STOCKPILING AS A MEANS OF PREVENTING SUPPLY INTERRUPTION ......... .83 COAL TRADE IN THE PACIFIC REGION ................................ 92 L COAL CENTERS ................ 0 ...... ............. 100 . I FACILITY SCHEMES ............... 0 ...0 ....... 0..* ...... 0 ..... 100 L THE COAL CENTER ........................ *........ #........ 101 THE COMMERCIAL POTENTIAL OF A TINIAN COAL CENTER ................. 105 FACILITY CAPABILITIES ............................................ 109 ENUMERATION OF BENEFITS ..................... Savings from Utilization of Large-Size Ships ................ ill Other User Savings .......................................... 112 Other Non-User Benefits ..................................... 114 UTILIZATION SYSTEMS ................................................... 115 A COAL/RFO-FIRED MODEL FOR SAIPAN ................................ 115 REFERENCES ........................... .......... ... 130 APPENDICES ....................... ....... .......... ........ 134 L L f L 1 01 ON Summary of Findings ,A @num 1AW SUMMARY OF FINDINGS INTRODUCTION The Northern Marianas are a chain of 16 islands extending for some 480 km from north to south. The main island, Saipan, is located toward the south of the group, at 150 12 min. N. lat. and 1450.43 min. E. long. Their total land surface is approximately 471 sq len, with the three principal islands, Saipan, Tinian and Rota, accoun ting for two-thirds of the land area of the group. Only three other islands are inhabited. The population as of the 1980 census was 16,780, and is projected to reach 23,320 by 1990. As is the case in other Pacific Islands, the government is the largest single employer. In 1977, various governments accounted for almost half of the total employment and paid 60% of all wages. The .distribution of remaining employment by industry was as follows: Number of Workers General Merchandise 773 Hotels and Other.Catering 733 Construction 714 Transportation and Stevedoring 323 However, by 1982, the private sector expanded and employed 6,290, of the 8,681 wage earners. It is not too surprising that the Commonwealth s government would like to see a more diversified economic base and is making effort's to develop manufacturing industries. These efforts, however, are being hampered by lack of skilled labor and indigenous sources of energy. The parallel efforts are being made to develop maritime-related industries which would benefit for location of the islands. It has been proposed that as part of this effort, a coal transshipment center (CTC) (Figure 1.1) be developed on one of the principal islands. The basic.idea of the proposed CTC is rather simple. Coal would be transported to CTC in large bulk carriers (150,000 DWT) and reloaded to r E AM PLAN OF SW%Y SCHEME SLEWING STACKER BUCKET WHEEL RECLAIMEO 3 UNITS 4000 t/h each 2 UNITS - 4000 th *vc h E COAL COAL SYM. ABOUT q 160 M HALF SECTION THRU COAL YARD COAL YARD 4.0 MILLION TON STORAGE 2000 m IN 'STACKER COAL RECLAIMER OUT E 0 IN- COAL STACKERI OUT RECLAIMER DESIGN VESSEL 150,000 DWT FOR BOTH PIE RS A AND B. DRAFT 16.5m, BERTH 310m, BEAM 42m. CONTINUOUS BUCKET UNLOADER SOROS LINEA 2 UNITS - 3000 t/h FREE DIGGING 1 UNIT 40 RATE EACH, NET OUTPUT 4000 t/h. COA1, Figure 1.1 Coal Transshipment Center: Equipment.-Rating and Dimensions smaller vessels for delivery to receivers not capable of handling larger shiploads.. The savings due to ability of utilizing large ships would more than offset unloading and loading of coal. The CTC would also be used for holding of a large enough stockpile for active and emergency use. It would include blending capabilities important to provide a L broader supply base for thermal coal. The storage capacity would also provide opportunities to make strategic spot purchases. The purpose of this study is to assess if the proposed CTC is likely to be feasible. Or more specifically, if the full scale feasibility study of the proposed CTC is warranted. To provide a background for this preliminary assessment, The Technical Report takes a look at the various aspects of the current and the projected pattern of international trade in coal in the Pacific area. The Executive @ummary discusses the findings and the recommendations of this study. The Appendix provides a list of terms that are used in this study. FINDINGS The findings of th is study by the Consultants and concurred in by the Project Coordinator are as follows: The geographic location of the CNMI in relation to the principal coal shipping routes to Japan from Australia, South Africa and South America makes the CNMI an economical.ly logical site for a coal center (Figure 1.2). A coal center complex includes facilities for the transshipment of L i coal from the 150,000 DWT long haul colliers to 60,000,DWT or smaller colliers for delivery to the consumer's ports. Stockpiling area for L four million tonnes with provision for blending would be included in the complex. The coal handling equipment for unloadirg, stockpiling and blending, reclaiming and shiploading operating rates and environmental control facilities would be comparable to the most modern Australian terminals (Table 1.1). An analysis of potential users for this facility reveals that the Japanese electric utility industry has an adequate demand base not met LID 3 T7 F_,ri F 141), 16W low 160* l4cr I M; ( Mk"_;", IRS" /N I// / 1P ALEUTIAN ISLANDS PAN WIN, W-RUS NOR 40' KOREA Mz J)@AN Coal Destinations in Japan HINAV/1 in COAL CENTER IN CNMI no TAIWAN HAWAIIAN --------- 6% ISLANDS 20* Matson ondi jAnslon PHILIPPINE Mcw"I ItIands ISLANDS c"M Palow o!_ w -BORNEQ 11 IN[ Mr%. Sao& Mot Coal from Australia Social, 20, @Atl "Cook 1408 160' 140' Figure 1. 2 Coal Transshipment between Australia and Japan I.. r E Table 1. 1 Major Port Loading Facilities 1983/84 1987/9 Country Port KTAimum Throughput Maxinn ship size capacity ship size 10 3 &It mtpa 10 3 dwt Australia Abbott Point 150 4 150 Hay Point 150 35 170 Gladstone 120 21 120 Nmcastle 120 .25 170 Port KaTrbla 150* 14 170 Canada Poberts Bank 150 24 150 Prince Rupert - 150 10 South Africa Richards Bay 170 35 170 United'States East Coast 120* 85 150* Gulf 60 30 150* West Coast 60 5 150,@ South Amparica Columbia 1.20-150 *Partly laden twiaximm ship sizes and port capacities indicative only Source: Shell Coal Tnternational by present provisions for coal delivery to utilize the total services of a complex. The contemplated use rate is twelve million tonnes per year (Table 1.2) or 20% of the Japanese 1990 utility coal demand. The economic viability of the facility is based on the value of the services rendered to the user. The potential savings on ocean freight rates by combining 150,000 DWT colliers for three quarters of the distance with smaller colliers to deliver coal to the utility consumers will largely pay for the use of the facility (Table 1.3). This is of course dependent on expeditious coal handling. The stockpiling and blending capabilities are an added inducement of major consequence to a potential user. Economic viability of the concept based on "order of magnitude" capital cost of $50 million indicates that with projected fees similar to other terminal fees of $2.50/tonne and a 12 Mt annual turnover, the revenues would be $30 million. Land rent of $0.80/t or $10 million would revert to the Government of CNMI. Six million dollars would apply to amortization. Operating costs would be on the order of $14 million a year. One hundred persons would be directly employed, with indirect employment affecting 300 persons. Opportunities for supporting service companies would be generated (Table 1.4). A tentative location lying south of the DOE reserve area on the Island of Tinian has been used in these projections (Figure 1.2). The land requirement contiguous to a potential harbor site is on the order of 500 acres. A potential site for an offloading pier and a loading pier with depths of 55 ft. (16.7m) appears to be available. Additional benefits of a coal center would include availability of relatively cheap coal for transshipment to Saipan, Guam and other nearby islands. A coal-fired power plant to provide power for the center could include the capacity to service the military facility and a cable to Saipan. Alternative transshipment concepts were studied. The conclusion was that these concepts were not viable at a fee structure attractive to potential users. The quality of essential services required by any potential user-requires an investment level that precludes smaller facilities. Table 1. 2 Actual and Predicted Use of Thermal Coal by Japanese Industries, 1981, 1984 and 1990*/. Industry 1981 1935 1990 6 (10 tons). Electric Utilities 12.3 20.0 33.0 Qxrent 9.1 12.5 14.0 Paper, etc. 3.5 6.5 9.0 Total 24.9 39.0 56.0 VIncludes dorrestic mined coal.. Source: Coal Tndustry, June 1982 Table 1.3 Estimation of Transshipment Cost Savings Direct Shigrent Transshi2ment NSW-JPN NSW-= CTIC-JPN Deadweight tons of ships 60,000 100,000 150,000 60,000 Tons. of coal shipped 58,200 -.97,000 145,000 58,200 Days in ports 2.3 2.6 5.1 0.8 Daily cost in port 18,275 .22,582 26,713 18,275 Total Cost in port 42,033 58,713 104,181 14,620 Days at sea* 23.7 17.2 17.2 .6.5 Daily cost at sea 27,284 33,379, 39,173 27,284 Total Cost at sea 646,631 574,119 673,776 177,346 Total shipping cost 688,664 632,832 777,957 191,966 Average cost per tofi 11.83 6.52' 5.35 3.30 1q9-;-=-JPN U 9. 82 8.65 Transshipaerit cost savings 2.01 3.18 U 01 Days at sea are calculated on the round trip basis; VessiAls speed is 15.knots; Distances are as follows: NSI, (Newcast1d, @--N. S.W.) -JPN (Japan, Yokohama) 4,268 nautical miles; NSW - CIC (Coal transshipment center, Tinian): 3,096.nautical miles; CTC.- JPN: 1,172 nautical miles. Table 1.4 Estimated Capital Costs of the CTC Item Million US$ Site work 3.0 Marine Construction 8.0 Foundations 3.0 Three Stackers 6.0 Two Reclaimers 10.0 One Shiploader 10.0 Material Handling 10.0 Total 50.0 ku @nu E LAND CURRENTLY LEASED BY THE MILITARY FOR JOINT SERVICE TRAINING CURRENT LEASE UNDER LEASE OPTION TINIAN PUNTAN HAHBO CAROLINAS Propas Site For The Coal Center N 0 1 2kni figure.1.2 Proposed Site for the Coal Center and Military Land Lease E @JIAN iBO @.Oose S The use of coal to fuel future extensions of the Saipan electric generation facility appears to be economically desirable. Expending installation of coal-fired units may be justified. Use of existing internal combustion units for future standby would enhance the quality of service available to the community. The potential of cable service from a large facility located at the coal center would be preferable. SITE VERIFICATION Discussions with officials of the Northern Mariana Islands during an October 1982 site visit resulted in the following findings. In general, they support the concept of a coal transshipment center in CNMI. 1. -Through discussions/interviews with the leaders of the executive, legislative and the private sector, it was found that there is a genuine support for both the assessment of the feasibility of coal transshipment through the CNMI and, if proven economic and technically feasible, for eventual construction of the infrastructure to support the transshipping. activities. It was further stated by the leaders of the Saipan legislature that support for both could be forthcoming in the forms of resolutions or even fund allocations. 2. It was disclosed that as early as six years ago-, the Government of CNMI seriously considered the use of steam coal for power generation and invited two Australian firms to assess the possibility of initiating a steam power plant. 3. The idea of transshipment is not new. Both the private sector and the government have been approached by Japan, a consumer of steam coal, and South Africa, a supplier of coal, for a coal transshipping center in CNMI. The two are not directly related, but it shows that both the supplier and the consumers believe there is a good possibility for a transshipping center in the Pacific (Figure 1.3). 4. Most land areas potentially suitable for coal storage have already been designated for specific purposes (e.g., small industry, ccmmercial and farming activities, mil-itary retention and conservation). 10 LA GA LJ Locations Australia Canada United States Saipan South America Rota Standard South Africa Tinian* Larger than Standard Standard Smaller than Functions Panamex Exporting Transshipping Coal Transshipment Countries Vessels - Center for unloading/ if- and Ports Panamex and stockpiling/mixing/. loading Larger loading and shipping Self-unloading pbrts are shall space is limite power plant loc close to sea *Note: In this report,, calculations are based on Tinian Harbor as the best po FL[a r Ege r t Eha n Se un Figure 1.3 Coal.Transshipment Functions, Components and Location FE However, officials of the Marianas Public Land Corporations and others have indicated that if coal transshipment were to prove economical (i.e., it could provide jobs and revenues), there is a good possibility. that priorities could be adjusted. With regard to military retention areas, there is a provision in the Northern Mariana Islands Land Lease that will allow both joint use of land and the construction and use of the shore areas for ocean-related activities. This would allow the construction of port facilities and harbors in the retention areas, especially on Saipan by Charlie Dock and in the Tinian Harbor area. 5. Frequent power outages and the ever increasing cost of imported oil for power generation (CNMI is budgeting $7 million of its $33 million 1983 FY Budget for power plant fuel) have contributed to the government's interest in assessing other sources of fuel. Although efforts are being , E expended in the indigenous energy resources, for the mid-term period, coal is becoming a more acceptable option for the officials of CNMI. 6. The officials on Rota are concerned.ab out the lack of private sector jobs which has contributed to the continued out-migration of the young and educated population to Guam and Saipan. A coal transshipping activity was seen as both a potential economic boost to the depressed area and a means of attracting people to stay on the island. Secondarily, officials hope that jobs and commercial activities will to help defer the already stagnant government sector and the non-competitive agriculture ventures. The two. existing Rota ports, East and West Harbors, are not in any condition to handle even small vessels. There are no piers, storage warehouses, cranes or forklifts. The East is too exposed to the open ocean. The West has shallow and very narrow channels, and the currents @at high tide are hazardous to moving as well as anchored vessels. The Corps of Engineers has let bids to improve West Harbor facilities; however, from the design criteria and the physical constraints, the new improvements would not allow ships of 50,000 DWT-to offload coal., In addition, neither dock has large flat surplus areas adjacent to. it. 7. Disregarding the Military Lease on Tinian, that island offers the most ideal channel, harbor and land area (Table 1.5). Most of the -riJi ------ j"r.- "Ji2i @L-r@ f@- r@ Table 1.5 Cost Estimates of Dredging of Harbors on Saipan, Tinian and Rota Location Channel Turning Basin Estimat (f eet) (feet) (in milli Depth Width Length Radius Depth Saipan Charl ie Dock 40 500 9,400 800 40 20 50 530 9,500 1,000 50 35 60 600 9,500 1,300 60 71 Tinian San Jose 50 530 not given not given 50 25 (not enough area) Rota West Harbor 50 530 not'given not given r, n 4 (not enough area) *Note: The given depths correspond to the following design vessels: 40 feet 700 feet ore carrier or 50,000 DWT 50 feet 900 feet ore carrier or 125,000 DWT 60 feet 1,200 feet ore carrier or 160,000 DWT 55 feet Draft and 150,000 DWT is used in the costs estimates for Tinian Coal Cente Source: Corps of Engineers Preliminary Cost Estimate, February 13, 1983. island is flat at very low elevation and lacks major infrastructures. The roads and the old air fields used during World War II are still in excellent condition. The small town is close to the dock but would not be in the way of any major expansion of warehousing, machine shops, stockpiling and movement of coal (Table 1.6). Currently, the major commercial activities are fanning, in which Pacific Energy of Japan is growing sorghum for alcohol, and the cattle/dairy farm. Both would be compatible with a coal storage center in that the center would basically use the shore area and not the agriculture and grazing land needed for the other two commercial activities. It was also pointed out that if transshipping is proven to be more economical, land use priorities can be readjusted. The island leaders are also interested in encouraging people to stay on the island by providing more meaningful and challenging jobs which the center could create. The location of a stockpiling center on Tinian could also be an advantage to the Island of Guam, which is currently considering conversion of power generation to steam coal from the low grade oil. Recent discussions with energy officials of Guam have verified this statement. Depending on the Defense plans for the utilization of half.of Tinian, a coal steam.power plant could be both-an asset to the military and a reliable source of power for the dairy plant, alcohol processing plant and the people of Tinian (Figure 1.4). And, with the steam coal stockpile on island, a more secure source of electricity could be attained. 8. It was also verified that at least two oil companies are considering the potential for oil transfer/storage activities in CNM.1. The possibility of such plans, in concert with the coal tra'nsshipping center, could provide a unified and reliable source of jobs, revenues and energy for the CNMI. A number of possible sites are being considered: two on Saipan, two on Rota and one on Tinian. 9. In the CNMI, there is no labor union and at this point offidals do not envision one emerging. Existing labor laws have provisions for the minimum wage for laborers. These two factors are.advantageous to 'I A I IJ Table 106 Site Selection Criteria and Required Characteristics for Coal Transshipment Center Li Channel/harbor De th Stockpiling/ (55 feet minimum5 Blending Area (500-700 acres) Roads/Utilities Asting Dredging Cost1 Available Existing Cost o f Expansion No High No 2 Yes Low .No Hig'h Yes No High No High No Yes Low n @No High No Yes Low No Low Yes Yes Low iy Corps of Engineers Cost of Dredging of Harbors on Saipan, Tinian and Rota. on Saipan but not adjacent to the.Charlie Dock for conveyors to transport stockpiles and back to ship for export. L uded in the sites as it has been considered as a potential site for oil Lt,, and the.two activities are compatible and can share most of the 'his will result in reduced capital and operation/maintenance costs. L coal transshipping activi ties, which would require reliable work for scheduled times and as low as possible handling fees for transferring storage and ship loading. 10. All three major power plants in Saipan, Tinian and Rota are within 100 yards of the water line. This could be advantageous for steam coal unloading and cooling of the power system if future plans call for coal steam generation. 11. The depth of water (less than 1,000 ft) and the distance between point Ushi on Tinian and Puntan Agigan on Saipan is about 2 miles, and most of it is in waters about 500 feet. There is a potential for a coal-fired 50 megawatt power plant located on Tinian, if a coal Center is placed there, to power both islands with a D.C. marine cable linking them. COAL TRADE IN THE PACIFIC REGION The CTC is likely to be economically feasible if it serves the needs of international trade. This section therefore describes the current and the projected pattern of international trade in coal in the Pacific region. Japan is the largest importer of coal not only in this region but in the world as well. In 1981, Japan's imports of coal accounted for about 40% of the world's coal trade and for almost 90% of the Pacific region's coal receipts. Other principal importers in the region are t4@ South Korea and Taiwan, while Australia, the United States, Canada and South Africa are the principal exporters of coal to the region. The volume and the pattern of trade in the Pacific region are summarized in Table 1.8. Currently, the world coal trade is dominated by trade in coking and matallurgical coals, which in 1981 accounted for about 60% of the total world's seaborne trade in coal. However, it is generally expected that the future coal trade will increasingly consist of thermal coal used for generation of electricity as well as in some industrial processes (primarily IVID in cement, pulp, and paper and chemical industries). In fact, according =4 "ah P@@A R", Clam h Table 1. 8 Coal Trade in the Pacific P29ion Major Drporting and Exporting Countries, 1980 and 1981 Zxporters Australia U.S, 'Canada S. Afri 1980 1981 1980 1981 1980 1981 1�80 IEE2rters Japan 30.13 35.02 20.93 23.44 10.45 10.85 3.29 3.49 1'50 1.13. 1.90 0.00 S. Korea 2.28 1.25 Taiwan 1.932/ 1 4 0.-75 2.74 1.63 All Asia 34.34 39.95 22.93 27.68 11.58 12.75 5.22 Year ended June 30.- Source: Ccnpiled from data supplied by Coal Industry Quarterly, June. 1982. to some forecasts, the volume of world's oceanborne thermal coal trade is-expected to triple or quadruple by 1990 from the volume reached in 1990. According to two available forecasts, shown in Table 1.9, the imports of thermal coal by the Pacific Rim countries are expected to increase at an even faster rate. Japan's imports of thermal coal increased dramatically in recent years, and this trend is expected to continue into the future as existing plants in several energy-intensive industries are converted and new plants that are designed to use coal come on steam. For example, the electric po wer industry at present has a total of 40 coal-fired power units with a total 'output of 5,760 MW. In the next' ten years, the industry is planning to build 40 new coal-fired units or two converted oil-fired units into coal-fired units with a total capacity-of 24,000 MW (Shibukawa, 1981). The set of latest long run estimates of Japan's total volume of thermal coal imports is reproduced in Table 1.10. Given the high degree of uncertainty, it is not surprising that they vary widely., The official government estimate is 54 million tons by 1990. However, opinions have been expressed that this estimate is too conservative and that imports are likely to exceed 60 million tons (Uehara, 1981, and Shibukawa, 1981). On the opposite side are Toichi and Furuto (1983), economists with the Institute of Energy Economics, who argue that the government's forecast is an overestimate since it was based on a 5% per year economic growth. However, Japan's economic growth in 1980 and in 1981 was under 3% per year. They further argue that the demand for energy will be lower even if-the economy again reaches 5% growth rate because Japan's energy- intensive industries, due to high energy prices, have lost much of their international competitiveness. Thus, there already has been a shift in the industry structure from energy- i ntens ive industries such as steel, cement, petrochemicals and aluminum refining, to manufacturing, assembly and service industries. Slow growth or stagnation of these industries will -reduce the future energy demand, which in turn will reduce the volume of thermal coal imports. In short, there is considerable uncertainty regarding the volume of Jap an's thermal coal imports. It should be LID Table 1.9 Actual and Predicted InWrts of Thennal Coal by Country,, 1981, 1985 a.nd,1990 1581 1985 1990 -Country (1) (2) (1) (2) (2) 6 (10 tons) Japan 9 .4 N.A. 27.5 N.A. 62.7 N.A. Yorea 0.5 1.2 8.7 8.0 15.8 11.5 Taiwan 3.5 3.5 8.9 15.8 13.6 Hong Xong 4.7 2.8 8.2 5.9 Singapore N.A. N.A. 1.6 N.A. Philippines N.A. N.A. 0.7 N.A. Malaysia N.A. N.A., 0.6 N.A. 2.4 _7 Sources: (1) Cited in Borg (198.2); (2) Kimura (1983). Table 1.10 FOreca-sts of Japanese Thermal Coal Bnports, 1985 and 1990 Date of the Forecast 1985 1990 6 (10 tons) 4/81 28 51 5/81 .2 0. 1 49..6 10/81 45 4/82 54. .3/83 24.5-25.5 29.5-33 Sources: Tinsley (1982) , Coal Industry C@@iarterly' June 1982, and Toicho and to (1983). Table 1.9 Actual and Predicted Imports of ThenTal Coal by Country, 1981, 1985 a.nd.1990 LA 1981 1985 1990 Country (1) (2) (1) (2) W- (2) 6 (10 tons) Japan 9.4 N.A. 27.5 N.A. 62.7 N.A. Korea 0.5 1.2 8.7 8.0 15.8 11.5 Taiwan 3.5 3.5 8.9 15.8 13.6 Hong Kong 4.7 2.8 8.2 5.9 Singapore N.A. N.A. 1.6 N.A. Philippines N.A. N.A. 0.7 N.A. 0.6 Malaysia N.A. N.A.. N.A. 2-.4 Sources: (1) Ci@ed in Borg (198.2); (2) Kimura (1983). Table 1.10 Forecasts of Japanese Thexnol Coal Imports, 1985 and 1990 Date of the Forecast 1985 1990 (106 tons) 4/81 28 51 5/81 .20.1 49..6 45 4/82 54 3/83 24.5-25.5 29.5-33 Sources: Tinsley (1982), Coal Industn, (@jaxterly, June 1982, and ToicTi& and Furuto T1983). 20 Le noted, however, that even the lowest forecast represents a very sizable increase over the current level of thermal coal imports. L The distribution of Japan's imports of thermal coal by source is shown in Table 1.11. No drastic changes in this distribution are expected in the future. Australia is expected to supply about half.of.Japan's L imports. This short overview suggests that the current and the projected patterns of coa 1 trade in the Pacific region are generally favorable to potential feasibility of the CTC. First, Japanese coal imports are expected to increase substantially in the future, and Japan is likely to be a major user of the CTC. Construction of coal receiving facilities is either underway or funds for their construction are committed in Taiwan and Korea. Similarly, coal centers are being planned in Indonesia and the Philippines. These countries are planning to increase domestic L mining of coal in the future, but initially would import coal for their own use and for transshipment ot Southeast Asia. ' None of these countries are likely to be users of the CTC located in the CNMI. Second, Australia is expected to remain the major supplier of coal to Japan. As was pointed out above, the CNMI lies on the direct route from Australia to Japan. Third, the major increase is expected to be in thermal rather than in coking coals. The existing port infrastructures in Japan were developed o serve the metallurgical coal trade. These facilities are well equipped and can handle shiploads of 100,000 tons or larger. These terminals, however, generally lack facilities for major transshipment of coals, which is what the growing traffic in thermal coal will demand because many coal-fired power stations and other industrial plants do not have sufficient berth depths for suitable unloading facilities to handle large direct shiploads. While some improvements in handling facilities will be forthcoming, according to one availableforecast, shown in Table 1.12, even by 1990 a substantial proportion of shipments destined for Pacific Rim countries, including Japan, will be to destinations unable to handle ship sizes in excess of 60,000 DWT. These receivers are the most likely users of the CTC. L Table Japanese The=al Coal Lnmrts by Source,-1980 and 1981 1980 1981 Source 6 6 10 tons % 10 tons Australia. 3.5 67.6 5.7 48.8 U.S. .3 5.5 2.1 18.2. S. Africa .2 @4.6 1.3 10,.8 PROC .6 11.7 1.2 10.2 Canada, .3 6.3. 1 9.8 USSR .2 4.3 ..3 2.2 W- Total 5'. 1 100.0 11.7 10.0.0 ON-1 Source: Coal Industry Quarterly, June 1982. Table 1.12 1990 POceiving Port Capacity For Pacific Rin Steam Coal LTiports By Vessel Size AccanTodated 6 3L i (10 tons; % of Total Cipacity). Vessel Size Japan Taiwan Korea r1btal 100,..000+ DWT 23.8* 39%* 18.4 69%- 5.2 31% 47.4 60,000+ to 11.9 19% 4.6 27% .100,000 DWT Panarrax or smaller 25.8 42% 8.1 31% 7.2 42%@ 41.1 39 (to 60,000 DWT) 61.5 100% 26.5 100% 17.0 100% 105.0 100 .*Includes 7.0 million tons capacity planned for Sakito Coal Center. Construction of this.facility by 1990 is now considered uncertain. Source:. H. P. Drewry Shipping Consultants, Ltd. (1980) In fact, the Japanese plant in Matsushima, located in the southwestern tip of Kyushu, could serve as a prototype of such a user (Figure 1.5). The plant has an output of 1,000 MW and requires 2,080 kt of thermal coal per year. The coal handling facilities include a berth with 14 m draft for 60,000 DWT bulk carriers. Unloading is done by four 700-t/h units to which has been assigned a 1,540 t/h rate. The plant has a 430-kt ground storage. It is the most modern coal-fired unit in Japan and probably represents the standard for new future coal-fired plants. In addition to Matsushima, there are eight other coal receiving facilities JO_ that are either in operation now or are expected to be in operation before 1990 and that are designed to serve electric power plants. Including Matsushima, the combined throughput of these facilities is estimated at 22.1 million tons per year (WESTPO, 1981). It seems reasonable to assume therefore that there should be sufficient demand for the CTC with a throughput of 10 million tons a year. ENUMERATION OF COSTS Capital and operating 'costs were needed in order to determine if 17 the stream of benefits estimated in the preceding section exceeds the stream of costs, and if the cost savings are sufficient to offset an extra cost of unloading, loading, stockpiling and/or blending of coal at the CTC. It was indeed very fortunate that the cost information on the. newly completed coal terminal at Port Kembla, NSW, was available (Soros, 1981). These data provided the basis for some "order of magnitude" estimates for the CTC. The estimated construction costs of the CTC are shown in Table 1.4. They were obtained by scaling down Port Kembla costs and by eliminating costs of facilities not to be included in the CTC. The construction is assumed to take three years with the following distribution of capital expenditures: First year, 25% Second year, 35% Third- year, 40% Coal Centers Public and-Private Ports A (a) Muroran (q) Naoet.su (b) Tomato (r) Toyama (s) T�uruga (c) Onahoma. (d) Chubu (t) Kashima. ""A.- (e). NK (u) Kita-Kyushu. M Ube b (g) Sakito a E3 (h) Hibikinada Electric Power Ports (i) Noshird (j) Soma (k) Ibaragi (1) Misumi (m) Takehara. (n) Matsushima jo (o) Matsuura (p) Reihoku @c q r A k lzll; tA As d EM m e f h g U n Figure 1.5 Japanese Coal Receiving Terminals, 1990 Source: Report of the Port and Marine Task Force (Soros, 1981) 24 The useful life is assumed to be 25 years without any salvage val ue. An order of magnitude estimate of operating costs for the CTC is as fol lows: Labor (all categories, 100 @ $40,000/yr) M $ 4.0 Operating Expenses 4.0 L General and Administrative Expenses 1.0 Total 9.0 U.1 CNMI Charges 5.0 L Total M $14.0 The CNMI charges are assumed to include ground rent and other L charges/taxes paid to CNMI governments. For transshipment of coal, the CTC is assumed to be $2.25. This charge appears to be within the range of port charges at several non-U.S. ports (Table 1.13). PRELIMINARY ASSESSMENT OF FEASIBILITY One should distinguish between two types of feasibility assessments: economic feasibility and financial feasibility. An economically feasible project is defined as one that generates "benefits" to whomever the y accrue in excess of the economic value of the "costs" regardless of who incurs them. However, only the value of the increment in output arising from a given investment should be counted as benefit. Similarly, only real resource costs incurred in producing that increment of output should be counted as cost. LW The present value rule which is logically superior to the others was used to determine both feasibilities. The project was consi dered economically or financially feasible if the present value of the associated stream of benefits or revenues exceeded the present value of costs. The present value is defined by the formula S S@ S S PVo + + 3 + + n (1+i) 2 (1=i) n 1-7- A Table 1.13 COAL LOADING CHARGE VARIOUS COAL LOADING =UM%L CANADA AUSTRALIA N S W QUEENSIR NEPUME ROBERTS .BANK NEWCASTU PORT KEMBIA AUCKLAND P( (CHARGE) stacking & Loading 2.50 2.40 4.20 3.52 1.75 M-iarfage 0.40 0.44 Harbour Due 0.25 Total (Local Currency) C$2.50' C$2.40 A$4.60 A$3.96 A$2.00 (Exch.) (0.80) M.80) (0.85) (0.85) (0.85) Us$ per M/T. 2.00 1.90 3.91 3.37 1.70 (CAPACM) Loader Capacity 3,000t/h x 2 4,000t/h x.2 2,500t/h x 3 .3,500t/h x 2 8,000t/h (mechanical) Max. Size of Vessel 125,000 DWT 125,000 DWT 110,000 air 110,000 DWT 55,00 to be accomnodated stockpile Capacity 220,000 t 1,200,000 t 1,000,000 t 800"000 t 300,000 t Annual Throughput 5 million t 15 million t 20 million t 14 million t 5 miUicx capacity source:. Private conTaunicatio'n from S. Kubota, Thyon-enka (Anerica) Inc., dated May 27, 1983. Where PV is the present value, S is the value of net benefits or net 0 i revenues attributable to in the year t to the investment under consideration (calculated as of the end of the year), i is the discount or interest rate per annum, and n is the last year in which the investment has any effect. A financially feasible project is defined as one that generates revenue sufficient to cover all financial costs to be paid, including such transfer payments as taxes. Both economic and financial feasibility is considered in this assessment. Each benefit, cost, receipt or payment was counted when actually 177' received or incurred and, following a generally accepted procedure, no adjustments were made to allow for anticipated changes in the general price level. The essential principle is that the entire comparison of 77.1 costs and benefits or revenues should be calculated using dollars of constant. purchasing power of some convenient period. Thus, all estimates are in 1980 dollars and are summarized in Table 1.14. The choice of proper discount or interest rate is subject to a considerable debate. To allow for differences in opinion and for differences in risk premium, the calculations of present value were made using 10%, 5.3 12% and 15%. The estimated present values are shown in Table 1.15. According to these estimates, the CTC is clearly an economically feasible project, i.e., when considered globally the benefits exceed the resource costs by a wide margin. It is also alfinancially feasible project, i.e., the revenues it generates cover its costs if the CNMI ground rent and other taxes are as sumed to total $5 million per year. If the CNMI ground rent/taxes are $10 million per year, the project becomes marginal. Furthermore, the present value estimates for net revenue streams are very sensitive to relatively small changes in cost estimates. Therefore, a more comprehensive effort is needed to refine cost and revenue estimates before a more definitive conclusion regarding the financial feasibility of the CTC can be drawn. Overall, however, it appears that the proposed project has merit and that the full scale feasibility study is warranted. LILA J L -7 Ali Table 1. 14 Sumury of Benefits, Costs and Financial Charges Year Received or Incurred First Second Third kmually Year Year Year through (M $ U.S.) 'Benefits: Savings due to use of large vessels .0 0 0 Savings on storage of stockpile 0 0 0 co Other non-user benefits 1 1 -1 Costs: Construction Costs 12.5 17.5 20.0 Operation Costs 0 0 0 Revenues and Financial Costs: Transshiprent Charges ($2.25 por ton) 0 0 0 2 Storage Charges ($0.50 per ton) 0. 0 0 CMI. Ground Rm. t/Taxes 0 0 0 AI ILI 1 151 --aj Ta ble 1.15 Estimated Present Values of Net IBenefit and Net Revenue Streams by Discount Pate Discount Rate Net Fenefits Net Revenues (Percent) $ U.S.) 10 116.0 30.8* 13.7". 12 89.0 19.3 5.-3 15 60.5 7.36 -3.2 *Assuming CNMI ground rent/taxes - $5 million'per year. **Assuming CNMI ground rent/taxes - $10 million per year. lu L221 711 90 Recommendations RECOMMENDATIONS WK 1LOSWE Based on the findings of this study, it is strongly recommended that @'fm - the Governor of the CNMI should take the following steps to verify the. economic and engineering viability of a coal transshipment center on one of its islands. There is every indication that segments of the private sector would be supportive of steps one and two. 1. Identify and contract a coal/port consulting firm with experience in Australia, Japan and the United States to conduct the following tasks: a. Verification of coal trade and market opportunities in the Pacific Rim countries; b. Based on economic and engineering assessment, select a site for a coal center and provide detailed cost estimates and engineering drawings for channel, port, handling, storage 72171, and blending infrastructure. C. Conduct an in-depth economic/engineering assessment of secondary industries, such as cement, ammonia, desalination and agriculture. d. Assess the economic, engineering and environmental viability of coal-fired power systems for the islands as a result of the Coal Transshipment Center. 2. Contract an independent firm or government agency to carry out both environmental and social impact assessments of a coal center and secondary industry as a result of the center in CNMI. 7'' 30a 3. With the results of the first two tasks, assuming that they are positive, solicit and negotiate financing jointly from the U. S. Congress, the Japanese power industry, and the Australian coal industry. 4. Develop land lease agreements and tax incentives that will provide revenues for the CNMI government and also be comparatively advantageous and benefic'ial enough to attract outside capital and investment in CNMI. % twI UM 30b TECHNICAL REPORT nt roduct ion .1 LI LiA" Le INTRODUCTION PROBLEMS AND CONSTRAINTS Problem statement: The CNMI, as a newly emerging self-governing entity, is aggressively pursuing a society where decisions as well as revenues for the running and.maintaining of government and other public and private services can be locally generated and controlled. There are, however, a number of constraints that the CNMI government is currently faced with and it is investigating various means t o overcome them. The major ones are: 1 . Natural Resources: Land, a precious commodity limited to a total of 184.51 square miles, of which 47.46 square miles are on Saipan where'close to 90% of the population resides. Water, especially potable water, on Saipan is obtained from underground water lenses. This impedes the development of agriculture, urbanization and commercial- activities that require large quantities of fresh water. 2. Economic Base: The government is the largest single employer, with 27% of the labor force in 1982. As the private sector is still in its early development stage, government is still providing such basic services as health care, water and electricity. 3. Federal Government and Foreign Investment (Table 3.1): Since the CNMI separation from the Trust Territory of the Pacific Islands, federal aid has been increased, which in turn has been accompanied by various federal laws, rules and regulations which in some cases could discourage potential foreign investors. Efforts by both branches of the government, especially the Northern Mariana Islands Commission on Federal Laws, have been undertaken in studying and making recommendations on such legislation as the Clean Air Act, the Ocean Dumping Act, the Coastal Zone Management Act, the Rivers and Harbor Act, the Federal Power Act, the Deep Water Act and the Ocean Thermal Energy Conversion Act. There are a number of ways to address these general problems. The government of the CNMI foresaw that there is no single or simple solution to employment, transportation energy, water, agriculture, health, 7 ?.1 Table 3. 1 NUMBER OF WAGE AND SALARY EARNERS AND AMOUNT OF WAGE AND-SALARY EARNINGS, PRIVATE AND GOVERNMENT SECTOR, 1977 AND 1982 Sector Wage and Salary Earners Wage &_Salary Earnings ($000) 1977 1982 Change 1977 1982 Change (Percent) (Percen GCNMI 1,979 1,849 - 6.7 $ 8,024 $17,338 116.1 TTPI 1,411 533 -62.0 8,017 7,078 -11.8 1,7- lil -30.0 6 52.2 Total Gov't. 3,390 2,382 16,041 24,41 Private 3,617 6,299 74.1 9,655 30,452 215.4 TOTAL 7,007 8,681 123.8 $25,706 $54,868 213.4 U.I Source: CNMI Overall Economic Development Strategy, 1983 '777- -(Lm training, and housing and so it launched a number of studies, assessments, and economic and engineering feasibility studies. Ports and small harbors, oil storage, fisheries, tourism, alternate energy and coal transshipment studies are but a few. These efforts are being carried out by an interdisciplinary group of individuals, government agencies and private consultants to ensure that engineering, economic, environmental and social issues are weighted equally in the assessments as well as in the recommendations. BACKGROUND The continued efforts of the Government of the Commonwealth of the Northern Mariana Islands (CNMI) to stimulate economic development and alternate energy resources and the utilization of the available experts, institutions, and agencies led to a contract for the Research Institute of the Pacific Basin Development Council (PBDC) to carry out a Coal Movement in the Pacific Basin Study. In a letter of May 28, 1982, the CNMI government specified the scope and type of assessment to be done by PBDC. SCOPE OF WORK 1 . Brief history of coal in the Pacific. 2. Identification of present coal-related Pacific shipping routes, shipping companies, support industries, projected traffic and tonnage volumes. 3. Analysis of plans and projects concerning coal movement in the Pacific, with.special emphasis placed on those which may be of significance to CNMI interests. The report will discuss 7, 7,77,77 related plans and projects of Japan, China/Taiwan, Korea, the United States, Pacific Islands, Canada, Australia, and other island areas. 4. Identification of potential coal uses and associated primary and secondary industries. Primary focus will be placed on those which could reasonably be expected in the CNMI or those regions which might affect the CNMI. 5. Discussion/correspondence with coal industry interests concerning possible opportunities presented by the CNMI's location adjacent to coal movement routes. 6. Short-term, mid-term, long-terrn future possibilities of coal usage in the CNMI. -1 011@ J. 7. Identification of demands on CNMI resources (including financial, natural, physical and human) from primary and secondary coal- related activities (e.g., land size and type, port and harbor, , - -, , al-I utilities, government services, labor, etc.). -A!r 8. Identification and evaluation of the positive and adverse economic, social and environmental impacts. A discussion of the impact of coal usage upon development of indigenous energy sources will be included. Special attention will be paid to imports which the CNMI could reasonably expect. 9. Regional issues and opportunities for regional cooperation. 10. Summary Report of Findings. STUDY OBJECTIVES T There have been numerous studies in the U. S. territories, and CNMI in particular, and, as some officials have said, "We have been studied to death." In formulating the study approach for the Coal Movement Study, five objectives were identified in the earlier stages of the work, so that as it progresses, it will not lose sight of what the CNMI 11 A government wanted. The objectives are also essential to the direction and justification for future detailed economic, engineering,,social, and environmental feasibility studies of coal transshipment and potential use in the CNMI. This type of analysis will prevent the expending of limited manpower and funds on the early scoping of the assessment; it will also provide a more reasonable and efficient method of further analysis if this first phase indicates some potential economic benefit in coal transshipment in the CNMI. Following are the stated study objectives: 1. To verify the economic, engineering and environmental viability of.coal transshipment in the CNMI. y 2. To identif the potential economic benefits of coal transshipment. 3. To assess the economic trickle-dow n effect of coal transshipment. 4. To identify and validate the economic, engineering, and environmental viability of coal utilization in the CNMI. 7 '7777. 5. To establish/reject the need to conduct a detailed engineering, economic and environmental analysis of coal transshipment and coal utilization in the CNMI. STUDY APPROACH Coal transshipment is a multi-function activity, and it requires an, integrated approach. Transportation, engineer*lng, economic, environmental, and social factors must be evaluated and correlated. In addition, 'a number of individuals, institutions, and government agencies in the past have studied the potentials and the resource availability and need for the various factors. To integrate the expertise and the findings, the Research Institute of PBDC, through the Project Coordinator, contracted as consultants'a coal mining engineer and a transportation economist, and secured the assistance of the U.S. Army Pacific Division Corps of Engineers (letter of September 3, 1982) in the study. Each of the four participants is responsible for a specific part of the study. Following are summaries of the responsibilities of the parties: PBDC: Project coordination, development of the recommendations, compilation and storage of data, and the preparation of the general narratives. It will also provide liaison between the investigators and the CNMI government. Coal Consultant: Development of the section on transportation, handling, storage and utilization of coal. Transportation Assessment of the economics of coal transshipment, Economist: the labor requirements, generation of secondary industry, and competitiveness of transshipped coal. Corps of Engineers: Calculation and provision of preliminary design criteria for harbors and channels that can handle large vessels. 1 7@1 This approach gives a wide access to the latest plans, technologies U@ and regulations that.could impact the transshipment and utilization of ,A " - coal in the Pacific Basin. ISSUES AND CONCERNS While it might at first glance look attractive and logical, close evaluation of coal transshipment raises a number of issues and concerns. Though the study is not structured to provide answers to each of these issues, it is believed that the investigators should at least be cognizant of them. The list could be expanded, but for the purpose of generating awareness of the alternatives and potential impacts of coal transshipment, the following issues will be sufficient. This itemized list also forms the foundation of our inquiries in this study. The Northern Mariana Islands are not located in the most direct shipping lanes for Canadian or U. S. coal. However, they are close to existing Australian and potential New Zealand coal routes. a. Why would shipping fi rms reroute their ships through the Northern Mariana Islands? b. What are the additional costs of bunkering and resupplying @coal ships in the Northern Mariana Islands? co What are the potential benefits to the Commonwealth of the Northern Mariana Islands? 2. The Northern Mariana Islands are located in a Pacific Ocean typhoon zone. a. What degree of safety and/or protection can be assured or provided if it is determined that this type of weather condition will have an adverse impact on the coal carriers? b. How much impact would adverse weather conditions have on the scheduling, arrival and departure of ships, and the loading and unloading of coal in the Northern Mariana Islands? 3. The channel depths of the Saipan, Tinian and Rota Harbors are about 30 feet; normally, 50,000 dwt vessels, which draw about 40 feet of water, are used for coal shipments. For transshipments of coal, 100,000-200,000 dwt ships are.being considered. a. With the Federal Government's emphasis on full (100%) local financing of port construction andpossibly Of operations and maintenance (including dredging), how will the Commonwealth of the Northern Mariana Islands obtain sufficient funding for the additional construction and maintenance costs if these (larger) coal ships are used? 17 b. If one of the major functions of rerouting to the Northern Mariana Islands is for stockpiling and transshipment purposes, how can the needs for deeper and larger ports, larger turning basin areas and facilities, and larger stockpiling areas on shore, be met? 4. Guam was recently approached by a private interest to provide bunkering facilities to refuel commercial ore and coal carriers. However, it should be noted that the Territory of Guam government has not shown any official interest in actual coal transshipment. a. What impact, if any, would the potential Guam venture have on the potential transshipment and storage operations in the Northern Marianas? b. What economic, political, environmental, labor and other resource advantages does the Northern Marianas have over Guam? C. Can such large ships be refueled in the Northern Marianas? d. Will the existing oil supplier (Mobil Oil/Micronesia) be willing to expand its services to accommodate these potential new clients? 5. Coal dust pollution, run-off, and leaching into the water lense are of great concern to the Commonwealth of the Northern Mariana Islands. a. What reprocessing and/or enhancing of coal can be carried out in the Northern Marianas? b. What additional resources, facilities and manpower would be required by these activities? c. Can these additional resources, facilities and manpower be obtained in the Northern Mariana Islands? ZK d Given that past experiences have shown that island sentiments are against oil storage and nuclear waste dumping, what would be the feelings of the CNMI citizens and government regarding coal storage? e. Would there be any change in the attitudes if there were 7 7 some direct benefit from the use of raw and/or processed products in economic development activities? 6. China and the Soviet Union are potential suppliers of coal. In fact, Japan is providing financial and technical assistance for coal production to China so that Japan can import the China coal surplus. a. If the demand for U. S., Canadian and Australian coal 0ol diminished after the Northern Marianas ports were expanded to accommodate coal ships, what other uses for these ports would there be? b. Would end users allow their coal supply to be tied or further controlled by the.United States by its stockpiling L, in the Northern Maria*na Islands? 7. Currently, there is a significant foreign labor force being imported to provide construction, maid services, bar-restaurant services, and to do other semi- and skilled work on Saipan. 1,9 This has resulted in a lesser rate of retention of new capital in the islands. a. Would increased coal activities increase the demand for foreign labor? 8. In general, steam coal (for power generation) is in higher demand than metallurgical coal (for ore smelting), although Japan's interest in both types must be taken into consideration. 39 a. Besides electrical power generation, what other primary and secondary uses can be identified? 9. Elected officials in the Commonwealth of the Northern Mariana Islands have requested termination of the U. S. trusteeship of the Trust Territory of the Pacific Islands as soon as possible. Upon termination, certain Federal laws which have not applied to the Northern Marianas in the past will become applicable. 71 The application of the Jones Act will bar foreign vessels from carrying ca.rgo between American ports. Current reports indicate that most bulk carriers are non-U. S. vessels. a. What impact will the termination of the trusteeship and concomitant application of certain previously nonapplicable Federal laws have on potential coal movement to the Northern Marianas? b. What impacts would post-trusteeship application of Federal trade and tariff regulations (and fees) have on potential coal transshipment activities in the Northern Marianas? 10. Japan is diversifying its coal sources so that strikes and other delays will not interrupt a constant, reliable flow of _!Uy coal to Japan. a. What are the implications of unionized labor, strikes and other operational disruptions for the use of coal facilities and services in the Northern Marianas? b . What potential is there in the Northern Marianas for preventing strikes and other operational disruptions which would impact constant, reliable shipment of goods from the Northern Marianas? DESIGN STUDY CRITERIA The flexibility and the possible large combination of vessel sizes, channel depths, coal throughputs, different harbor sites, and many other variables require that a set of design study criteria be selected. The channel depths and vessel characteristics chosen are hypo,tetical but correspond closely to the existing coal vessels from Australia. The throughput is based upon-the coal consumption of Japan and the current load/unloading capacity at Pier G at Long Beach Harbor. Three potential sites have been designated, based upon the U.S. Army Corps of Engineers' reconnaissance studies of 1980: Tanapaq Harbor on Saipan, Rota Harbor on Rota,.and Tinian Harbor on Tinian. Tanapag Harbor improvement/expansion costs will be done for three different depths (40,, 50, and 60 feet) to accommodate vessels of dead weight tons (dwt) ranging from 50,000 to 150,000. Rota and Tinian will be limited to 50,000 dwt only. IMIR On stockpiling for transshipment, calculations (Hicks: 1972: 3 363) will be limited to 1,500,000 metric tons' storage capacity with the assumption that transshipment will not permit the total throughput of 3 mt to be stored at one time. 7"1 Existing Conditions EXISTING CONDITIONS 7. The on-site evaluation and assessment is an essential component of the Coal Movement in the Pacific Basin Study. As the engineering, economic and environmental analysis is being carried out in Honolulu, Hawaii, the existing conditions (i.e., social, political, economic, and environmental) on Saipan, Tinian and Rota had to be validated. To bring reality to the study, the on-site visit tried to evaluate and assess the -o. @77 following: 1. The conditions and future plans for harbors, ports, on-shore facilities; 2. Land availability and policies; 3. Labor needs, regulations, union movement; 4. Economic conditions role of transshipment in the long-range economic goals; 5. Power plants - conditions, operation and maintenance costs, and potential use of coal and its impacts on environment and renewable resources developments; 6. Acceptability of coal transshipment and utilization - political, social and environmental 7. Barriers/impediments to coal transshipment and utilization technical and social; and 47,-, 8. Pre-se lection of potential sites criteria and rationale. GENERAL CONDITIONS One method of visually assessing the conditions of the ports, harbors and channels was to ride the Marianas Queen, a ferry boat which went from Saipan to Rota and returned via Tinian. Saipan Current reports and visual inspections show that the Charlie Dock on Saipan is experiencing deterioration due to age, typhoon waves, and other corrosive'environment (Figure 4.1). 7 T, MU L L R it R -g-;Nfi ml ilk �R I 4AIrM tlO w R SY x gi 7&t7 Vt I ega 7+4 9'M m_i' ii , l"15 j Will _711rflllllr@@ WA I:; @- vmd"@ MR IN- nom % m @m`:IIXW@ jo" 'r 1 N -H t "'Lq Vwu & FERNI'ir U2@ PW Ml@k I WIN' TOO,. -om i@ E -A'4f 111W51, @o m 'b", Nvt pl" Wm @Ai N yo M ELIL LA M .@g@@g 04" al- �R mr, C_ Y@e' Pho t D_ o c kand Marianas Queen, Saipan The ferry boat had no trouble maneuvering in the turning basin and the channel, as it is the main port of call in the Northern Mariana Islands. Space on Charlie Dock is not available, and the nearby shore area P1, is being considered for other port-related activities that will prevent, and not be compatible with, coal stockpiling (Figure 4.2). Some officials feel that the adjacent lands, flat and non-productive now, should be turned over to the Port Authority. This might prove to be a potential site for coal stockpiling. The most accessible area, "dump site", is under the U.S. military retention area. Again, some officials believe that it could be used for transshipment, as it is port activity-related. Power, sewer, water, telephones, and roads are accessible, and no major utilities expansion/extension would be needed for transshipment requirements. A master plan for the port and nearby land is underway, but so far the draft has not yet been accepted by the CNMI government. A second potential site is the sea-ramp area by the new power plant. The U.S. Army Corps of Engineers has completed a master plan for a small boat harbor for the site. Currently, no funds are available to implement this plan, and the docks are deteriorating and grass and small trees are overtaking most of the seaplane landing. Because the areas from the seaplane ramp to the new power plant and the repair shop and old TTPI warehouse have been filled in and concreted,- it is not suitable for agriculture. Production is limited to services and repairs. Some officials feel that it should become the center for light industries (e.g., block making, auto repairs, etc.). Again, it was pointed out that if coal stockpiling at this area would generate more-revenues and employment, a reassessment and change of priorities could be made. An additional attractiveness of this location is the close proximity of the dock to the plant. If the CNMI were to opt for steam generation in the future, the cost of coal would be relatively low; for land transportation the cost would be minimal, 44 7.E @7 Uld 4 06, STUDY AREA N 'Id 0 ANAGANA TURNING BASIN SAIPAN y ISLAND 0 RAD141@@ -c 1300 NTS -66 DEEP MLLV 0 I ENTRANCE -CHANNEL] T-500' LONG CHANNEL MOUTH COO ' WIDE PUNTAN CO DEEP MLLW -60'DEEP MLLW FLORES - - - - - - - - - - - - - - - - - - - - - - - SEAPL@ OAK Oc CHAnLIE DOCK .PIP ABLE DOCK PUNTA'N PROPOSED DR MUCHOT IMPROVEME N 0 T E S: 1. PLAN OF IMPROVEMENT -BASED ON HY DRO_ AMERICAN SAIPAN GRAPHIC SURVEY BY M (k E PACIFIC, DTDI MEMORIAL PARK 0 a 19 SEP 1979. cl 0 2. NAVIGATIONAL AIDS WILL HAVE TO BE . ADJUSTED. 3. 'THE EXISTING CHANNEL IS APPROX. 300 GRAPHIC SCALE P WIDE AND -29' DEEP MLLW. q 2000 0 2000 rC7 AlItA ex rCHANt, 0 SCALE IN FEET U. S.. A R MY EN Figure 4.2 Saipan Harbor Improvement Cost at $75 million for 60 feet A well-placed and technically competent official supported the stockpiling of coal on a reef-flat adjacent to the power plant with dredged canals as berms. This idea is being tried along the Atlantic Coast. Environmental and economic detail analysis has yet to be done,' and if and when it is, this would be the last option for CNMI. A proposed small boat harbor is being planned for the Japanese seaplane ramp adjacent to the new power plant. Sources indicated that currently there are no funds to construct the facility. If it is constructed, with the deepening of the channel there is an excellent possibility of delivery of steam coal for power generation to the site. Major coal shipping companies are using conveyor type self-unloading bulk carriers to ship and transfer coal from a vessel to non-improved sites. Ship-to- land conveyors can be as long as 250 feet. Close working relations between CNMI, the Army Corps of Engineers and coal shipping companies have to be established to phase in the objectives of power generation, docking facilities and vessel designs. Rota Currently, Rota West and East Harbors have few natural depths and protections (Figure 4.3). Small ships, such as the Mlarianas Queen, a small draft river-type ferry, have difficulty in entering, exiting, turning around and docking at the West Rota Harbor. Recently, however, 7717- the U.S. Army Corps of Engineers has contracted the International Bridge of Guam to deepen and widen the channel, construct docks and a causeway connecting the existing island of Anjota to the mainland. During the site visit, it was verified that there were no werehousin and handling structures at the dock. Most small,cargo is handled by forklifts onto trucks and pickups. Land adjacent to the dock is already occupied by some houses and a small.diesel power plant. Nearby lands, some still undeveloped, are high and are already being dedicated to housing, as it is close to the center of town. The East Dock is basically an open non-wave protected jetty. It is deteriorating as a result of its exposure to the bay and open ocean and the regular typhoon forces and damage. _TM 46 .......... Ll @j 4 1-J 1;7 -OkV 'k-4. 77 4.z Fe@ Ir @Z SO" -%;&q Mal,= MA MLCIURN @a- VCVpyr@ RM ,a rv I my@ Photo - -P i ai i-r P 4 . 3 East Dock. Rota 177-- The adjacent land is limited by the residential, school and recreational facilities already in place. Both the West and East Dock/Harbors at this time do not have the required channel depths, turning basins and land area to accommodate (approximately 5 million metric tons of coal per year) coal for transshipment to Japan and other Pacific Basin and Rim countries (Figure 4.4). However, with the use of self-loading coal vessels, the U.S. Army J Corps of Engine ers' development of West Harbor, could improve the role of Rota in coal transshipment in the future. 2 An opportunity that could impact the possible development of a coal transshipping port on Rota is the interest of Northville, an oil company, to constructa. major oil transshipment facility in the CNMI. Rota is being considered as a possible site. The exact location of the facility isfurther up on.the northern end of the island. Some drawbacks of the site include the lack of existing infrastructure (e.g. dock, harbor, housing), roads and utilities. Northville's decision is expected some'time toward the end of this year. The recently completed airport and terminal will provide easy access to Rota. The road construction from the airport to Songsong Village is progressing well. Power, water, and sewer, however, are not being extended to the airport and the new housing division between the airport and the town. The Mayor of.Rota, Prudencio T. Manglona, and other elected leaders are supportive of labor- and revenue-generating projects for two major reasons. First, most employed people are working for the government; and second, as job opportunities are limited on Rota, there is a strong out-migration to Saipan, Guam and other areas. Coal transshipment is looked upon as a potential incentive to turn the tide of out-migration, and as a trickle down effect, to improve --"777 commerce, tourism and agriculture. Currently, there are only two hotels (PauPau and the Blue Peninsula). In contrast to Saipan, fresh spring water is available on Rota. Large public land areas have not all been designated for specific uses, Aft but are too far.from the docks, and elevations are too high for single conveyors to transport, reclaim, and stockpile coal. JJ 48 'Ail LZ -AT 10 LO CIMOW PAT ZVI jo LICEND: fL151 44 C104Xr.OW r I %,,#1 .1, 1 -.. , , ""o", -1..9 4 '0 4:@Q, CO- M K 'd HUM LAA L to Or', IL40 F1 r"PI M'M CAIT PKI RD 0, My1w wwrms "4 ex!sr or T49 wo"We" 14 5-,P*Q, M$11A.SA. I tr 41 H -ZONTALWM #VJJIOrA A3ZAAW #.-Tap Wn 7- % -rypiCAL vrTTFO M. F1 L A, ?4 ".L& M FLET Figure 4.3 Rota Harbor Improvement Cost at $4 million for 50 feet draft Ti ni an The use of Tinian Island during World War II by the United States as a support base for B-29's that dropped the atomic bombs on Japan has. resulted in an excellent paved road, airfields, and the existing dock and harbor. zl- Two si-te-visits to Tinian, first by ferry boat Marianas Queen and by small six and two-passenger planes, revealed the excellent conditions of the channel, wave-breakers, docks and piers. Most of the adjacent ji I-1 land has not been developed and is still overgrown with pine trees and bushes. Though the power plant is less than a mile away, there are virtually no structures (warehouses, cranes, or repair shops) presently located at the dock. For purpose of coal, transshipment, Tinian is ideal . Large harbor and port with potential expansion areas exist. Land is available at LOA close proximity and with low elevation. A major potential problem is the U.S. Department of Defense's lease option for Tinian. It was established in the CNMI Covenant. The lease option will require the use of 18,182 acres which will include a good La@ I portion of land and dockage area of Tinian. Harbor. The U.S. Congress recently, after some delays, appropriated,$32 million for the lease option. However, officials, especially of the Marianas Public Land Corporation, believe that there is a provision in the agreement for, joint use of the land as long as t here is no major conflict. This has to be legally and environmentally assessed when specific DOE and coal transshipment plans become more developed. ELECTRIC POWER GENERATION AND TRANSMISSION SYSTEMS 7 on all of the island's in the Commonwealth of the Northern Mariana Islands (CNMI), diesel is the main fuel source for the power plants. The. government owns, operates and maintains the power systems. The responsibilities are carried out by the Utility Agency within the Department of Public Works. 1111W Diesel fuel is supplied mainly by Mobil Micronesia, Inc. (Figure 4.5).* Contract provisions, however, have not been disclosed. A bulk.plant is L located on Saipan. The Utility Agency is charging customers 6-7 cents per Kwh, depending El- on the level and type of use, while it is estimated that power generation costs alone are 7.2 cents per Kwh. To rectify this imbalance, the CNMI government is seeking qualified contractors to: L 1 1. Design rates for electric power customers; 2. Calculate the total amount of revenue that must be collected by the Utility Agency; and 3. Determine the effe cts of current and proposed rates on conservation efforts. Saipan Power System The main power plant is located at Lower Base. 'It started regular operations in May 1980. It has three Mitsubishi-Pann generators with the capacity of 7.2 MWe each at 13.8 kilovolts. A fourth generator will increase the total capacity to 29.2 MW by September 1983., Projections from various studies for power demands for 1983 vary from 18 to 20.3 MW. The standby power plant has two 1,500 KW White- Superiors and two 2,856 KW Norbergs. They are constantly under various degrees of repair/maintenance which has prevented a 100% reliability of power supply to the island power system. Recent reports show that with the main power plant utilizing heavy fuel (RFO) and the old plant high grade diesel, the conversion of fuel to electricity or the efficiency difference is close to 7.0% in favor of RFO. (Table 4.1) Table 4.1 Efficiency Rates of Saipan Power Plants Heat Rate Efficiency Main Power Plant 8,570 Btu/Kwh 39.8% Old Power Plant 10,340 Btu/Kwh 33.0% NOTE:' Heavy Fuel Oil 138,778 Btu/Gal Diesel Oil 127,185 Btu/Gal ---- --- L_J 17 4 5 @@, 71,21,7173 I,AK Y 441, Ve 3", 4`@ y2 Ir _711 04 i 5.1 Z, i"ZIP W-M @_ ws, 7F. CO 1 11 -7 TA 14@ 4AI Figure 4.5 Mobil Bulk Pla nt, Saipan Pho to: Power demand is increasing at a rate of about 10% each year. Power plant operation costs are forecast to be about $7.7 million. The actual costs will be less because of the oil glut of this year. For the next fiscal year, the government has budgeted about $7.2 million out of a total budget of $44.8 million. Tinian and Rota Power Systems Both islands have smaller land areas and out-migrating populations (mostly to Saipan and Guam) than Saipan. The power systems are small diesel systems (Figure 4.6). For example, the Tinian power plant has two 600 Kw White-Superiors and two 300 Kw Caterpillars. During my visit there, it was observed that some of the generators are down and need major overhaul. In the process is the purchase of a 1,000 Kw Yamaha generator from Japan. This, as in the past, will create problems in operations and maintenance. Spare parts will be expensive and cannot be, exchanged among the three different manufacturers. Past experiences have shown that spare parts from Japan are usually hard to secure on a timely basis. The elected officials, both on Tinian and Rota, are trying to .LU institute ways to encourage commercial activities on their islands.. But with limited power capacity and reliability, it is imperative that fuel sources are identified and incentives given to potential energy ventures. Power and Coal Storage cenarios S In considering coal transshipment, two major resources are essential: flat land close to port and a good harbor. If these conditions are met, an additional benefit of coal transshipment is the use of coal for power generation. Tinian, at this early stage of the investigation, has excellent land and a good harbor that can also be expanded. The government officials and the businessmen on Tinian are in support of the coal transshipment proposal . Two scenar,ios are economically and technically possible to enhance the power systems on Saipan and Tinian. First, coal can be transshipped from Tinian to Saipan on smaller barges or by self-unloading carriers to T-r --i", 'F '4J @'k A ti; X -7" Photo i Figure 4.6 Rota Diesel Power Plant at West Dock the site of the main power plant. Second, and meritorious, is the construction of a larger steam power plant on Tinian where coal is (assuming that Tinian is the stockpiling site) already available and a strong need for power could increase with military use of the lease option. A 50 MW power plant could support Tinian and Saipan power needs. Submarine direct cables have been used in up to 1,800 feet of water. The State of Hawaii is currently working on submarine electrical cables and will further enhance the electrical and mechanical capabilities of D.C. submarine cables. Of particular interest to this project are the works of the Hawaiian Electric Company., Parsons Hawaii and the State of Hawaii Planning and Economic Development. LL4 @LU 'LU 55 5 Coal in the Pacific COAL IN THE PACIFIC This history is derived from research on the industrial use of coal in the Hawaiian Islands, the Northern Marianas, Guam and Japan. A limited amount of material was found on coal imports to Hawaii in the period from 1850 to 1945, very little information is available on coal in the Northern Marianas and Guam, and extensive information is available on coal imports to Japan since 1940. The Japanese history is important since it is the background of the present and future dominant sector of the Pacific coal trade. HAWAII Introduction of coal in significant quantities into Hawaii coincided with the mechanization of the sugar industry by the introduction of the centrifuge and the import of Scottish sugar machinery in the early 710 1850's. This 'equipment required drive lines, steam engines and boiler plants. Cane was gathered from the fields and transported to the plants on narrow gauge railroads with small, coal-fired locomotives. Steam-powered ships were also introduced into the island trade about this same time. The world's navies were also being converted to steam and required coaling stations to ensure their mobility. The ea@liest source of coal was as ballast in sailing ships en route from the Pacific Northwest to the orient. Later, a lively trade developed in hauling lumber from the Pacific Northwest to Australia and backhauling coal to Hawaii. A coal discharge dock was built in Honolulu by the Oahu Railway and Land Company in 1890. The U.S. Navy opened a coaling station that was later upgraded to a Naval Station known as Pearl Harbor. The importance of the coal trade is evidenced by its inclusion in the Reciprocity Negotiations of 1848 between the Kingdom of Hawaii and the United States. The Hawaiian Electric Company opened its first coal-fired generating p lant in 1894. Coincidental to the peaking of the coal trade was the development of the Signal Hill oil field in Southern California and the Union Oil Company's search for markets. In 1903 three of the largest sugar plants on Oahu agreed to use oil in place of coal . The Union Oil Company introduced the progenitors of the modern tanker fleets to serve this market. By the end of World War II in 1945, the conversion of coal to oil-fired plants and ships reached the point where coal was no longer imported. The OPEC oil embargo and the higher price structure for oil occasioned a review of energy sources in Hawaii starting in 1973. The studies proceeded slowly for several ears, until the cement plants were threatened y with serious price competition from west coast plants which had changed over to coal under Federal orders. The cement plants completed their refit to coal in 1979. 7i The Hawaiian Electric Company commissioned a study by the Stearns- Roger engineering firm in 1978. The study developed the conclusions that the use of coal in Hawaii was feasible from a "logistical, technical and operational standpoint". The study cautioned that "The environmental and economical aspects need additional study as their potential impact on the Hawaiian Islands is considerably greater than fo r most any other area of the United States." The study goes on.to point out that at the then cost of (Colorado) low sulfur, washed coal delivered to Oahu of $2.44/MBtu, coal was competitive to the then cost of oil on the same basis or $2.57/MBtu. Current estimated cost of coal on the same laid-down basis, but using washed Australian low sulfur coal is $2.50/MBtu. The average HECO fuel cost for oil in 1981 was $6.59. It should be noted that the plant described in the Sterns-Roger study would meet the same emission. GUAM AND THE NORTHERN MARIANA ISLANDS Coal usage in other Pacific Islands has been'difficult to establish. There seems to have been almost no industrial development during the Spanish occupation of the islands. After cession Cuam received scant attention by the U.S. until just before the start of World War II. At _U@ that time there.were plans to send the USS Gold Star to the Philippines 57 to bring back a load of coal for the power house and for local business houses. (Paul Carano, 1964). It is likely that during the intensive agricultural development that took place during the occupation of the Varianas by Japan, coal may have been @used on the cane railroads or in the sugar plants (Table 5.1). Coaling stations established by the U.S. Navy were located at the following ports: Philippines: Olangapo and Cavite Japan: Yokohama Guam: Apra Alaska: Si tka Hawaii: Honolulu American Samoa: Tutuila. JAPAN The largest volume of coal trade in the Pacific has been to meet Japanese import requirements for their steel industry. Table 5.2 shows the principal suppliers of coking coal to Japan from 1940 to 1980 and the rounded'quantities supplied. The flexibility and skill with which the Japanese procurement policy was implemented are indicated by the fact that the major part of imported coal is from coal fields not in production before 1955. These coal fields and the necessary infrastructure were financed internationally with minimum Japanese funds. The installations are modern and efficient and have resulted in very competitive prices. The Japanese government controlled the procurement program through MITI in a manner that prevented the users from competing for the supplies and bidding up the price. When the vendors' governments tried to equalize the negotiating process or increase the cash flow from the sale of their resources, the Japanese shifted or threatened to shift their procurement sources. Japanese domestic coal production reached a level of 56 ftly during World War II. Production fell to 20 Mt in 1946, gradually increasing to 55 Mt in 1965. Since then, production has steadily declined to the. 20 Mtly level which is expected to be maintained for the next 20 years. Tableo iana, Caroline, and Marshall Coal and Petroleum Imports Into Mar During the Japanese Administration (1917 1935) COAL PETROLEUM Year Value Quantity Value Quanti Yen- Pounds M-e-tr i c T o n s Yen hitre Ualio 1917 --- --- --- 17,211 --- 1918 --- --- --- 30,800 1919 --- 26,o6i .1920 --- --- 20,344 --- 1921 goo --- --- 16,622 --- 1922 .68,507 --- --- 32,659 --- 1923 68,292 --- --- 30,884 --- .1924 79,362 --- .81,953 1925 122,632 --- 79,589 192.6 112,666 --- 61,708 1927 95,646 --- --- 75,589 --- 1928 151,066. --- 104,745 --- 1929 91,327 --- --- 46,611 --- 1930 267,764 30,76o,ooo 13,956 66,347 386,ooo iol, 1931 182,767 129242 82,210 482,000 127, 1932 187,118 .34,648,000 15,720 79,946 472,000 124t 1933 178,586 18t777,005 8,519 107,807 573,022 151, 1529992 23;53lg645 lo,676 789,281 2089 1935 146,465 18,b6o,095 8,194 151,545 899t693 2370 1 metric ton = 2,204 lbs. 1 litre =0.264 gallons 1 barrel =55 gallons Source: Annual Report by the Imperial Japanese Government to the Council of the League of Na on the Administration of the South Sea Islands, 1936. Table 5. 2 Japanese Coal Imports From Coking Coal Manuals 1966, 1976, 1981 (000 tonnes) Manchu- Austra- Soviet So. Year ria China U.S.A. lia Canada Union Po-land Africa 1940 741 2 395 1945 238 262 1950 531 75 59 1955 lo4 2,364 10 85 1960 4,988 1,194 564 437 1965 475 6,9o4 69620 873 11149 1970 25t345 14,749 49242 2p489 941 1975 21,227 21,272 lo,961 2,86o 1,lo4 193 1980 14,000 26,ooo 10,000 1,6oo 400 2,500 The Japanese did not import therral coal before the oil embargo. Their policy was to increase oil and liquid natural gas imports for use in new thermal plants. After the embargo, the policy was quickly modified and they implemented a thermal coal utilization program. The cement industry and paper and pulp companies have completed their changeover and increased coal imports from nil in 1975 to 8 Mt in 1980. Utilities were less than 2 P-t in 1980 but are expected to increase their imports to 15 Mt in 1985. Total thermal coal imports are expected to increase to 22 Mt in 1985. POTENTIAL COAL USERS It is unlikely that a Coal Center could be financed without firm contracts'for its services.at least through the payout period. To find 60 the client or clients most likely to make long-term contracts for Coal Center services, it is necessary to study the structure of the international coal trade in the Western Pacific. Tinsley (1982) offers the most current and comprehensive information for this purpose. Construction is underway or committed to in Taiwan and Korea for coal receiving facilities. Coal Centers are being planned for Indonesia and the Philippines. These countries have future domestic mining plans but would initially import coal for their own use and transshipment to SE Asia (Slater, 1982). None of these areas are likely to be markets for coal passing through Tinian. Japan has the largest expanding demand for coal in the CNMI trade area. Conversion of the cement and general industry plants to thermal coal is well underway. An active program to increase the coal-fired share of power generation from 17,000 GWh 1979 to 96,000 GWh in 1990 is underway. Thermal.coal imports for power will exceed the present metallurgical coal imports by 1990. Metallurgical coal imports are expected to increase from the present 60 Mt in 1981 to 80 Mt by 1990. The deep draft and well-equipped ports of the coking coal importers now unload the largest bulk carriers. These ports are capable of higher throughputs. The higher capacity will 7 be used for associated public utility companies. Metallurgical coal importers are not prospects for a offshore Coal Center. The Japanese cement industry made the earliest transition to coal. They lifted 8.3 Mt in 1981 and are not expected to import more than 1.5 Mt by 1990. The high ash thermal coal was landed at existing ports with 7 capacity for increased imports. Other miscellaneous users import less i _a than 2.0 Mt. Cement and general industrial users are not likely Coal 7 Center prospects. The Coal Center would import only low ash, low sulfur thermal coals. The public utilities of Japan presently import, about 5.6 Mt of thermal power coal mostly from Australia. The 1981 Coking Coal Manual is the source of the following data concerning future public utility plans for coal-fired power generation: (Table 5.3) Table 5. 3 Japan's Future Public Utility Plans for Coal Fired Power Generation (Period 1981 - 89) Use D79 Requirement Coal Requirement Construction decided 10,350 MW 25 Mt (16 units) Construction undecided 14,456 mw 32 Mt (20 units) Subtotal (36 units) 25,8o6 mw 57 Mt General Industries 500 MW 2 Mt (4 units) TOTAL COAL REQUIREMENT 49 mt (less 10 Mt domestic) Shibukawa (1981) offered the following projections to the members' of the Senate Subcommittee on Energy and-Natural Resources in Washington on December 1, 1981: "The Japanese electric utilities industry plans to start 49 new coal-fired units with a total output of 24,000 MW in the coming ten years. This will require the importation of 40 to 46 Mt of thermal coal by 1990." Tinsley (1982) reports various 1981 projections of 45.50 and 51 Mt for 1990, and 74 to 82 Mt for 2000. The shift to power generation with coal has serious implications from a supply as well as a delivery standpoint. Japan has experienced frequent and serious supply disruptions of coking coal and iron ore. They are aware that they cannot tolerate an uncertain coal supply for utilities. They must also obtain the lowest possible cost of coal landed CIF -7 plant site. Since ocean freight is their most controllable cost, they V 62 are looking for economies in this area. They have recently joined in the financing of overseas port infrastructure projects. They have also studied the steel ports. The Japanese steel industry has taken the initiative in the developme nt of bulk carriers in excess of 100,000 DWT and deep draft ports at tidewater steel plants. The steel mills' efficient infrastructure incorporating multiple stockpiles and blending is known and has contributed to Japan's competitive position in the world steel markets. JAPAN'S COAL SUPPLIERS Australia is an example of an uncertain supplier of concern to Japan. Australia has large low ash and low sulfur coal reserves, new, efficient mines and a newly constructed infrastructure. Australian coal can easily be the lowest cost coals on the Japanese market; industrial strife has caused frequent severe supply disruptions. The 1981 Coking Coal Manual states that the 1980 disruptions cost the Japanese steel companies $200 million on the 18 Mt of coal involved. This situation has caused Japan to rethink its supply relationship with Australian producers and shift to a diversified supply base. The United States, which is the'major supplier of coking coal to Japan, has only recently upgraded some East Coast ports to reduce congestion (Figure 5.1). The major expansion of thermal coal production in the Western states lacks the infrastructure for export to the Pacific Rim countries. U.S. thermal coal cannot be delivered from the West Coast at competitive prices. West Coast coal could use Tinian Coal Center facilities, especially for blending. When deeper draft ports create traffic for larger than panamax vessels, the coal could be stockpiled for forwarding to the utility company ports which have only 14 m (43 ft) draft. Canadian coal development has been centered on coking coal. Thermal coal is now being developed. Canadian infrastructure is efficient, with the provincial governments assisting in the development of new resources. Unfortunately, adverse weather and rail grades are serious impediments to the competitive position of Canadian mines. This could 63 77- ran am. :7 4j 4j C_ .11@ o. > S_ cu 5- 11M 4- "'T w u V1 lid Ne Xi@WM EA S_ 0 0-1 N.: CL 4-) m 00 r_ CF) > M C LA (m a LA s C_ cu (111 .P X S_ (U V Cj u C -C 4-J cn c U S_ (z 3: 4-J (o u V) o 0 P_ -4 IiE 4-) =3 ;V'Y it hye'z,i,@ CL 0. C L. ZT, V. 02- :iA I,- IM 4-) " "d PUT, > aj :3: Qj 4-J m 4-J 4J cj c (A Nqk, Y_, "I 7--,Ollf@@o CD 0 r6- rL R" U-1 cu 751, @q S_ 10 0 S_ a) C: 4-) 7 A A-Nz, f@,m Lr) 5' W.*j 17 o, 4" f V @1, 4' P'l be improved in the thermal power coal market by transshipping through Tinian with the large colliers that Canadian ports can load. THE RECEIVING PORTS Japan uses stockpiling and diversification of coal sources to counter supply interruptions. Both of these strategies increase the requirements for coal handling equipment and the yard space for storage and blending. Most of Japan's new power plant sites have marginal space for coal receiving, stockpiling and reclaiming facilities. Their water frontage has limited draft potential. More frequent deliveries by smaller colliers will increase the potential for pollution, discharge penalties and higher labor costs. These will create higher energy costs which must be passed on to the consumer. Japan is now constructing three coal centers for thermal coal (Tinsley, 1982). These centers will be equipped to efficiently receive coal from 100,000 to 150,000 DWT coal transpo.rts. They will be designed to handle throughputs of 8.5 to 10.0 Mt/y. They will undoubtably have facilities for blending and reloading coal into vessels suitable for their client's facilities on demand. Many of Japan's Utility Companies are owned by major chemical and/or metallurgical groups with large coal handling facilities able to handle increased tonnage of power thermal coal. There are many more of the plants to be built that will need facilities beyond the range of the planned Coal Centers and will have to use panamax or smaller colliers from the export ports. These new plants could benefit by using a Tinian Coal Center. To meet the thermal coal import problem, the Ministry of Transport first considered additional Coal Centers. The heavy expense of centers, the shortage of deep draft harbor sites, environmental concerns and the cost of intracountry distribution have caused a reevaluation of Coal Centers. WESTPO (1981) reports that the Ministry chose 20 out of 61 candidate ports for expansion or development. This program, if completed, has an ultimate capacity for utility coal of 48.7 Mt in place by 1990. 11.8 Mt of this capacity is in operation now. Eighteen' (18) Mt is scheduled to be commissioned in 1988/89. Only half of the ports for utility coal planned or existing will berth vessels of 100,000 DWT. THE NOMINATED USER, JAPANESE ELECTRICAL L!TILITIES Those public utility companies in Japan, existing or planned, that are not serviced by a Coal Center that can.receive 150,000 DWT colliers are candidates for a Tinian Coal Center service. Initiatives on behalf of a Tinian proposal are likely to receive favorable consideration by the Transport Ministry. The opportunity to avoid confrontations in expanding ports or opening new ports would be appreciated. A user group would likely be organized by MITI to negotiate for the services of a Coal Center. The following narrative examines the potential of a Coal Center located on the Island of Tinian, CNMI. The purpose is to determine if the potential opportunity merits in-depth studies. This seems to be indicated by the value to a user of the tangible and intangible benefits. These benefits are of the same order as those at new overseas infrastructures being financed in part by Japanese cooperative funds. A new exporting terminal at the Port of Los Angeles is the most recent example according to TRAK (1982). The financing arrangement is accompanied by a long-term commitment for port operation by a Iocal entity. It is understood that the citizens of CNMI would only accept the construction of the Coal Center on the basis that it would be environmentally acceptable and economically attractive over the long term. The greatest potential benefit that a Tinian Coal Center could offer the Japanese group would be to create a significant improvement in the reliability of supply and delivered cost of thermal coal from Australia. The proposed facility should have the inherent capability to obtain the desired benefits: *A site with potential harbor and ground area located within reasonable shipping radius of the coal ports and the utility ports for optimum transshipping benefits at minimum cost. *A large ground storage of stockpiled coal to provide emergency backup to Japan-based stock. *A blending capability to enhance the trading opportunities when attractive spot lots of coal suitable for blending are on the market. *The blending capability would permit the use of lower quality coals with the normal thermal coal when the combined mix would, through favorable burning characteristics, result in a lower energy cost. *The high unloading, stockpiling, reclaiming and loading rates would improve the utilization of the collier fleet with resulting lower ocean freight. The relatively short haul to the Japanese ports from Tinian would permit the possible utilization of self-Unloading ships and other innovative shipping ideas. This potential would be of particular importance to the more remote plants with limited land area. The stockpile would permit scheduling overseas lifting to avoid ports with impending stoppages. The reader is referred to the article on the new Port Kembla, NSW by Paul Soros (1982). Many of the features of material handling and environmental protection would be appropriate to a Tinian port. This article and other recently published articles by Soros and R. Peckham (1982) provide the basis for some "order of magnitude" estimates of the economics of this facility set out in below: (Tables 5.4 and 5.5) Table 5-4 Construction Costs of Coal Center, JAN Based on Port Kembla, NSW Data Purpose Cost in $ Millions Site Work $ 3.0 Marine Construction 8.0 Foundations 3-0 Three Stackers 6.o Two Reclaimers 10.0 One Shiploader 10.0 Material Handling 10.0 TOTAL 50.0 Note: Soros (1982) states that the Conneaut, OH, terminal charges for railroad unloading, stockpiling and shiploading are $1.19/st of coal. It charges $1.40/st of iron ore from vessel to stockpile to railroad car. AN Table 5-5 Annual Operating Costs of a Teri Million Tonne Thro hput Coal Center Tstimated) Purpose Cost in $ Million Capital Charges $ 6.0 Operating Expenses 8.o General and Administrative 1.0 CNMI Land Rent 10.0 TOTAL and(per tonne) 25.0 ($2.50 The later section (Transshipment) points out that the generally accepted criterion for a feasible facility is that the expected benefits exceed the associated costs. And further, that the private benefits in the form of net savings that accrue to the users of the facility will create the demand for its services. Based on later calculations, it is clear that the size of vessels impacts.the cost of transportation from NSW to Saipan (TIN), and to JPN and TIN to JPN. The costs differ in the amount of delay time in NSW harbors. Three scenarios using these tables are set out as follows: A. 60,000 DWT collier, NSW/JPN 19 waiting days in NSW loading port. 150,000 DWT collier same delays in NSW to TIN, offload and transship by 60,000 DWT collier to JPN. Shipping cost compared using calculated TIN service cost of $2.50/tonne. B. As above, with minimal harbor delays in NSW. C. As above, except one-half the differential delay days for 60,000 DWT colliers because of the large number of that sized colliers using the available port loaders. Three is likely to be a favorable treatment for the plus 100,000 DWT vessels that utilize the large capacity facilities more effectively. (Table 5.6) Table 5.6 Shipping Costs Based on Vessel Size (Dollars Per Ton) Scenario A B C 60,000 DWT 18.81 12.84 15-84 Less: 150,000 DWT 9.54 6.o6 6.o6 60,000 DWT 4.78 4.78 4.78 Tinian Charges 2-50 2.50 2.50 Subtotal 16.82 13 34 13-34 Net savings (cost) 2.47 1.99 (0 50) The projections above have no reference to the facilities under consideration, the Australian port facilities likely to be used or a Japanese utility receiving port. The following narrative presents a comparison of the alternate shipping schemes as they might be used. The estimating basis is from J. Sasadi (1982). (Table 5.7) The Japanese power plant used is Matsushima located on the southwestern tip of Kyushu. The plant has an output of 1000 MW and requires 2,080 kt of NSW thermal coal each year. The -coal handling facilities include a berth with 14 m draft for 60,000 DWT colliers. Unloading is done by four 700-t/h units to which Kas been assigned a 1540 net t/h rate. The plant has a 430-kt ground storage. It is the most modern coal-fired unit in Japan and probably represents the standard for future coal-fired plants. Table 5.7 Characteristics of Queensland (QSLD) and NSW Coal Ports and,Their Facilities Vessels, Ld Rate Draft/Length Port Berths k DWT k t/h m m QSLD Gladstone 3 55/60 1.6/4.0 11.8 183 17.2 330 1 120 4.o 17.2 343 Hay Point 3 150 4.o/6.o 16.8 342 17.7 365 Brisbane 1 4o 1.2 9.1 191 Bowen 1 16 0.7 7.0 167 NSW Port Kembla 1 55 2.0 11.0 472 1 120 5.0 16.3 280 Newcastle 1 55 2.0 11.0 359 1 (1983) 110 4.0 15.2 540 Sydney 1 55 1.0 11.0 320 1 35f I.Of Tinian Scheme Unloading 1 150 2o4.o 17.2 308 Loading 1 150 6.4 17.2 308 70 Analysis of the above port data shows that except for Hay Point, the largest loading facilities are in the 100 to 120,000 DWT class. There is not likely to be more than two 150,000 DWT loaders available for thermal coal loading, and then only to 100,000 DWT plus vessels. The Joint Coal Board (1981) indicates an intent to see that the NSW 100 to 120,000 DWT are used. efficiently by larger vessels. They have urged the Japanese to end the stemming of 20 to 30,000 DWT vessels. After a survey the Board concluded that the maximum discharge facilities being constructed by the Japanese cement and power companies are in the 60 to 100,000 DWT range. It appears reasonable to assume that 60,000 DWT vessels will be loaded at the smaller loaders as a policy. The most likely loadin'g rate for 60,000 DWT vessels will be 2000 t/h (1400 net) and for 100,000 DWT plus, 4 to 6000 say 5000 t/h (3500 net). The approach used in.Section 6 is similar to that used by WESTPO (1981) and others to examine the U.S. export port situation. This approach assumes that the Japanese buy coal on a CIF basis. They are noted for resisting CIF contracts and insist on FOBST. The 1981 Coking Coal Manual tabulation shows that in 1979, of the 54 Mt of coal imported, 28 Mt was carried by Japanese Flag vessels, 20 Mt by Foreign Flag Vessels operated by a Japanese shipping company and 6 Mt by Foreign Flag Vessels. It is common practice in Japan that the Japanese Trading Companies assigned to the Group by MITI make the shipping contracts for all coal lifted by the Group. The commission.is a big part of their "take" from the Group for their services. This arrangement is an essential part of their raw material negotiating procedure. The two companies that negotiate with the selected mines are able to use a common freight structure. The larger part of the coal lifted to Japan will be by vessels with Japanese crews. Andrews (1978) states that oriental officered and manner crews cost one-fifth American crews and significantly less than European crews. Cost data for Japanese-crewed vessels is not presently available. I The costs adapted from the WESTPO (1981) are used in the following analysis. (Tables 5.8 and 5.9) 71 Table 5.8 Operating Costs of Various Vessel Sizes Vessel Size, DWT 6o,o-oo -100,000 1509000 At sea, k$ 31.6 4o.5 47.8 In'port, k$ 22.4 -25.9 Note: 10% of steaming fuel costs in port. k$ $11000.00 Table 5.9. Comparison of Direct Shipping and the Tinian Alternative Option NSW/JPN NSW/TZN/JPN Vessel, DWT 60,000 60,000 1000000 150,000 Voyage NSW/JPN TIN/JPN NSW/TIN NSW/TIN RT nm 8536 2344 6192 6192 At Sea Days 23.7 6.5 17.2 17.2 In Port Days Loading 1.8 0.7 1.2 1.8 Discharging 1.6 1.6 1.4 2.1 Subtotal 3.4 2.3 2.6 3.9 Add 1.7 1.2 1.3 2.0 Total 5.1 3.5 3.9 5.9 RT Days 28.8 10.0 21.1 23.1 Voyage Cost At Sea k 748 205 679 822 In Port k 81 56 87 159 Total k 829 261 784 981 Unit Cost $/t 13.82 4.35 7.84 6.54 Delivered cost Add TIN/JPN @/t 4.35 4.35 Add TIN/Fee T/t 2.50 2.50 Total /t 13.82 14.69 13-39 Savings (cost) (1-07) o.43 For delay impact add two sea days and two port days Cost J/t 1.57 1.26 0.98 Total /t 15-39 15-95 14-37 Savings .(Cost) (0-56) 1.02 Notei k$ = $19000.00 L The cost data developed in the Transshipment section with the input and the alternate costs in the above table indicate that the utilization of the Tinian Coal Center's facilities will include a modest L savings if the NSW leg is done with 150,000 DWT colliers. If this is L the case, then the important intangible benefits will accrue to the users without cost. Intangible benefits convert to tangible savings when the coal delivery system is stressed as during 1980. While the L loss of business caused by the industrial strife may lead Australian L: labor to more temperate ways, it is too much to expect that there will not be further supply disruptions in Australia or in North America. The Tinian Coal Center as presently conceived would have a conservative unloader capacity adequate to service eight units the size of Matsushima. Between seven and eight 150,000 DWT colliers would be required. At 4.0 Mt the ground storage would be 500 kt per unit which, added to the 400 kt on-site storage, would be about a minimum emergency stock for a 100% burn for 90 days. The Tinian ground storage can be increased and the handling equipment expanded with a modest additional capital expenditure. ADDITIONAL BENEFITS TO THE AREA Low cost coal for energy or industrial use would become available in the area. This could enhance the construction of a coal-fired plant 7 on Tinian with sufficient capacity to service the coal center, the I military complex and Saipan via cable. Low cost coal for a Guam coal- fired plant and other island plants would substantially reduce the energy costs. The encouragement of service industries associated with relatively heavy ship traffic would provide opportunities for local employment and the development of new skills. The towns of Gladstone and Hay Point, Queensland, provide examples of this potential economic benefit. _77, @Q' f 73 Transs h 1 pme'nt 7 70 TRANSSHIPMENT SOURCES OF USER SAVINGS The purpose of this task is to determine if a full scale economic feasibility study of the proposed coal transshipment facility to be located in the Northern Marianas is warranted. To provide a background for the assessment the next section takes a look at the current and the projected pattern of international trade in coal in the Pacific area. According to a generally accepted criterion, a facility is considered feasible if expected benefits generated by the facility exceed the associated costs. However, while the benefit/cost analysis takes into account all benefits and all costs to whomever,they may accrue, there will be no demand for services of the transshipment facility unless there are private benefits, i.e., net savings that accrue to the'users of the facility. Thus, rough estimates of probable savings are found in -70 this section. The net savings estimated provide the upper limit to charges for use of the facility. This section investigates the financial viability of the transshipment facility if revenue stream is limited to net savings. This section also provides a brief summary and conclusions. If there is to be a demand for services of the transshipment facility, there have to be net savings that would accrue to users of the facility. This section examines two possible sources of these savings- economies of scale associated with large size vessels and assurance of -71 uninterrupted supply of coal at lower cost. SAVINGS FROM UTILIZATION OF LARGE SIZE SHIPS In most cases, the ability to realize economies associated with LAI large size vessels is the main source of benefits to be derived from the transshipment facility. For example, the expected savings due to i 0 utilization of 500,000 DWT tankers from Persian Gulf ports to the transshipment facility versus use of 120,000 DTW or 250,000 tankers from Persian Gulf to destination ports was the basis of the proposal for development of a transshipment and storage port at Palau. (Panero, 1975) Although the proposal did not estimate the net savings attributable to the transshipment facility, the data supplied allow a rough estimate to be made. The planned throughput of the facility was 50 million tons of crude per year, and the following freight costs for different tanker sizes were reported: Persian Gulf-Japan Tanker Size (DWT) ($US/kiloliter*) 36,000 14.61 89,500 10.24 120,000 9.73 250,000 6.93 500,000 5.00 (projected) *one kl = 1000 litres 0.85 metric ton (for Iranian heavy crude, as an example) Thus, a very rough estimate of gross savings is equal to the difference in freight costs of transporting 50-million tons of crude in 120,000 DWT or 250,000 DWT and in 500,000 DWT tankers. These savings are $278.5 million or $113.5 million, respectively, or the equivalent of $5.57 or $2.27 per ton. The charge for use of transshipment facilit was estimated y at $1.15 per ton. Thus, the net savings to the users would total $221 million or $56 million, depending on whether the direct shipment would be made using 120,000 DWT or 250,000 DWT tankers. These estimates are probably biased upward because they do not include the higher cost of transporting crude from the transshipment port to the port of ultimate destination. The upward bias may be somewhat offset by somewhat lower freight costs from the Persian Gulf to Palau using 500,000 DWT tankers because of a shorter distance. 75 LO The economy of ship size is also a possible source of savings in case of a coal transshipment facility. The sizes of coal transport ships have been increasing. The distribution of vessels by size employed* in the coal trade as Well as the distribution of new orders among size classes indicates a clear trend toward use of larger ships (Table 6.1). This trend is expected to continue in the future (Table' 6.2). The evidence suggests that although there has been a significant increase in sizes of coal transport ships, this trend has a way to go before economies of large size ships are fully realized. This, in turn, is due to a large extent to draft limits at the export and/or import ports and the size constraints imposed by the Panama Canal. The situation, however, is i'n the process of being remedied. Ongoing improvement projects will allow major loading ports in the future to handle ships up to 170,000 DWT (Table 6.3). Similar improvements are being made at ports unloading metallurgical coal. In Japan, for example, by 1983/4 .these ports will be able to handle ships up to 150,000 to 300,000 DWT. However, ports unloading thermal coal for power stations in Japan, South 70 Korea, Taiwan and Hong Kong will be limited to 100,000 to 130,000 DWT vessels. According to another source, even by 1980 steam coal receiving ports in the Pacific Rim Countries accounting for 42% of total capacity will not be able to handle vessels larger than 60,000 DWT (Table 6.4). In this scenario there is a possible role for a transshipment facility. One option is to ship coal to the transshipment port using large (e.g., 150,000 DWT or even 170,000 DWT) vessels and to distribute it to destination ports using smaller vessels that receiving ports can accommodate. Another option is to ship directly to destination ports using the maximum size vessels the receiving ports can handle (e.g., 60,000 DWT). It is possiblethat the first option could generate sufficient savings due to use of large vessels to more than offset ext ra unloading and loading costs at the transshipment facility. The available data on daily vessel costs by size of vessel in 1980, shown in Table 6.5, provide a basis for estimating the cost of two options discussed above. In order to extrapolate to the in-between Table 6.1 Comparison of Size Distribution of New Building Orders For Bulkers With Vessels Already Employed In The Coal Trade %of World Vessels Employed in Dry Bulk and the Coal Trade Combination of Cargo Carried) Size Class Carrier Fleet (DWT x 1000) on Order (DWT) 19651970 -1975 1976 1977 less than 25 5.7% 63% 40% 29% 25% 23% 25 - 4o 23.1 23 21 12 12 10 4o - 6o lo.6 11 21 24 24 21 6o - loo 39.5 3 12 25 25 29 above 100 21.1 10 14 19 Sources: Marine Engineering Log 1980 Yearbook. Simmons-Boardman Publishing Corp., 1980. Bulk Systems International-, July 1979. Table 6.2 Projected Distribution of Steam Coal Shipments in Ton-Miles, By Ship Size (percent) Year Ship Size (thousand DWT) 20 20-35 35-50 50-80 80-100 100-15-0 150+ Total 1980 10 1 22 43 5 7 - 100 3 1985 6 7 19 39 4 17 8 100 1990 4 6 13 27 6 27 17 100 1995 3 5 10 24 6 30 22 100 T 7, 2000 2 4 8 21 7 33 25 100 Source: H. P. Drewery Shipping Consultants, Ltd. Changing Ship TYPe/Size Preferences in the Dr.V_Bulk Market. (London, England: HPD Publicationsq 1 -9 8 0 Table 6.3 Major Port Loading Facilities Country Port 1983/84 1987/90 Maximum Throughput Maximum Throughput L ship size capacity ship size capacity 103 DWT mt-pa 103 DWT mtpa L_ Australia Abbott Point 150 4 150 10 Hay Point 150 35 170 50 Gladstone 120 21 120 30 Newcastle 120 25 170 40 Port Kembla 150* 14 170 30 Roberts Bank 150 24 150 24 Prince Rupert - 150 10 South Africa Richards Bay 170 35 170 65 United States East Coast 120* 85 150* 110 Gulf 6o 30 150* 40 West Coast 6o 5 150* 20 L South America Colombia - 120-150 15 eartly laden. Maximum ship sizes and port capacities indicative only. Source: Shell Coal International Table 6.4 1990 Re ceiving Port Capacity For Pacific Rim Steam Coal Imports By Vessel Size Accommodated L (MTPY; % of Total Capacity) Vessel Size Japan Taiwan Korea Total 100,000+ DWT 23.8* 39% 18.4 69% 5.2 31% 47.4 45% 60,000+ to 11.9 19% - - 4.6 27% 16.5 16% 100tOOO DWT Panamax or smaller 25.8 42% 8-1 31% 7.2 42% 41.1 39% (to 6o,ooo DW.T) 61.5 100% 26.5 100% 17.0 100% 105.0 100% *Includes 7.0 million tons capacity planned for Sakito Coal Center. Construction of this facility by 1990 is now considered uncertain. LJ 78 sizes, the daily vessel costs per day at sea and in port were regressed on size of the vessel. The regression equations obtained are as follows: Log CS = 8.5978 + 0.3948 Log DWT R2 = 0.9875 Log CP = 8.1171 + 0.4143 Log OWT R2 = 0.9808 where CS = daily costs at sea; CP = daily costs in port; and DWT vessel size measured in 1,000 dead weight tons. These equations were used, in turn, to estimate daily vessel costs for a range of vessel sizes shown in Table 6.6. In addition, the following set of assumptions was adopted: 1. Distances NSW (Newcastle, N.S.W.) - JPN (Japan, Yokohama): 4268 nautical miles; NSW - SPN (Saipan): 3096 nautical miles; SPN - JPN 1172 nautical miles; 2. Vessel Is speed 15 knots; 3. Actual tonnageof coal loaded and discharged per voyage 97% of vessel's dead weight tons; 4. Nominal loading rate 7,000 tons per hour (both NSW and Saipan); 5. Effective loading rate 70% of nominal loading rate; 6. Loading and discharging working time 24 hours per day; 7. Vessel's waiting in port 19 days in NSW, no waiting time in JPN or SPN; 79 Table 6.5 Daily Vessel Costs in U.S. Dollars per Day in 1980 Vessel Size 4o (MDWT) 65 (MDWT) 120 (MDWT) 175 (MDWT) ownership costa $ 8597 9826 $ 13560 $ 17196 daily operating cost 4526 5314 5820 8143 including overheadb fuel cost/day, at sea 10038 136o8 15097 17247 in port 2658 3488 3877 4267 Total cost/day-at sea 23161 28748 34477 42586 in port15781 18628 23257 29606 aIncludes 10 percent return on investment, 80% of purchase price financed at 8% for 8-L years, 15 year life and zero salvage value. 2 bIncludes manning, stores, repairs and maintenance, insurance and administration. Source: H. P. Drewery Shipping Consultants, Ocean Shipping of Coal, Survey No. 24, October 1981, pp. 92, 94 and 97. Table 6.6 Daily Vessel Costs by Size of Vessel in 1980 (in U.S. dollars) 6o,ooo 100,000 130,000 150,000 170,000 DWT DWT DWT DWT DWT At Sea 27,284 33,379 37,022 39t173 41t157 In Port 18,275 229582 25,175 269713 28pl35 80 8. Nominal discharging rate 4,000 tons per hour (two unloaders working at the same time with 2,000 tons capacity each); same for Japan and Saipan; 9. -Effective discharging rate 60% of nominal discharging rate; 10. Extra days in port for contingencies and vessel's operations Two days in each loading and discharging ports respectively; 11. -Ballast voyages Vessels return with ballast. Given these assumptions and the daily vessel cost estimates, the cost of transporting coal per ton can be estimated for various vessel sizes and for three routes involved in two options being evaluated. Such a set of cost estimates is reported in Table 6.7. According to 70 these estimates, the transshipment option would result in lower cost per ton if the option of shipping direct is limited to use of 60,000 DWT vessels as long as shipment of coal from NSW to Saipan is in 100,000 DWT or larger vessels (since $4.78 + 11.86 = 18.81). However, this conclusion rests heavily on the assumed waiting time at the NSW ports which on the average in 1980-81 varied from 16 to 21 days (Waters 11, 1982), the situation which was likely to be remedied in the future. Therefore, t he cost estimates were revised, assuming no waiting time at the NSW ports. The new set of cost estimates is shown in Table 6.8. According to these estimates, transshipment costs are still lower than direct shipment using 60,000 DWT vessels, but the differences are smaller. In fact, unless 150,000 or 170,000 DWT vessels are used to transport coal from NSW to Saipan, the cost savings are not likely to be large enough to offset extra loading and unloading at the transshipment facility. These estimates suggest possible gross savings in the $2.00 to $3.00 per ton range. Japan's imports of steam coal in 1990 have been estimated at 44 million tons. As cited above, 42% of this coal will be Table 6.7 Estimated Cost of Transporting Coal by Size of Vessel, 1980 (U.S. $ per ton) 6o,ooo 100,000 130,000 150,000 170,000 Route DWT DWT DWT DWT DWT NSW - JPN 18.81 14.09 12.20 11.29 10-57 -@NSW-- SPN 15-76 11.86 10.29 9.54 8.94 SPN JPN 4.78 3.75 3.36 3-18 3.03 Table 6.8 Revised Estimated Cost of Transporting Coal by Size of Vessel, 1980 (U.S. $ per ton) 6o,ooo 100,000 130,000 150,000 170,000 Route DWT DWT DWT DWT DWT NSW - JPN 12.84 9.67 8.41 7.81 7.33 NSW - SPN 9.79 7.43 6.50 6.o6 5--70 SPN - JPN 4.78 3.75 3.36 3.18 3.03 82 destined to ports *unable to handle vessels larger than 60,000 DWT (Table 6.4). Suppose that transshipment facility is utilized for 11L this coal, the gross savi.ngs would total $37 to $55 million per year (18.48) mil. tons x $2.00 or $3.00). These gross savings limit the charges for use of facility to less than $2-to-$3 per ton. The next question is whether the transshipment facility, with throughput of 18.5 million per year and generating revenues of some $35 to 55 million per year would be financially feasible, i.e., would these revenues more than cover the costs. The remainder of this 71 section discusses another possible source of benefits--stockpiling of coal in order to insure against fluctuations in supply. -71 STOCKPILING AS A MEANS OF PREVENTING SUPPLY INTERRUPTION It has been asserted on numerous occasions that the supply of coal M from Australia is unreliable. The following statement is rather typical: 0 ... Reliability of supply has been a concern of importers of Australian coal since labor problems have been endemic. Water-side workers have been associated with many export bottlenecks in the past, with bans and limitations on exports being common issues. However, labor problems have also extended to the mines, railroads and loading facilities." (Borg, 1983) In spite of the frequency of these assertions, there does not appear to be any data on frequency and duration of these supply interruptions. L i The following two statements come closest to quantitative estimates: "Newcastle, with probably 18 million metric tons of capacity, is likely to be able to move only 13 million tons in 1982 due to inter-union manning disputes, etc." (Lynch, 1981) and "A report by New South Wales Joint Coal Board states that 17 production'of raw coal in 1980 in NSW was 50,720,200 tons compared 83 L ! with 50,887,500 tons in 1979. Production during the first half of Le 1980 was seriously disrupted by industrial disputes at the mines. These disputes particularly affected underground product 'ion which fell some 3.2% over the year to 36,766,000 tons. After May 1980, production improved and during the second half of the year was equal to an annual rate of 56,000,000 tons." (World Coal, 1981) The above, admittedly fragmentary evidence, suggests that the supply interruptions may indeed be sufficiently frequent and of sufficiently long duration to impose significant costs on the Japanese industry. If that is indeed the case, there are two possible solutions--diversification of purchases among various sources of supply and/or stockpiling. As it was shown above, Japanese do purchase thermal coal from several suppliers. Indeed, according to one study, the Japanese are believed to be willing to pay $6 to $7 more per ton for American coal than for coal from other countries because of the stable U.S. coal supply (Page and Farragut, 1981). It is not clear, however, whether the observed diversification of purchases is motivated by desire to avoid supply interruptions or merely because the lowest cost producer (i.e., Australia) is unable to satisfy their total demand. The monthly variations of Japanese coal imports from Australia and from other sources may provide a clue to the extent that purchases from other sources are being used to offset reductions in supply from Australia. Two indices of Japanese indices by source for 1981 are shown in Figure 6.1 and Table 6.10. If coal purchases from other sources are used to offset shortages of Australian coal, the two indices should move in the opposite directions. There is no evidence that this has happened during the first half of 1981, but the indices appear to move in the opposite direction during some months in the second half. However, the data on Australian steam coal exports to Japan in 1980 and 1981, shown-in Figure 6.2 and tj Table 6.11, exhibit a similar pattern suggesting that seasonal factors may have been responsible for the observed differences. The most notable exception is the sharp drop in exports in June 1980, which was probably caused by a labor strike or similar supply interruption. The indices of 84 A S t @@Ii fill ve @.l o n t,h -Ind L,56- 1.1 It !it II'l It III, It :It ;I Iiiil; It[ I T I1 0 :T P 1 10 FT 1AI V 1 11 -7 -77 I f TT Y -T L T-T1 70 --ELL, It r -7-- VU ......... . A 77- T T- Figure 6.1 Indices of Japan's Thermal Coal Imports by Source, 1981 Table 6.9. Japan's Thermal Coal Imports by Source, 1981 From Australi@L From Other Suppiiers Month Tonsa Indexo Tonsa index January 632 133 481 97 February 251 53 300 6o March 567 120 292 59 April 435 92 424 85 May 49o 104 557 112 June 654 138 689 139 July 347 73 563 113 August 438 93 698 14o September 458 97 369 74 October 384 81 625 126 November 537 114 396 80 December 48A 102 1 115 Total 5 7 5ff5 Average 473 100 497 100 aThousand Metric Tons - delivered. bMonthly Average = 100. Source: Merrill Lynch, Pierce, Fenner & Smith (1982) 86 77-7 t 7 'T"-, -4 (Xo'n thly' 41 1 I 1 1 1 If I I f i I I f i_.; I i I I 1 1 it It LF J @6: II I I I I PW 1 1 1 1 1 1 1 1 1 1 1 d) I I f t if 1 1 1 1 1 1 11 1 4 i I 10 i 11 1 1 IV I i i 1 16 I If I I I I 7- T_ I - It FV7 71 1, 7-7 T 0 -7 it -7" 1 V. I I 0 A T 77 0 7 7 -4 L it if `T_ 7- 7- -7 T =,P. - + -A - ------ D& 7 Figure 6.2 Indices of Australian Non-Coking Coal Exports to Japan' 87 Table 6.10 Australian Non-Coking Coal Exports to Japan M 1980 1981 Month Tonsa Indexb Tonsa IndexL January 268 89 558 118 February 158 52 46o 98 March 173 57 416 88 241 507 April 80 108 May 26o 86 477 101 June 137 45 747 159 July 367 122 396 84 August 296 98 351 75 4 6 477 101 September 5 151 October 375 124 459 97 November 427 141 383 81 December 46o 424 90 Total 3618 5655 Average 302 100 471 100 a Thousand.Metric Tons exported.. b1980 Monthly Average 100. c 1981 Monthly Average 100. Source Merrill, Lynch, Pierce, Fenner & Smith (1982) 88 total Australian steam coal exports, shown in Figure 6.3 and Table 6.11, LO also suggest a strike in May-June 1980 or 1980 and additional supply interruptions during August-November 1981. Unfortunately, the 1980 and the 1981 shipment patterns may have been affected by events outside Australia. At the end of 1980 shipments may have been motivated by the anxiety over the expected coal miners' strike in the U.S., and in 1981 actually affected by this strike. The. evaluation of the second solution, i.e., stockpiling, is also hampered by the same data unavailability. We know, however, that it has been considered. In fact, according to Melvin Shore: "...There is an example, one case that I am aware of, where because of their own recognition of their labor problems, the Australians have actually been moved to stockpile some commodity on the West Coast of the United States in order to reach the Japanese market." (Statement of Melvin Shore, Port Director, Port of Sacramento, made during discussions following presentation of his paper (Shore, 1979).) Thus, stockpiling atthe transshipment facility, in order to avoid supply interruptions, may be another source of benefits. In order to estimate these benefits, it is necessary to have information on the frequency and duration of supply interruptons since they, together with the interest rate, would determine the optimum volume of the stockpile. Furthermore, it is possible to stockpile at destination or at the transshipment facility. The choice of location would depend on the difference in storage costs. It is reasonable to assume that these costs would be lower at the transshipment facility than in Japan. Thus, there are potential benefits in stockpiling at the transshipment facility unless coal in Japan could be stockpiled at the coal using facilities eliminating I extraloading and unloading. This, however, is very unlikely. L Although these benefits could not be estimated in this preliminary I. assessment, there are likely to be net savings generated from stockpiling 6 coal at the transshipment facility. These benefits, therefore, should be estimated in the full scale economic feasibility study. Furthermore, L10 89 -7-77 1 -T, -.71-. T771-7717-FT I -77 TIM L I 1 1 T I MOftt 7T- 777T IV; I I I f. 1 1 12 E) I I ! ! 7 7 7 7 f 1 1 , 77. -r77- 4A 77@ IT 7 --7- --T'T T -r-.--l 7-7 --- 1--T- r_ 77 t7-- T7 7_ -7-7@ T-i J 7 -7.1 - '_T TT 17 Tfov'.@ :,Dec.. T 77 F Y;7, @r4r-.-, 'A' Lin _T R. 7 7 77 Figure 6.3 Indices of Total Australian Non-Coking Coal Exports SLd__ 71 Table 6.11 Total Australian Non-coking Coal Exports 1980 1981 Month Tonsa Indexu Tons' Indexc 77 January ?85 105 938 107 February 692 93 947 ill March -469 63 615 70 April 1097 147 1216 138 May 528 70 946 108 June 533 71 1214 138 July 939 126 831 100 August 856 115 625 71 September 682 91 756 86 October 826 ill 703 80 737i 100 81 November 750 713 December 812 log 978 ill Total 79-6-9 10559 Average 747 880 7 a 717 Thousand Metric Tons exported. b 1980 Monthly Average 100. C1981 Monthly Average 100. Source: Merrill Lynch, Pierce, Fenner Smith (1982) 7" J L both stockpiling and diversifi cation of purchases should be investigated in greater detail. It is likely that a combination of stockpiling and diversification among sources of supply is the optimum strategy to assure an uninterrupted flow of coal to Japan. L COAL TRADE IN THE PACIFIC REGION L Co al deposits are much more widely distributed than oil. Thus, practically all industrialized countries can supply at least part of L their demands by domestic production. A significant proportion of coal also moves relatively short distances. Nevertheless, the world seaborne trade in coal accounts for a significant proportion of total world L trade, having increased dramatically since the oil crises of 1973-74. The volume and pattern of the trade in 1980 is shown in Table 6.12. According to OECD (1982), 1981 saw another 4.2% increase over the 1980 volume and totaled some 196 million tons. In the Pacific Basin area Japan, South Korea and Taiwan were the principal importers and Australia, the United States, Canada and South Africa were the principal exporters. The volume and pattern of trade in the Pacific region are shown in Table 6.13. F Japan is the largest importer of coal. In 1981, Japan's imports of coal accounted for about 40% of the world's coal trade and for almost 88% of the Pa-cific region's coal receipts. L Japanese coal imports by source are shown in Table 6.14. Currently, LO most of the coal comes from Australia, followed by the United States, Canada and South Africa. No drastic changes in the share of coal imports by source is expected in the future. Currently, world trade is dominated by trade in metallurgical coal. In 1981, metallurgical coal totaled some 117 million tons and accounted for about 60% of the total world's seaborne trade of coal. However,'it is generally expected that the future coal trade will increasingly consist of steaming of thermal coal used for thermal generation of electricity as well as in some industrial processes (e.g., cement, paper, etc.). Ll 92 I i F Table 6.12 World Seaborne Coal Trade in 1980 in thouse TO UK/ fAE-DITER- OTHER SOUTH JAPAN OTHERS WORLI FROM CONTINENT RANEAN EUROPE AMERICA -198( Eastern Europe 8,16o 3,229 8,995 979 724 244 22,33 Other Europe 3,344 2,597 1,852 29 - 182 8,OOL North America 22,175 8,686 8,633 5,766 31,378 4,988 81,62@ Australia 6,@04 1,174 52 29,327 4,754 43,14L South Africa 13,364 3,o58 4,2o6 - 3,289 3,351 27,26E Others 352 8 94 - 4,390 1,228 6,07 World 1980 53,899 18,752 25,113 6,826 69,108 14,747 118,44, World 1979 44,195 17,730 20,398 5,983 59,112 12,002 World 1978' 31,050 13,290 18,012 4,473 51,036 8,665 NOTE The term "Coal " comprises anthracite and bituminous coal. Export st whenever possible. Exports from the United States to Canada are excl from Siberia to Japan are included under Eastern Europe - Japan. Co between most continental countries as well as between East European considered as overland transportation. Source:OECD (1982) Table 6.13 Coal Trade in the Pacific Rbgion in th Exporters Australia u. s. A. Canada 'Z. Africa 0 Tmporters .1280 1281 1980 1981 1980 1981 1980 1981 Japan 30v128 35,015 20,928 23,444 10,450 10,852 3,288 - 1, South Korea 2,777 3,489 1,251 1,498 1,131 1,897 - - Taiwan 826 530 4oo 1,612 - - 1,626 708 Others 976 2,6ol 304 lv577 415 517 - - Total Exports 34,207 41,635 22,883 28,131 11,996 13,266 41914 - 1, M 45.2 - 30.2 - 15.8 - 6.5 - Source: Compiled from Merrill Lynch, Pierce, Fenner & Smith (1982) Table 6.14 Japanese Coal Sources (million metric tons) Source Year 1981 fl, ------ 1981@r- 1990E P Amount Amount Amo unt Australia 34.8 44.6 45 46.4 55 47.o-45-5 United States 23.7 30.4 24 24.7 25 21.4-20.7 Canada 10.7 13.7 16 16.5 20 17.1-16.5 South Africa 4.2 5'.4 6 6.2 8 6.8-6.6 China (R.R.) 2.4 3.1 4 4.1 6-8 5.1-6.6 U.S.S.R. 1.4 1.8 2 2.0 2-4 1-7-3-3 Other .8 1.0 1 1.0 1 0.9-0.8 Total 78.0 100.0% 97 100.0% 117-121 100.0% Source: Merrill Lynch, Pierce, Fenner & Smith (1982) According to available forecasts of overall steam coal trade and oceanborne steam coal trade, shown in Tables 6.15 and 6.16, the volume of coal is expected to quadruple from the volume in 1981. According to another forecast, shown in Table 6.17, the imports of Pacific Rim countries are expected to increase at an even faster rate. Japan's import s of steam 'coal increased dramatically in recent years and this trend is expected to continue into the future. The latest available forecast of steam imports by the ultimate user and t he long-term forecasts of energy supply are shown in Tables 6.18 and 6.19. Distribution of Japan's imports of steam coal by source are shown in Table 6.20. Drastic changes in this distribution are expected in the future. Australia is expected to supply about half of Japan's imports. This short overview of the current and projected pattern of coal trade in the Pacific region suggests that the potential feasibility of the coal transshipment facility is tied closely to Japan's imports and, more specifically, to imports of thermal coal. This allows narrowing the focus of the task to this specific aspect. Consequently, the following section looks at the possible gains to users of the transshipment facility. Since coal contracts commonly specify FOB port of origin these gains would accrue to the importers, i.e., the Japanese. 95 Table 6.15 Steam-coal Trade Forecasts (MST a) N South Market U.S. Australia Africa Otherb Total Western Europe 1985 28 17 38 19 102 1990 48 28 61 39 176 80 257 1995 63 63 51 Japan and Pacific Rim 1985 8 28 4 18 58 1990 23 46 12 36 117 200 1993 48 77 22 53 Canada (Eastern) 2'Z 1985 12 12 1990 12 12 1995 12 12 Others 1985 2 3 2 7 13 6 2 1990 5 20 1995 5 7 8 Totalc 1985 50 48 44 3? 179 1990 88 80 75 75 318 1995 128 147 110 104 489 aMillions of "standard" short tons (24 x 1012 Btu). b Western Canada, Colombia, China, USSR, and Poland. @- I . 77 C Excludes Eastern Europe. Source: Borg, I'. Y. (1981),,p. 6. Table 6.16 Forecasts of Oceanborne Steam-Coal Trade (million tons) On routes from: 1980 1985 1990 Poland 16.o 21.0 23.0 South Africa 18.7 36.5 54.2 Australia 8.5 28.6 66.9 Other origins 23.? -2---9- -70.9 Total 51-1 110.4 215-0 Source: Doerellp Peter E. (1981) quoted from H.P. Drewery (Shipping Consultants) Limited, The Growth of Steam Coal Trade. 96 L- j Table 6.17 Demand for Imported Steam Coal Far East (MMTa) Country 1981 1982 1983 1984 1985 1986 1987 19 Japan 9.4 15.5 18.3 23.4 27.5 34.6 37.0 50 Taiwan - o.6 1.9 2.7 3.5 6.o 10.0 12 Korea 0.5 2.7 5.6 7.6 8.7 10.0 12.0 13 Hong Kong - 1-3 2.8 3-9 4.7 5.2 6.4 8 Singapore Othersb 2 Total 9.9 20.1 28.6 37.6 44.4 55-8 65.4 85 aMillion metric tons. bOthers, like the Philippines. Sourcei Borgq I. Y. (1981), p. 6. Table 6.18 Japanese Steam Coal Forecast Industry 1980 1981 1982E 1985E 1990E Electric Utility 9.8 12-3 13.4 20.0 33-0 Cement 7.1 9.1 10.0 12-5 14.o Paper, etc. 4.2 3.5 4.6 6.5 9.0 Total 21.1 24.9 28.0 39.0 56.o Source: Merrill Lynch, Pierce, Fenner & Smith (1982) Table 6.19 Japanese Long Term Energy Forecast .1985 E 1990E Forecast Date Forecast Date Energy Supply 1977 1980 Aug. 28, 1979 8/28/7 9 4Z8 Coal Mil. Tons Domestic 19-72 18.10 20.00 20.00 18 - 2 Imported 58.29 74.30 101.00 143-50 13 Coking 57-34 64.52 79-00 90.00 8 Thermal 0.95 7.10 22.00 53-50 5 Nuclear Mil. KW 8.00 15-70 30-00 53-00 4 Hydro Mil. KW 26.15 29.80 41-50 53-00 4 co Imported Oil Ml Kl 307-00 285-00 366.oo 366.oo 29 LPG Mil.. Tons 7-39 14.oo 20.00 26.oo 2 LNG Mil. Tons 8-39 25-90 29.00 45-00 6 Total Mil. Kl. 412.oo 429.00 582.00 716.00 59 Source: Merrill Lynch, Pierce, Fenner & Smith (1982) Table 6.20 Japan's Import of Thermal Coal by Source in thousand metric tons delivered 1979 1980 1981 77 Amount Source Amount Amount - Australia 1,ooo.48 71.1 3,529-37 67.6 5g676.ii 48.8 U. S. 0.12 0.0 389.09 5.5 2,118.90 18.2 9.8 Canada 12.60 0.9 6 328.28 .3 1,139-70 S. Africa 21.28 1.5 238-09 4.6 1,262.89 lo.8 U.S.S.R. 117.06 8.3 222.61 4.3 255.20 2.2 P.R.O.C. 256.28 18.2 612.83 11.7 ltl88.16 10.2 - 100.0 11,64o.99'100.0 Total 1,407.8@T TOO.0 5,220.27 Source: Compiled from Merrill Lynch, Pierce, Fenner & Smith (1982) z,@ 77 IL LA Ask "AW ]L 99 7 Coal Centers '2. COAL CENTERS The Commonwealth of the Northern Marianas lies along the main coal shipping routes between the Australian coal fields and their Japanese customers. The Commonwealth Government has requested this study to determine in a preliminary manner the feasibility of a coal transshipping facility located in the CNMI. This study uses the public sector knowledge of the international coal trade practices as input. From this input the most useful type of facility for the CNMI is selected. Potential users have been studied @4 U-, and the most likely nominated. The tangible and intangible benefits to the user are analyzed. Capital and operating data from technical articles on recent installations have been used to estimate the order of magnitude economics for a CNMI-based facility. The environmental exposures are discussed. FACILITY SCHEMES The three main schemes for transshipment facilities for an island site are: Scheme 1): Coal transfer vessel to vessel; normally be controlled by harbor regulations and obtain port charges. The revenues derived would be unlikely to justify the cost of dredging required 77 for large vessels. The scheme would be used for small vessels or barges on a casual basis. Scheme 2): A shore-based transfer operation without ground storage; would require extensive harbor dredging for mooring and a turning basin, marine construction and bulk material handling equipment would entail a large investment. This scheme requires the least land area and minimum environmental exposure. The scheme is unlikely to be implemented because of its low cost benefits to a user. q 100 Scheme 3): A coal transferring facility with large ground storage, high capacity bulk material handling equipment with blending capability, and a harbor draft for 150,000 DWT bulk carriers. This facility would be unique and offer the greatest tangible and intangible benefits to the user and revenue to the CNMI. Depending on the layout, the site would occupy from 200 to 250 ha (500 to 700 acres). That portion of the Island of Tinian adjacent to the harbor of San Jose appears to have excellent potential for a site. A transshipping point with these capabilities roperly called a "Cdal Transshipment Center" (CTC). is p The Coal Center scheme is only practical when the land area with the harbor potential lies on existing shipping routes. Tinian has the area adjacent to a harbor site, far much larger ground storage than most terminals. Tinian is located about three-quarters of the distance from New South Wales (NSW) coal ports to Yokohama, Japan (JPN): NSW-Tinian- JPN is 4268 nm, NSW-Tinian is 3096 nm and Tinian-JPN is 1172 nm. The CNMI would derive the greatest economic benefits, both direct MIT and indirect, from a CTC. The environmental exposures would be significant IL but can be mitigated by existing means in use, which can be inspected at major coal ports in Australia. M 2L THE COAL CENTER 'Q Tinian is a low, flat island lying three miles south of Saipan. It is 12.6 miles long, 6.1 miles wide and has a land area of 42 square miles. The highest elevation.is 584 feet. Geologically it consists of a raised limestone reef. The U.S. Department of Defense, on January 6, 1983, signed a $33 million land lease agreement with CNMI for defense facilities use on the northern ,7 L part of the island. The Coal Center proposed herein would be located on the southern part of the island contiguous to the Port of San Jose (Figure 7.1). This area seems to offer a suitable base for a plated and drained coal yard capable of holding at least 4 million tons in windrows. 101 K ? fo fi@@ L f@ r L r@@ r fi r II PLINTAN DIABLO PUNTAN LAMA14180T LEGEND SAN PAPA PLIOLIC DMAIM SM 4069 VILLAGE LEAZED K*LC LM F771 IN @TARY RETENTDK$M LEASED PUSIX LAW$ HOWESTE&O + A.. IN MUTANT RETENTION K.E$ M. I 7@ . . . 41. TITLE ISSIAD It HO@ESTEAD TITLE NOT YET ISLOL" I Coal Transshipment Center TIMAN HARG- VM X, TINIAN w PHYSICA N A A e LAND PUNTAN VICENTE M 0 P Figure 7..l Coal Transshipment Center and Adjacent Land Use Source: Physical Development Plan for MIS Tinian, 1978 T 11 FMZ-@ The harbor of San Jose was dredged during WWII to a depth of 28 to Alook 30'feet in the southern end and where the wharfs and piers were built. A breakwater was built on a reef (Figure 7.2). The harbor lies in a natural basin between the island and the reef. The U. S. Army Corps of Engineers submitted plans for improvements to the harbor consisting of repairs to the north quay wall and a small boat harbor to be constructed in FY 1985/88. If it is not practical to use San Jose for a deep draft harbor with berths for unloading and loading of 150,000 DWT colliers, a site immediately south and east of Gurguan Point may.be suitable. Figure 1.2 showed the general concept of a CTC with a 4-million- tonne ground storage. The colliers would be unloaded by two continuous bucket unloaders, each with a free digging rate of 4000 t/h. The combined net unloading rate is 4400 t/h. The unloading pier dredged depth would be 16.5 m (54.1 ft). The berth length would be 308 m (1010 ft) with unloader reach for the maximum vessel beam of 45 m (147 ft). These dimensions are suitable for a 150,000 DWT collier. The conveyors inbye of the unloader dock conveyors would flow to any one of the three windrow stacker units at a nominal rate of 4000 t/h. These three stackers would lay up windrows of coal on four 2000 m pads as shown in Figure 1.1. The pads would be plated to prevent seepage and enclosed by berTns to contain the drainage or leachate from the piles. The drainage water would be collected in ponds, allowed to settle and filter. The clear water would be rec cled to dust control y sprays. The coal filtrate would be returned along with the settled coal to the stockpiles. An agglomerating agent is added at key points to the coal stream on its path to the stockpiles. This agent causes the fines to adhere to the coarse pieces of coal as long as the proper moisture level is maintained at the pile surface. The sprays are located along the stockpiles and are controlled.by a weather station on the site (Figure 7.1). Two bucket wheel reclaimers, each with a capacity of 6000 t/h, will transfer coal from the stockpiles to the outbye belts. The outbye belts feed the dock conveyors to the linear shiploaders. The nominal 103 4- Z EAST QUAY #41 0 lb 0 0 OUTER BASIN -k- PROPOSED SEAWALL MARINA AREA 61 INNER BASIN pit NORTHERN MARIANA ISLANDS PRELIMINARY SAN JOSE HARBOR "'n source: U. S ARVAY lpiacd.c Plann-A ENCINEER DIVISION, PACIFIC OCEAN. wta oes.9" Cam Conn CF EnGil. Figure 7.2 San Jose Harbor, Tinian CNMI 104 loading rate is 6000 t/h. The shiploader pier is also designed for a 150,000 DWT collier. Normally, smaller colliers will be used to ship .:n the coal to the final destination. Figure 7.3 shows some of the standard equipment at a coal transshipping port. THE COMMERCIAL POTENTIAL OF A TINIAN COAL CENTER The principal customer for a Coal Center in Tinian would be the Japanese thermal coal consumers. Tinsley (1982) points out that coal Z, imports into Japan, by the most recent estimates, are predicted to range from 45 to 80 Mt in 1990. Present level of imports is at 6.0 Mt. China, USSR and Poland may provide 15% of the supply. The balance will come from Australia, Canada, South Africa and the West Coast of the United States. Tinsley also points out that many of Japan's ports are primarily involved in handling iron ore and coking coal for the steel mills. The larger part of the thermal coal imports will have to be landed at Coal Centers now under construction and transshipped to coal-fired power plants which in the main are poorly sited for receiving coal in the quantities necessary to enjoy the benefits of the economies of large coal ships. Tinian has several advantages over the proposed Japanese Coal Centers: *Tinian has sufficient area available for a larger stockpile area than the proposed Coal Centers. *Tinian could deliver coal in larger, self-unloading, boom-type coal ships that would not require customer unloading equipment and a minimum mooring facility. *Tinian could receive coal in large coal carriers operating on a faster turnaround than ships sailing into Japanese waters (Table 7'.1). 105 -r: F fg- 0 -W, 5 ' - =MW '47 gu@ v t@ We -7-7; im. riigurO 7.3 Port of Long Beach Coal Exporting Facilities Ph oo s A Loading and Land Transpor@ Storage and Unloading at by Conveyor Stockpiling Blending C the Dock System Pollutants As Dust Dust Dust Dust Seepage Tr Leachate su@ Ni Th He Method of Control Enclosed conveyers Enclosed Water Sprinklers Enclosed Sc conveyors Windbreakers structure Ap Vacuum Plated Pads cleaners TEnclosed by Berms Us (Similar sys- Bond to Collect tem used at Drainage water Long Beach Dome' for Small Amount Pier G) of Coal Source: A. J. Dvorak, Impacts of Coal-Fired Power Plants on Fish, Wildlife Their Habitats, 1978 Table 7.1 Solid, Thermal and Chemical Pollutants from Coal Processes 4 ' P" F- Table 7.2 Daily Vessel Costs In U.S. dollars per day in 1980 40 (NDWr)- .65 (MDWT) 120 (MWr) 175 ownership costl $ 8597 $ 9826 $13560 .$l daily operatinq cost including overhead 2 4526 5314 5820 Fuel cost/day, at sea $10038 $13608 $15097 $1 in port 2658 3488 3877 C) co Tbtal cost/day at- sea $23161 $28748 $34477 $4 in port 15781 18628 23257 2 1Includes 10 percent return on investaTent, 80% of purchase price financed at 8% 8-1/2 years, 15 year life and zero salvage value. 2Includes manning, stores, repairs and mintemanae, insurance and administratim Source: H. P. Drewery Shipping Consultants, Ocean Shipping of Coal, Survey No. 24, October, 1981, pp. 92, 94 and-97T.- *The larger stockpiling area at Tinian would permit blending of coal from different sources to produce a more efficient coal for burning in power plants. The Powder River, Wyoming, coal producers are proposing blending with Australian termal coals. FACILITY CAPABILITIES Conceptual studies are based on the scheme shown in Figure 1-1. These criteria are detailed below: *Coal receiving dock proposed is 300m long with 15m draft for 100,000 DWT ore carriers. Unloading equipment would be two continuous bucket-type unloaders, each having a free digging rate of 3000 t/h. Net unloading rate would be 4000 t/h. *Coal storage and blending area would consist of four windrow piles 25m high by 50m wide. The windrows would be contained laterally by berms incorporated into the elevated subgrade The provided for the coal stockpiling and recovery units. berms would prevent the coal from running onto -the equipment tracks, permit 100% machine recovery of the stockpiled coal and contain drainage from the coal piles. The accumulated drainage would be conducted to lateral leachate pond where the water would clarify and be used for dust control . The coal storage area and the leachate pond would be plated with local clay soils as required to prevent seepage. The maximum storage provided would be 4.0 Mt. Use of part of the storage area for blending would reduce the stockpile capacity. *Coal stacking, blending and reclaiming equipment. Stacking equipment proposed consists of three units operating on the 109 outside and the center of the four coal windrows. The capacity of each stacker and its feeding conveyor would be 4000 t/h. The stackers would work independent of the reclaiming system. Provision would be made to bypass the windrows and transfer coal directly from the unloading to the loading ship. The two bucket wheel reclaimers would each operate between two windrows at a reclaiming rate of 4000 t/h. The reclaiming conveyors would deliver the coal through a transfer point to the ship loading conveyor. Normally, one rec laimer would be operating. Coal stacking and reclaiming operations are independent of each other and could take place simultaneously. *Shiploading facilities would consist of a dock with a traveling loader or a linear loader with breasting and mooring dolphins. The draft would be 15m in either case to permit loading of a 100,000 DWT coal carrier at a rate of 4000 t/h. The facilities described above are similar in many details to the newly operational coal terminal facilities at Port Kembla, NSW as described by Paul Soros (1982). The following cost data is extrapolated from this article: (Table 7.3) Table 7.3 Cost Estimates for Coal Center Million Marine Works 10 Site Works, Foundations 15 Ship Unloaders 10 Ship Loader 8 Material Handling 15 Stackers 10 Reclaimers 10 Total 78 (Accuracy 30% low or 10% high) 110 An order of magnitude operating cost for a facility of this kind is estimated as follows on an annual basis: (Table 7.4) Table 7.4 Cost of Operation and Maintenance of the Coal Center Million Labor, all categories: allow 100 persons at 4.o $40,000/annum Maintenance, operation materials and services 4.o Capital charges at 15% 12.0 Subtotal 20.0 CNMI ground rent 10.0 GRAND TOTAL 30.0 Assuming an annual throughput of 1O.OM t/a the cost per tonne would be on the order of $3.00. This is the same order of port charges as 3. other Pacific coal ports. ENUMERATION OF BENEFITS If there is to be a demand for services of the CTC, there have to be net savings that would accrue to users of the facility. This section examines two possible sources of these savings - economies of scale associated with use of large-size vessels and assurance of uninterrupted supply of coal at lower cost. The last part of the section is devoted to discussion of commercial advantages that may accrue to users and the benefits that accrue to other than user of the CTC. Savings from Utilization of Large-Size Ships In most cases the ability to realize economies associated with large-size vessels is the main source of benefits to be derived from the transshipment facility. Th.e sizes of ships used to transport coal have been increasing. The distribution of vessels by size employed in the coal trade, as well as distribution of new order among size classes, indicates a clear trend toward use of larger ships (Table 7.5). This trend is expected to continue in the future (Table 7.6). The evidence suggests that although there has been a significant increase in sizes of coal transport ships, this trend has a way to go before economies of large-size ships are fully realized. This, in turn, is due to a large extent to draft limits at the export and/or import ports and the size constraints imposed by the Panama Canal. The situation, however, is in the process of being remedied. Ongoing improvement projects will allow major loading ports in the future to handle ships up to 170,000 DWT. Similar improvements are being made at ports unloading metal 1 u rg i cal coal .In Japan, for example, by 1983/84, these ports will be able to handle ships up to 150,000-300,000 DWT. However, as it was pointed out earlier, even by 1990 a large number of ports unloading thermal coal for power stations in Japan will not be able to handle vessels larger than 60,000 DWT. Other User Savings There are other potential user savings related to the ability to blend and hold large coal stocks. One of these potential savings pertains t the ability to blend low BTU (8,200-9,700 BUT/lb), low sulphur with o high BTU, high sulphur coal to obtain an acceptable blend at net lower cost. In the normal course of business, the long-terTn contracts usually cover not more than 90% of the required coal. The remainder is generally purchased at more favorable prices on the stock market. In negotiating stock purchases, as well as long-terTn contracts, a buyer with stock on hand or with an access to a large area for stockpiling is usually in a favorable position. Likewise, increased lifting of coal prior to price i creases i n s facilitated by having access to available storage areas. Thus, these savings would accrue to the CTC users. In addition, the relatively short distances between Tinian and Japan would facilitate scheduling of smaller ships, resulting in higher 112 Table 7.5 Ccrq:)arison of Size Distribution of New Building Orders ror Bulkers With Vessels Already E@rplpyed -in the Coal Trade % of ;,brld Vessels B7,ployed in Dx), Bulk and the Coal Trade* Qor@bination (% of CarcTo Carried) Size Class Carrier Fleet (DUT x 10 0 0) on Order (Dr.-,Y@) 1965 1970 3.975 1976 1977 Less.than 25 5.7% 63% 40% 29% 25% 23% 25,,- 40 23.1 23 21 12 12 10 40 - 60 10.6 11 21 24 24 21 60 - 100 39.5 3 12 25 25 29 above 100 21.1 10 14 19 Source: H. P. Drewry Shipping Consultants Ltd. (1980) Table 7.6 Projected Distribution. of Steam Coal Shiprents In Thn-Miles, By Ship Size (percent) Ship Size (thousand MIT) Year 20 20-35 35-50 50-80 80-100 100-150 150+ Total 1980 10 13 22 43 5 7 100 1985 6 7 .19 39 4 17 8 100 27 17 100 1990 4 6 13 27 6 1995 3 5 10 24 6 30 22 100 2000 2 4 8 21 7 33 25 100 Source: H. P. Dro@;ry Shipping Consultants Ltd. (1980) 113 utilization of power plant unloading facilities. This, in turn, would result in the ability to accept smaller stockpiles on site. These savings are difficult to quantify since they are likely to be buyer or plant-specific. No attempt, therefore, has been made to assign dollar values to these savings. Other Non-User Benefits The CTC may stimulate economic development or increase economic activities.both in the immediate surroundings of the CTC or elsewhere in the economy. Low cost coal for energy for industrial use would become available. This could prompt construction of a coal-fired plant with sufficient capacity to service the CTC, the military complex and Saipan (via cable). 114 8 Utilization Systems UTILIZATION SYSTEMS A COAL/RESIDUAL FUEL OIL (RFO)-FIRED MODEL FOR SAIPAN This model is a preliminary approach to examining the practicality of significantly reducing the electrical energy costs on Saipan by -fired generation for the larger part of the oil-fired substituting coal power generation (Figure 8.1). Initial analysis indicates that the fuel cost savings based on current prices of RFO and Australian low sulfur coal delivered to Saipan are substantial. The current low ratio of RFO cost to coal cost per million Btu of $5.25 to $2.19 at Saipan and $5.57 to $2.10 at Guam, in the opinion of the writer, is artificial and not likely to prevail. A more likely price ratio for the last half of the 1980's is $7.50 to $2.50. A test calculation at this ratio indicates the cash flow from fuel cost savings would approach or exceed the cost of the coal -fired 'instal lation. These results, though admittedly preliminary and somewhat superficial due to the lack of good inputs, justify an in-depth study of the potential of coal-fired energy on Saipan. Input for the model originates from the following sources: *DOE Territorial-Energy Assessment, 1981 (TEA) *COE Preliminary Port and Harbor Study of the CNMI, 1981 (COE) *Stearns-Roger, Coal Feasibility Study for Hawaiian Electric Co. (SR) *DPED State of Hawaii Data Book, 1981 (DPED) *I.Y. Borg, Coal as an Option for Power Generation in the U.S. tories of Terri the South PacTfic, 1981 (BORT *1981 Coking Coal Manual, including thermal coal and ant racite TOR) *DOE Interim Report of the Interagency Coal Export Task Force, 1981 CET) 115 STACK-GAS CLEANING SYSTEM COAL HEAT STEAM MECHANC-AL ELECTR)CAL FURNACE BOLER C" TURBINE - - -- ------------- Mo- ENERGY ENERGY L------------J COCXING SYSTEM Conversion of Coal into Electrical Energy in a Coal-Fired Power Plant. High Pressure High Temperature Steam Turbine Generator Heat Input Electrical To Cycle Boiler Energy mechanical Energy High Pressure Output To Generator Water Make up Condenser Low Pressure Water Low Temperature Pump Steam 7 Low Pressure Water Blowdown Heat Rejected From Cycle The Water/Steam Cycle in a Coal-Fired Power Plant. Modified from U.S. Atomic Energy Commission (1974). Figure 8.1 Coal-Fired Electric Generation System Components Source: Impacts of Coal-Fired Power Plants on Fish, Wildlife and their Habitats INC; @kHi g 1, 8 Wo le' Low Pre ssu re Wa@ter Blowd n Heat Reje lib A@ The model output is presented in a series of tables as outlined below. Data sources are indicated: Table 8.1 Projection of the Existing Plant 1980 to 2000. *Population from PBDC. *Demand follows the per capita demand experience as given in DPED of 6000 kwh/y. 1980 Saipan demand as shown on TEA p. 75 is 5750 kwh/y. Increase in tourism is expected to increase unit demand per resident. *Base Load is calculated: Demand/8760 h. *Peak Load: TEA p. 75 indicates a base to peak load ratio of 10.5 to 14.5 or 1.38. On page 79 the ratio for 1981 :11@ J'. and 1986 is shown as 14.8 to 16.5 and 21.8 to 24.2 or 1.11. Table 8.1 uses a ratio of base to peak load of I to 1j, *Residual Fuel' Oil usage if based on TEA p. 75 1980 burn rate of 145,000 bbls for 92.0 million kwh. This is equivalent to 15.106 kwh/gal. HECO 1981 Annual Report, p. 38, shows fuel oil output of 14.04 kwh/gal. by calculation. *Fuel cost used is $32.11/bbi as per TEA p. 75. TEA p. 34 shows a Guam price of $34.067. The footnote on page 75 indicates that the Saipan price does not include taxes or local transportation. *Fuel cost per kwh is calculated at $0.051. Guam's price and usage base results in a fuel cost of $0.0579 or 114% of the Saipan cost. 117 -[50 0 o @o 0-1 C-cc 6 i7z Z Z;@ 9 i36-c -C CC .-[50 o o @4'6 170C 3 - fj@@ 0 e@@, gaz6T T'eC -[50 0 o 6 f16Z fCCZ@ C 9*92T T*Tc T!@o , o fiT 6 59Z zozz 90oz 9 * 091 T 0 oc J5000 fle"e @zz 6 o -[z 6,6-[ 9 'fIZT T-6z 2 'T@7 -1 T5000 C@*q 99Z 3,6T 9029 T'9L -[@Oeo 0319 552 Cooz 5,13-1 OOZ91 OIZZ T@0'0 69aZ 9fZ 9*6T 2'ZT 0*95T o-qz T50*0 zg*Z zcz 609T es4T 9*05T T*5Z TWO 5COZ 6ZZ 2: 1 9T 9'9T e & 5f7T Z 'f7@@ TWO 50*z ozz 90ZT 049T 9,61T CO.Cz T50 "0 02.9 ZTZ 6'9T C*@T f7 ' i7CT f7'Zl- TWO 9@*9 f7OZ C#9T 9'-@T 9*6ZT 9'T@@, -Kovo 6z*g 961 9'@T Z.tfl Z'IIZT Z,oz TWO Zo*g 69T -1'5T Z'CT OoOeT 010? 190 ' 0 69*5 C9T 9 ' 47T C@CT f7 * 9TT f7*6-[ -15000 59,@ Z T O'i7l Zszl 9-IT-1 90@3T TWO f7f7 a 69T @GCT C#eT 47 * ZOT 6'ZT TWO f19T O'CT B'TT WCOT C04T T5000 f7O " 5 Z5T 5 zT f7 * TT 9-66 909-1 TWO 99 * f7 @fjT 520-1 ooz6 009-1 I-d Imi x C-1 Ili IA @o t-I I-d t-I w X F- I'd m -G@ 0 S:@ o m 0 fo p 0 B3 0 ci-"d u C+ ol H IM (D 0 P. 5@ P, 00 1 0 s:: :y 0 t- P) En H C+ pu-ewea j@moj uudTL-S L*8 DLqpi, @A There is a great deal of conflicting information in the narrative and tables concerning the current and future energy situation on TEA pp. 75 to 79. A much more specific study of the facilities and operations will be required for a useful preliminary survey of the possibilities for improvement. Table 8.2 is based on the use of an 18-Viw coal-fired generating unit. This unit was selected to see if using a unit that would not require flue gas treatment would have important savings. Low sulfur Australian coal with a heat content of 12,OOC Btu/lb. or 26.4m Btu/tonne was assumed for this table. Washed coal would have an ash content of 8% and a sulfur content of less than 1%. Cost delivered CIF is $60/tonne. This is the same as used on TEA p. 51 in the Guam narrative about conversion to coal. As indicated in the table footnotes, the coal-fired availability was estimated,to be 330 days per year. All other factors are the same as used in Table 8.1. Table 8.3 is similar to Table 8.2, except a 25-Mw coal-fired plant was used. In Tables 8.1, 8.2 and 8.3, the coal-fired plant performance was derived from data included in SR Section 5 on coal-fired plant performance for a 25-Mw plant projected for Maui - Hawaii sites. In Tables 8.2 and 8.3 it was assumed that the first full year of coal-fired plant operation would be 1986. It was also assumed that the coal would be transported by bulk carriers similar to the Australia National Lines Lake Class, which are 16,500 DWT vessels having a length of 486', beam 75', depth 39% and a 7 draft of 28.5'. They would normally carry 16,700 t. These ships are equipped with 3 17 ft. deck cranes for unloading cargo. They would unload into dock hoppers which would be serviced by trucks hauling to the plant (Figure 8.2). An arrangement where the hoppers could discharge onto a conveyor belt to the plant store appears to be possible with m nimal dredging and pier construction. A simple but efficient coal i storage system is shown in Figure 8.3. This will contain dust and other pollutants from 'storage of coal near power plants. 119 Table 8.2 Saipan Existing Pla P lus 18 MW Coal Fired Unit P W rd -A 0 a) rd Pil 4- Lo r-i r_: @5 >) @D @Q Id rd d r-A P-4 H 4--> 4--, a Cd W :3: d 4--1 0 d -11-@ d V-3; 0 Cd 0 Q) 0 x 0 ;5 0 0 @4 Year PQ 14 P-4 f-4 00 0 0 1985" 13-3 14.6 116.4 183 86 13-7 15-1 120.0 lo6.4 54.0 3.25 22 8 7 14.2 15-6 124.2 112.4 56@2 3-37 18-5 86 14.8 16-3 129.6 117.2 58.6 3-52 19-5 89 15-3 16.9 134.4 121.2 6o.o 3.63 20.8 go 16.o 17.6 130@8 126-7 63.4 ).8o 20.8 @91 16.6 18.2 145.2 131-5 65-7 3.94 21.6 92 17.2 18.9 150.6 136.2 68.1 4-.09 14.4 93 17.8 19.6 152.0. 141.0 70.5 4.23 23-7 C:) 94 18-5 20-3 162.0 142.6 71-3 4.28 30-7 95 19.2 @21.2 168.6 142.6 71-3 4.28 41.o 96 19.9 21.9 174.6 142.6 71-3 4.28; 50.6 97 20.6 22-7 180.6 142.6 71-3 4.28 6o.o 98 21-3 23.4 186.6 142.6 71-3 4.28 69-5 99 22.0 24.2 192.6 142.6 71-3 4.28 79-0 2000 22-7 24.9 198.6 142.6 71-3 4.28 88-5 Plant Stoker fired 18 MW without FG treatment. Data after S-R HECO study. Nominal Capacity MW 18' Gross Capacity MW 19.8 Net Plant Heat Rate Btu/kwh 11820 Coal Used*Btu/lb. 12000 M Btu/tonne 26.4 Btu/He 19800 x 118,20 M Btu 234 tonnes/hr. 8.86 use. 9. Plant Availability Planned Maintenance Days 30 Forced Outages Days 5 Net of Days 330 Net of Hours 7920 % Z@ Saipan Existi P, APPIUS 18 MW Coal Fired Unit -4 . " * f- t , I . 0@- Tabl e8.2 rig 0 (D ED rx, 4- d @4 P-4 r-i 4-3 to Cd :3: d (d :i]: W 4-0 W 1@4 (D Cd 0 X G) 0 X 0 0 :J 0 0 Year PQ @4 00 0 0 1985" 13-3 14.6 116.4 183 86 13-7 15-1 120.0 106.4 54.o 3.25 22 87 14.2 15.6 124.2 112.4 56.2 3-137 .18.5 8@ 14.8 16-3 129.6 117.2 58.6 3-52 19-5 89 15-3 16.9 134.@ 121.2 6o.o 3.63 20.8 go 16.o 17.6 130.8 126-7 63.4 ).8o 20.8 91 16.6 18.2 145.2 131-5 65-7 3-94 21.6 92 17.2 18.9 150.6 136.2 68.1 4.og 14.4 M) 93 17.8 19.6 152.0, 141.0 70.5 4.23 23-7 94 i8-5 20-3 162.0 142.6 71-3 4.28 30-7 95 19.2 ..21.2 168.6 142.6 71-3 4.28 41.0 96 19.9 21* 9 174.6 142.6 71-3 4.281. 50.6 97 1 20.6 22-7 180.6 142.6- 71-3 4.28 6o.o 98 21-3 23.4 186.6 142.6 71-3 4.28 69-5 99 22..0 24.2 192.6 142.6 71-3 4.28 79-0 2000 22-7 24.9 198.6 142.6 71-3 4.28 88-5 Plant Stoker fired 18 MW without FG treatment. Data after S-R HECO study. Nominal Capacity MW 18 Gross Capacity MW 19.8 Net Plant Heat Rate Btu/kwh 11820 Coal Used Btu/1b. 12000. M Btu/tonne 26.4 Btu/He 19800 x 118.20 M Btu 234 tonnes/hr. 8.86 use. 9-- Plant Availability Planned Maintenance Days 30 Forced Outages Days 5 Net of Days 330 'Net of Hours 7920 @2 Tabl e 8.3 '@;;a! pa,@ %A t3 F- x jL:@.'r 4@ EQ 0 '0 4-3 U2 EG ;:5 :Z:) r-q -14 rd Cd H (1) P4,Q, r-A 4--' -6@ 10 (ij :E@: 16 Cd @c Ei Ed @4 -P :1-: Ed @4 0 P Cd 0 a) 0 0 -r-I @J 0 0 0 X Year - w 4 P,4 0 0 0 1985 13-3 14.6 116.4 183-0 86 13.7 15.1 120.0 108-3 50.3 3.02 18.4 87. 14.2 15.2 124.2 112.4 52.2 3.13 18.6 88 14.8 16.3 129.6 117.2 54.4 3.26 19.6 89 15-3 16.9 134.4 121.2 56.2 3.37 20.9 .90 16.o 17.6 130.8 126.7 58.8 3.53 20.7 91 16.6 18.2 145.2 131.5 61.o 3.66 21.7 92 17.2 18.9 .150.6 136.2 63.2 3.79 22.7 93 17.8 ig.6 156.0 141.0 65.4 3.92 23.7 94 18.5 20.3 162.0 146.5 68.0 4.o8 24.5 26.1 95 19.2 21.2 168.6 152.1 7o.6 4.23 96 19.9 21.9 174.6 157.6 73.1 4.39 26.8 97 2o.6 22.7 18o.6 163.2 75.7 4.54 27.4 98 21.3 23.4 186.6 168.7 78.3 4.70 28.2 99 22.0 .?-4.2 19z.6 174.2 80.8 4.85 28.6 2000 22.7 24.9 198.6 179.8 83.4 5.00 29.7 Plant Pulverized Fuel Fired 25MW w/ FG Treatment. Data after S-R HECO stud Net Output MW 25 Gross Output MW 27.6 Net Plant Heat Rate Btu/KWk 11820 Coal Used 12000 Btu/lb or M Btu/tonne 26.4 Coal Usage tonnesAr . 11.6 .Availability: Planned Maintenance 30 days Net Available 330 days Forced Outage 5 days 7920 hours Total Outage 35 S 7N 9.21 r 4@' or f M Yt lf,:_ W -,TV 9L wl 'IT a Ag 7^11 lot'U"141 - AN_I@ M NX - 7W IIIA 5GR @VTO@ t@- IMNX 14;i -P ""V '4 M., 47 WA% Photo: Figure 8.2 Australian Coal at Honolulu Harbor 7", X-@ STORAGE CAPAC)Ty@ OiME&1510@J TANLE 'A' -s- @Cfyy 1#Lr0Aj3 z38,000 -41:0 2SO-0 -05C:C- 90' C. -20.500 Z01'0 Z04LO -70@@ @4-c- '0'500 *C-4tO -@410 5@' C. C- 0@ C@ COLU@4 C-C@K 'A' r,,E D-wram MAC-AJER/ zu-'r @LATxDMM rizAiJ3LLAC-P@dT PA x1F-L I. oR C@TIOAJAL PC:aT@VSE- OITIO@AL) R@F %fC'JT3. T -'rCm-'.E-j 4 @N Y 1:1 A N A A.01;V gU3 1-i- V94T: IE4;. 0 -" pw-@'a- up 'DOOR 3:0 0 Mam V CP;aAJAL STACIC, -ALTEf@JATE ELEVAT104 STORAGEJ R@iCLAIM SYSTEM DIAGRAM Figure 8.3 Dome enclosure for coal storage of 10,500 - 36,000 tons for pollu and space saving Source: Domes, Inc., a division of General Conveyor, Inc., Northern Californ Table 8.4 indicates the comparisons of fuel costs between the -fired plant and the 18 and 25-Mw plants from 1986 to 2000 existing RFO inclusive. The savings for the 25-Mw plant are significantly larger, since it can carry a larger part of the load in the later years. Table 8.5 is based on recalculating the RFO cost on the basis of Guam fuel prices and performance. The fuel price savings of the combined RFO/Coal plant with the 25-Kw unit and the straight RFO plant are substantially larger. If Guam were to shift to coal, Table 8.6 uses the same input as Table 8.5, but assumes a $45.52/bbl RFO cost and a $68.25/t coal cost. This is equivalent to a $7.50/VBtu cost for RFO and a $2.50/MBtu cost for coal. The three-to-one ratio is a minimum likely ratio for the future. The discounted cash flow return would pay for the steam plant in less than 15 years at a 15% interest rate. This is based on plant -Mw steam turbine, costs on the order of $1000 to $1300 per kw or a 25 -fired plant. The plant would be located adjacent to pulverized, coal the existing RFO plant and use the same support facilities for service, maintenance and management. There would not be any land costs and offsite facilities. Coal haulage would be done under contract. The plant would be set up to handle 25 kt of sodded coal for a stockpile and 25 kt. in a storage structure equipped with a recovery feeder used with a front end loader. A 500-t plant silo would hold coal for feeding the pulverizer. The plant is expected to conform to all appropriate EPA regulations regarding emissions, dust, drainage, noise and other offsite impacts. Fly ash and bottom ash would be collected automatically in separate silos. FGDS sludges would be stabilized with the ash and lime to form a hardened product of low permeability suitable for disposal in a -U landfill. Alternatively, the ash could be used for roads or as a concrete additive and the FGDS sludges could be used for land plaster. Saipan's remote location offers some problems from a standpoint of equipment delivery and construction costs. The site does have some advantages, and a high level of interest by the community and its officials can result in an efficient and economically designed facility that will have a positive impact on the island economy. 124 Table 8.4 Comparisons of Fuel Costs of Tables A and B and A and C* Year A B -A minus B C A minQs .1986 6.07 .3-96 2.11 3.61 2.46 87 6.29 3.97 2-32 3.73 2.56 88 6.56 4.15 2.41 3.89 2.67 89 6.80 4-30 2.50 4.o4 2.76 go 7.05 4.47 2.58 4.19 2.86 91 4.64 2.71 4.3.6 2.99 92 7.62 4.82 3-10 4.52 3-10 93 7.89 @4.99 2.90 4.68 3.21 94 8.20 50 26 2.94 4.87 3.33 95 8.53 5.6o 2.93 5.07. 3.46 96 8.84 5-90 2.94 5.25 2.59 '97 9.14 6.21 2.93 5.42 3.72 98 9.44 6.51 2.93 5.61 3.83 99 9.75 6.81 2.94 5.77 3.98 2000 10-05 7.12 2.93 5.95 4.1o, Note Table 8.1 - A Table 8.2 - B Table 8.3 - C Table 8.5 Fuel Cost Comparison of Residual Fuel Oil and Coal IIAII "B" I1CtI 4-1 0 0 LI- E/I 4-:1 L@- W rT, \0 A@' r-I U) \0 0 P@ 00 b.0 0 r-4 X! 1-4 0 00 0 n Cd 0 :3: 0 P FX4 PC4 , PL, 0 @) r-A Q P @) Year GWh Kbbls M$ Mt 1986' 1200 2o4 6.95 11.7 21 0.71 3.02 87 1242 211 7.20 11.8 21 0.72 3.13 6 % 88 129 220 7.51 12.4 21 0.72 3.26 89 1344 229 7.79* 13.2 22 0.76 3.37 go 139 8 238 8.1o 13-1 22 0.76 3.53 91 145 2 247 8.41 13.7 23 0.79 3.66 92 1506 256 8.73 14.4 25 o.83 3.79 93 1560 265 9-03 15.'0 26 o.87 3.92 94 162' .276 9-39 15.5 26 0.90 4.o8 95 1686 287 9.77 16.5 28 o.96 4.23 96 1746 297 10.11 17.0 29 o.98 4.39 97 1806 307 10.46 17.4 30 1.01 4.54. 98 186 6 317 10.81 17.9 30 1.03 4.70 99 1926 329 11-17 18.4 31 1.07 4.85.1 2000 1986 338 11-50 18.8 32. 1.09 5.00 1986 Value of cash flows at 15% interest is $22.84 million, Table'8.6 RFO and Coal Prices Projected to $7.50 and $2.50/M Btu Guam B RFO Only RFO + Coal @) cd C);0 Cd 4-'16% .0 PEA A. 0 -p 0 Year E-1 'E: 1986 2o4 9.29 21 0.96 50-3 3.43' 4.39 87 211 9.67 21 0.96 52.2 3.56 4.52 88 220 10.01 21 o.96 54.4 3.71 4.67 89 229 lo.49 22 1.08 56.2 3.84 4.92 go 238 10.91 22 1.o8 58.8 4.0 5.09 91 247 11-37 23 1.05. 61.o 4.16. 5.21 92 256 11-73 25 1-15 63.2 4.31 5.46 93 265 [email protected] 26 1.19 65.4 4.46 5.65 94 276 12.65 26 1.19 68.o 4.64 5.83 95 28? 13-15 @28 1.28. 70.6 4.82 6.1o 96 297 13.61 29 1-33 73.1 .4.98 6.31 97 307 14.07 30 1-37 75.7 5-17 6.54 98 317 14-52 )o 1.37 78.3 5.34 6.71 99 328. 15-02 )l 1.42 80.8 5.51 6-93 2000 338 15.49 32 1.47 83.4 5. 69 7.16 points out that the generating Borg capacity per capita for Saipan is 2.28 kw while California is I.C. The HECO annual report for 1981 shows a system-wide factor of 1.66 kw/capita. This includes Oahu, Maui and Hawaii. Assuming that after the delivery of the 841w unit in 1983 the effective generating capacity on Saipan willbe about 30 Mw (Figure 8.4), based on Hawaiian standards this would be equivalent to a population of 18,000, the expected level for 1984. If a more conservative factor of 1.5 kw per capita is used, additional generating capacity will be required in 1986. If the suggested 25 Mw plant is put on line at that time and the existing plant is used for peaks and standby, the capacity will be adequate until 2000. It is likel that a lower factor can be y a ppl i ed to a "steam plant. The limited economic review herein does not include any consideration of operating costs, which are generally much lower for a steam coal- fired plant. It has also been assumed that there will be adequate manpower available to run the steam plant and the standby units. The Australia - Japan shipping route passes, very near to Cuam. A significant quantity of coal in lots similar to those required by Taiwan, Hong Kong, Singapore, Malaysia, New Caledonia, and smaller industrial users in Japan is available. The business is sought after by ,3" coal companies because it is additional revenue with no significant capital layout. The shipments required are approximately the same as used by Hawaii's cement users. Ability to handle large bulk carriers or transshipment of coal is not important to Saipan's requirements. If Guam were to shift to coal, there is a possibility that dual shipments in a larger carrier would offer some price advantage. Presumably, the ship would return to Saipan with a partial cargo. Drafts in the same order of magnitude as projected in the proposed U. S. Army Corps of Engineers program are adequate for any foreseeable coal service to Saipan. 128 -7, Lf @ WIMN'S 15F Rv? 3 gs*g? U.4 NR MR % Y5 k--z 4 v 4: @50 4@? W. o@, j,@ v .... . .. . N3 T-Y ,F - - --------- IR wo Kit: mj Im, 41* io" A@ "ke V T-o Figure 8.4 Saipan 21 Mwe Power Plant and Substation Pho 9 References REFERENCES Berkowitz, N., An Introduction to Coal Technology, New York, 1979. Borg, I.Y., Coal as an Option for Power Generation in U.S. Territories of the Tacific, Lawrence Livermore National Laboratory, University of California, Livermore, California, 1981. Borg, I.Y., Technical Considerations Relating to Use of Coal in American Samoa for Power Generation, Lawren6e_Li_@_e re National Laboratory, University of California, Livermore, California, 1982. Burns and Roe Pacific, Inc., Bid Evaluation for the Saipan Permanent Power Plant, 1978. Carter, J. (Ed.), Pacific Island Year Book, 14th Edition (Sydney: Pacific Publications, 19 Coal Industry Quarterly, published quarterly by the Securities Research Division, Merrill Lynch, Pierce, Fenner and Smith, Inc. Coastal Resource Management Office, Issues Related to Construction of a Major Oil Transshipment Facility in the CNMI, 1980. Coking Coal Manual, 1981 Edition, The Report, Ltd., Tokyo, Japan. Commonwealth of the Northern Mariana Islands, Overall Economic Development Strategy, Saipan, 1983. Commonwealth of the Northern Mariana Islands Energy Office, Renewable Energy, 1982. Commonwealth of the Northern Mariana Islands Government, Commonwealth Register, 1981. Doerell, P. E., "Seaborne Steam Coal Trade May Quadruple in 10190," World Coal , Vol . 7, No. 2, 1981, pp. 27-28. Goplerud, C. P. III, Coal Development and Use, Lexington Book, Mass., 1983. Hargreaves, D., Australian Bulk Ports and Shipping - Can They Meet the Chal 1 enge of the @Os , Bu 1T Sol i ds Ha ndl i ng , Vol . 1, p. 5 65, 1981. Ship H. P. Drewery Shipping Consultants, Ltd., Chan ing.Sh' Type/Size Preferences in the Dry Bulk Market (London: HPD @@i @@ti ons, MO) Jennings, W., How to Negotiate and Administer a Coal Supply Agreement, -Hill, Inc., 1981. McGraw 130 Joint Coal Board, Thirty-Fourth Annual Report, 1980-1981, Sydney, February 9, 1982. Kajakoski, P., Stacking, Blending and Reclaiming of Coal, Bulk Solids Handling, 11 @. 105, 1� 1. Keller and Gannon, Saipan Power Sy stem Improvement Study, 1981. Kimura, T., Demand for Imported Steam Coal in Asian Countries, The Institute of Energy Economics, Tokyo, Japan, 1983. Knights, R. I., Coal Loading Facilities in the Port of Newcastle, Bulk Solids Handling, Vol. 1, p. 573, 1981. Merrill Lynch, Pierce, Fenner & Smith, Inc., Coal Industry _Quarterly, June 1982. National Energy Advisory Committee, Strategies for Greater Utilization of Australian Coal, Australian Government Publishing Service, Canberra, 1980. Nishimoto, N., Forecast and Record of Power Generation, 1982. OECD (Organization for Economic Cooperation and Development), Maritime Transport 1981, Maritime Committee Paris, 1982. Okura, G. N. and G. A. Chapman, Hawaii Deep Water Electrical Transmission Cable Demonstration Program, 1982. Page, R. P. and Farragut, P. R., "Export Coal. Implications for U.S. Ports," Transportation Research Forum, Proceedings of the 22nd Annum Meeting, Vol. 22, No. 1, .1981, pp. 112-120. Peters, W., et al, Coal Resources, IPC Science of Technology Press, New York, 1978. Port and Marine Task Group, Western U.S. Steam Coal Exports to the Pacific Basin, report prepared by the Port and Marine Task Group, Western Coal Export Task Force, Pacific Basin Steam Coal Export Study (Denver: Western Governors' Policy Office, 1981). Power Generation Branch, Letter to Director of Public Works, (CNMI Government), 1982. Robert Panero Associates, A Proposal for the Development of an International TransshTi@ment and Petroleum Storage Port, District the of Palau, Western Caroline Islands, Trust Territo@y Of Pacific, Port Pacific Corporation, 179-75. Robinson G., Leith Coal Outloading Plant, Bulk Solids Handling, Vol . 2, ill, 1982. P. @4 131 Joint Coal Board, Thirty-Fourth Annual Report, 1980-1981, Sydney, February 9, 1982. Kajakoski, P., Stacking, Blendinq and Reclaiming of Coal Bul k Sol ids Handling, Vol . 1, P. 105, 19 1. Keller and Gannon, Saipan Power System Improvement Study, 1981. Kimura, T., Demand for Imported Steam Coal in Asian Countries, The Institute of Energy Economics, Tokyo, Japan, 1983. Knights, R. I., Coal Loading Facilities in the Port of Newcastle, Bulk Solids Hand-i-ing, 1. 1, p. 573, 1981. Merrill Lynch, Pierce, Fenner & Smith, Inc., Coal Industny Quarterly, j June 1982. National Energy Advisory Committee, Strategies for Greater Utilization of Australian Coal , Australian Government Publishing Service, Canberra, 1980. Nishimoto, N., Forecast and Record of Power Generation, 1982. OECD (Organization for Economic Cooperation and Development), Maritime Transport 1981, Maritime Committee, Paris, 1982. Okura, G. N. and G. A. Chapman, Hawaii Deep Water Electrical Transmission Cable Demonstration Program@, -1982.- Page, R. P. and Farragut, P. R., "Export Coal: Implications for U.S. Ports," Transportation Research Forum, Proceedings of the 22nd Annum Meeting, Vol. 22, No. 1, .1981, pp. 112-120. Peters, W., et al, Coal Resources, IPC Science of Technology Press, New York, 1978. Port and Marine Task Group, Western U.S. Steam Coal Exports to the Pacific Basin, report prepared by the Port and Varine Task Group, Western Coal Export Task Force, Pacific Basin Steam Coal Export Study (Denver: Western Governors' Policy Office, 1981). Power Generation Branch, Letter to Director of Public Works, (CNMI Government), 1982. Robert Panero Associates A Proposal for the Development of an International Transshipment and Petroleum Storage Port, District of Palau, Western Caroline Islands, Trust Territor of the 'y PaCi-f-ic, Port Pacific Corporation, 1975. Robinson, G., Leith Coal Outloading Plant, Bulk Solids Ha ndl i ng, Vol . 2, p. 111, 19,82. 131 Sasadi, J., Latest Developments in Coal Handling for Self-Unloading Ships. and Barges, Bulk Solids Handling, Vol. 2, p. 383, 1982. Shibukawa, K., Statement of Japanese Steam Coal Forecast, Hearings of the Subc tee on Energy and Mineral Resources, Energy and Natural Resources Committee, U. S. Senate, December 1, 1981. Shore, M., "Overall Economics in Transportation of Coal for Export," in Critical Issues in Coal Transportation Systems: Proceedings of Symposium (Washington, D.C.: National Academy of Sciences, 1979). Simeons, C., Coal: Its Role in Tomorrow's Technology, 1978. Soros, P., Conneaut-An Economical Superport, Bulk Solids Handling, Vol. 2, p. 413, 1982. Soros, P., Port Kembla Coal Terminal, The International Journal of Storing and Handling Bulk Materials, Vol. 1, No. 4, December 1981, pp. 587-594. Soros, P., Port Kembla A State of the Art Coal Port, The International Journal of Storing and hHandling Bulk Materials, Vol . 3, No. 1, March 1983, pp. 85-91. Tinsley, R. C., Economics of Pacific Rim Coal, in Li, T.M., Brown, G.R., and Guernsey, N.C. (Editors), Mineral Resources of the Pacific Rim, Proceedings of the Special Programming by the Minerals Resource Management Committee during the First International SME-AIME Fall Meeting, Honolulu, Hawaii, September 2-9, 1982, pp. 113-122. Toichi, T. and K. Furuto, Outlook for Japan's Economy and the Energy Supply and Demand Structure for the 1980s, Energy in Japan, Bimonthly Report No. 62, The Institute of Energy Economics, Tokyo, Japan, March 1983, pp. 11-29. Uehara, T. , Pacific Rim Coal Markets, Hearings of the Subcommittee on Energy and Mineral Resources, Committee on Energy and Natural Resources, U. S. Senate, December 1, 1981. U. S. Army Corps of Engineers, Port and Harbor Study for CNMI, 1981. U. S. Army Corps of Engineers, Saipan Small Boat Harbor, 1981. U. S. Department of Energy/Department of Interior, Territorial Energy Assessment, 1981. U. S. General Accounting Office, Alternatives to the Northern Mariana Islands Lease, 1982. 132 Venator, T. J.j Applications Aspects of Continuous Unloaders, Bulk Solids Handling, Vol. 2, p. 107, 1982. Waters 11, W.G. , "Transportation and Market Prospects in the World Coal Trade," The Loqistics and Transportation Review, Vol. 18, No. 2, June 1!@8-2. 1982 Australian Coal Conference Papers, Au stralia: Surfers Paradise, April 19-22, 1982. 133 10 Appendixes DEFINITIONS (Adapted from The Direct Use of Coal and Port Pricing ".7;V and Investment or A All-in charges: Single charge for all services. Alongside: With the vessel standing at the quay or jetty, the cargo is moved from ship direct to surface of quay (or in inverse direction). Opposite: overside. Anthracite Coal: A hard, high rank coal with high fixed carbon. Ash (fly ash): Lightweight solid particles that are carried into the atmosphere by stack gases. Base Load: The minimum load of a utili electric or gas, over a given ty peri*od of time. Berth: Section of quay (pier, wharf, or jetty) notionally designed to accommodate one vessel and including a section of the surface over which labor, equipment, and cargo move to and from the vessel. By transference, in ship owner's language, service to a port. Berthing fee (or charge): A charge levied by certain ports on the vessel to pay for the use of the berth (and not always payable, or fully payable, if the ship stays mid-stream). Bituminous Coal The coal ranked below anthracite. It generally has a high heat content and is soft enough to be readily ground for easy combustion. It accounts for the bulk of all coal mined in this country. (cargo): Cargo packed in separate packages (lots or consignments) Break-bulk or individual pieces of cargo, loaded, stowed, and unloaded individually; as distinct from bulk cargo. _4 -@4 134 BTU: British thermal unit, a measure of the energy required to raise one pound of water one degree Fahrenheit. Bulk carriers; bulker: Ship designed to carry bulk, nonliquid cargo. A CFS: Container freight station. Channel: Passage of water leading to the port that is normally dredged and policed by the port authority. Channel dues: Charge levied (on the vessel) for using the channel. Charter rate: Payment by charterer (such as cargo owner) to ship owner for the chart erer (such as cargo owner) to ship owner for the charter of the vessel. It is determined by market conditions and terms of charter. c.i.f.: Cost + insurance + freight. This corresponds in principle to the landed price of shipments before tax. Coal gasification: The process that produces synthetic gas from coal. Coal liquefaction: Conversion of coal to a liquid for use as synthetic petroleum. Coaster: Ship that plies between coastal ports on the same coast or archipelago or in interisland trades. Commercial Sector: A subsector of service industries that includes wholesale and retail trade, schools and other government nonmanufacturing facilities, hospitals and nursing homes, and hotels. As defined, this sector does not include transportation and household services. 135 Conference (liner or steamship conference): A combination (technically, a cartel) of shipping companies (or owners) which sets common liner freight rates on a particular route and which regulates the provision of services. Cranage: A port charge levied for the use of cranes. It is paid by ship or cargo owner or by both parties in certain proportions according to the customs of the port. DWT: Dead weight tonnage. The weight in long tons that a vessel can carry when fully laden. Effluent: Any water flowing out of an enclosure or source to a surface water or groundwater flow network. Elasticity: The fractional change in a variable that is caused by a unit change in a second variable. Income elasticities are important in energy estimates, since these estimate the changes in quantities of energy demanded as incomes change. FCL: Full container,load; a container that is delivered to the shipping company full of the consignor's cargo. The meaning changes according to who uses the term; ports may describe containers as FCL if they leave j the port's area without having been unstuffed (or stripped). Feeder (service): Transport of containers which are first carried by the main line container vessel to a port of transshipment, unloaded, and then loaded on a smaller vessel for feeding to a further port. Feeder service implies transshipment Flue-gas desulfurization: The use of a stack scrubber to reduce emissions of sulfur oxides. See stack scrubber. 136 f.o.b. Free on board. In the case of ocean carriage it means the value of the goods (including the value of packing) when placed on board the vessel. It includes such charges as the shipper had to pay to the port but excludes cargo insurance (and freight) and corresponds only approximately to market value in the exporting country. Freight tons: A heterogeneous unit for counting cargo or traffic in liner shipping. It is based on the rules by which freight rates are assessed. For cargo paid by weight tons, the weight ton (long, short, or metric) is a freight ton. For cargo paid for by measurement tons (for example, 40 cubic feet), the measurement ton is the freight ton. General cargo: Cargo, not homogeneous in bulk, which consists of individual units or packages (parcels).. :@2.' vh@ Greenhouse effect. The potential rise in global atmospheric temperatures due to an increasing concentration of C02 in the atmosphere. C02 absorbs some of the heat radiation given off the Earth, some of which is then reradiated back to the Earth. CRT: Gross register tonnage, a measure of the total space of a vessel in terms of 100 cubic feet (equivalent tons) including mid-deck, between deck, and the closed-in spaces above the upper deck, less certain exemptions. The GRT of most of the world's ships is recorded in Lloyds Register. See also, NRT and DWT. Gross energy demand: The total amount of energy consumed by direct burning and indirect burning by utilities to generate electricity. Ne t energy demand includes direct burning of fuels and the energy content of consumed electricity. The difference between gross and net energy demand is a measure of the energy losses by utility conversion to electricity. The difference between gross and new energy demand is a measure of the energy losses by utility conversion to electricity. About two-thirds of the energy input at the utility is lost in generation and transmission. 'q it 137 Gross National Product (GNP): The value of all goods and services produced in a given year. GNP is a "value added" concept. It is stated in either current or constant (real) dollars. Groundwater: Subsurface water occupying the saturation zone from which wells and springs are fed; in a strict sense, this term applies only to water below the water table. Heat pum_p: A device that moves heat from one environment to another. In the winter it moves heat -from the outside of a building to the inside, and in the summer it moves heat from the inside to the outside. Hook: Loading and discharging point along a vessel; the hook is lowered by ship's derrick or crane to receive the net holding the cargo. Hence, hook hours, the base of a measure of port output (cargo tons moved per hook hour). Industry: Industry is an aggregate,of three sectors manufacturing, mining, and construction. Joule: A unit of energy which is equivalent to 1 watt for I second. 1 Btu 1,055 Joules. Labor force: The number of persons 16 years of age or older who are either employed or actively looking for work. y Landing charges: A charge levied b certain ports on the cargo owner for receiving and handling imports. The corresponding charge for exports is called shipping_charge. Lash: Lighter aboard ship. This is a technique of water transport by which cargo is loaded on barges which are in turn taken up by an ocean vessel which transports them and ultimately releases them to carry the cargo into port. LCL: Less than container load; cargo destined for shipment in a container that is delivered by the consignor for consolidation with other cargo and insertion in a container by the shipping company at a container freight station. Lignite: The lowest rank coal from a heat content and fixed carbon standpoint. Measurement ton: A unit of quantity of cargo based on its cubic measurement (for example, 40 cubic foot or 1 cubic meter). Me tal I u rg i cal coal Coal used in the steelmaking process. its special properties and difficulty of extraction make it more expensive than steam coal. Methane: CH4, carburated hydrogen or marsh gas formed by the decomposition of organic matter. It is the most common gas found in coal mines. NRT: Net register tonnage, the GRT minus the spaces that are non- earning - machinery, permanent bunkers, water ballast, and crew quarters. Over the,range 0 to 6,000 NRT there is a reasonably good correlation between NRT and DWT: DWT 2.5 NRT. One-off visit: A nonroutine or nonschedule call at a port. Overside: Cargo being loaded or unloaded from ship into barges standing along the vessel. Opposite: alongside. Pallet (palette): Tray or other solid base on which cargo is loaded for loading or unloading; a form of unitized cargo (palletized). Pallet ships are designed to carry cargo piled on pallets. Particulate matter: Solid airborne particles, such as ash. 139 Peak power: The maximum amount of electrical energy consumed in any consecutive number of minutes, say 15 or 30 minutes, during a month. Port dues: A charge levied by certain ports on the vessel or cargo. Process steam and heat: Steam and heat produced for industrial process uses, such as the activation of drive mechanisms and product processing. Productivity: The value of goods or services produced by a worker in a given period of time, such as one hour. For the United States, in 1975, this averaged $7.39. Increases in output over time are used to measure gains in productivity. A variety of time periods is used, including output per worker per year. Also, productivity statements often refer to gains in private sector output per worker rather than output in the total economy. Quad: One quadrillion (1015) British thermal units (Btu). 74 Quay charges (rent): A port charge levied on the vessel for the use of the quay. Reserves: Resources of known location, quantity, and quality which are economically recoverable using currently available technologies. Residential sector: Includes all primary living units - houses, apartments and mobile homes. Households are classified as follows: a) family households, which incorporate persons who are either married or blood related; b) primary individual households, which are made up either of single persons or incorporate two or more persons who are neither married nor blood-related. Resources: Mineral or ore estimates that include reserves, identified deposits that cannot presently be extracted due to economical or technological reasons, and other deposits that have not been discovered but whose existence is inferred. 140 Retrofit: A modification,of an existing structure, such as a house or its equipment, to reduce energy requirements for heating or cooling. There are basic types of retrofit: equipment, such as a heat pump replacing less efficient equipment; and insulation, storm doors, calking, etc., designed to lower energy requirements. Rol 1 -on/rol I -of f: Cargo carried in wheeled containers or wheeled trailers aboard and moving onto the ship and off it on wheels, usually over ramps. Seam: A bed of coal or other valuable mineral of any thickness. Ship measurements: Measures of cubic capacity, in tons of 199.clibic feet; see GRT, NRT, and DWT. Slurry pipeline:. A pipeline that conveys a mixture of liquid and solid. The primary application proposed is to move coal long distances (over 300 miles) in a water mixture. Stack scrubber: An air pollution control device that usually uses a liquid spray to remove pollutants, such as sulfur dioxide or particulates, from a gas stream by absorption or chemical reaction. Scrubbers are eel' also used to reduce the temperature of the emissions. Steam coal: Coal suitable for combustion in boilers. It is generally -TAI soft enough for easy grinding and less expensive than metallurgical or a nthraci te coal . Stevedore: Labor employed to load and unload cargo and, by transference, the organizer of this work. In many ports, stevedores only work aboard ships for the account of vessel or cargo owner, and work ashore is done by the port's labor. 141 Subbituminous coal: A low rank coal with low fixed carbon and high percentages of volatile matter and moisture. Sulfates: A class of secondary pollutants that includes acid-sulfates and neutral metallic sulfates. Sulfur: An element that appears in many fossil fuels. In combustion of the fuel the sulfur combines with oxygen to form sulfur dioxide. Sulfur dioxide: One of several forms of sulfur in the air; an air pollutant generated principally from combustion of fuels that contain sulfur. Supply: The functional connection between the price of a good and the quantity of that good that some agent is willing to sell at that price. The supply function is generally positive, or (geometrically speaking) up-sloping, meaning that as the price goes up, the quantity supplied also goes up. Swing fuel: A fuel that plays a key. role during the transition from exhaustible to inexhaustible fuels. Coal is viewed by many as the swing fuel during the transition. Synthetic fuel A fuel produced by biologically, chemically, or thermally transforming other fuels or materials. TEU: Twenty-foot equivalent unit. Standard unit for counting (equivalent) containers of various dimensions: 20 x 8 x 8 feet; in other words, a 20-foot equivalent container. Transportation sector: Includes five subsectors: 1) automobiles; 2) service trucks; 3) truck/bus/rail freight; 4) air transport; and 5) ship/barge/pipeline. 142 'KA Trampers (Tramps): Nonscheduled, nonconference vessels. Transit shed: A shed in the port area, usually in customs-bonded area, which is positioned behind the berth to receive cargo unloaded from v essel or for loading. Dist'inct from warehouse. Unit train: A system for delivering coal in whic-h a string of cars, J's", with distinctive markings and loaded to full visible capacity, is operated without service frills or stops along the way for cars to be cut in and out. Unitized caL2o: Cargo packed in units for easy presentation to vessel and port; for example, containered cargo and palletized cargo. Western coal: Can refer to all coal reserves west of the Mississippi. By Bureau of Mines definition, includes only those coalfields west of a straight line dissecting Minnesota and running to the western tip of Texas. Wyoming and Montana (subbituminous) and North Dakota (lignite) have the largest reserves. Wharfage: A charge levied by some ports on the cargo owner for the use of the port surface over which the cargo moves. "Id 143 PRIMARY PERSONNEL CONTACTED IN CNMI Government Pedro P. Tenorio Governor Pedro A. Tenorio Lt. Governor Olympio T. Borja Senate President Benigno R. Fitial Speaker of the House Herman M- Manglona Mayor, Tinian Prudencio T. Manglona Mayor, Rota Ramon S. Guerrero Special Assistant to the Governor, CNMI Gloria Hunter Special Assistant for Programs and Legislative Review George Chan Acting Special Assistant for Planning and Budget Ivan Groom Physical Planning Office Ignacio M,. Sablan Consultant to the Special Assistant to the Governor for Planning and Budget Manny T. Sablan Acting Program Coordinator, Coastal Resources Vanagement Herman Guerrero Washington Office George Ehlers Physical Planning Nick Songsong Rota, Labor and Commerce Tony Tenorio Consultant to Public Works Masahiro Nishimoto Power Plant Branch Supervisor, Department of Public Works Ben Sablan Acting Director of Public Works, Tinian Antonio C. Mona Chief of Labor Henry U. Hofschneider Tinian, Marianas Public Land Corporation William R. Concepcion Chief Planner, MPLC Jose R. Lifoifoi Chairman, Resources and Development, House of Representatives Private Sector David M. Sablan President, MICROL Corporation Alfred Santos President, Saipan Stevedore Company Don Conner Tinian, Stevedores, Inc. Jose A. Songsong Assistant Executive Director, Ports Authority 144 CONTACTS AND COAL-RELATED INDUSTRIES William D. Aldenderfer Electric Power Development Co., Ltd. Vice President 8-2 Morunouchi 1-Chome Pacific Resources, Inc. Chiyoda-ku PRI Tower Tokyo 100, Japan 733 Bishop Street P. 0. Box 68 Donald G. Fleming Honolulu, Hawaii 96810 Director of Public Relations The Port of Long Beach Alvin L. Alm 925 Harbor Plaza Director P. 0. Box 570 Harvard Energy Security Program Long Beach, California 90801 J. F. Kennedy School of Government Harvard University Maridell A. Foster 79 John F. Kennedy Street Senior Marine Biologist Cambridge, Massachusetts 02138 SEACO, Inc. 146 Hekili Street Ian Coddington Kailua, Hawaii 96734 General Manager Energy Marketing Division Japan Coal Development Company CSR, Ltd. 2nd Floor, Kokoryu-Koen Building One O'Connell Street No. 6-15, Shiba Koen, 2-Chome Sydney 2000, Australia Minato-Ku Tokyo 105, Japan Loren C. Cox Director Joint Coal Bdard Center for Energy Policy Research Sinius House Energy Laboratory 23 Macquarie Place Massachusetts Institute of Technology Sydney, NSW 2000 Cambridge, Massachusetts 02139 oll John E. Keith Department of Mineral Resources Associate Professor 8 Bent Street Resource & Environmental Economics CACA Centre Department of Economics Sydney, NSW 2000 Utah State University Logan, Utah 84322 Department of Mines Mineral House James Maragoes 41 George Street Chief of Environmental Resources Section Brisbane, Queensland 4000 Planning Branch U. S. Army Corps of Engineers Daniel A. Dreyfus Building 230 Director Ft. Shafter,'Hawaii 96859 Energy Forecasting and Analysis Gas Research Institute Kenichi Matsui 1019 19th Street, N.W. The Institute of Energy Economics Washington, D. C. 20036 Sai-Ju 10 Mori Building 1-18-1 Toranomon Minato-ku _4 Tokyo 105, Japan 145 james'H. McJenkin Rollin A. Slater Executive Director Director The Port of Long Beach SORDS-Longworth 925 Harbor Plaza McKenzie Pty, Ltd,. P. 0. Box 570 Consulting Engineers Long Beach, California 90801 3 Eden Street Crows Nest, NSW. George W. Mead f Director, Coal Marketing Soros Associates Pacific Resources, Inc. 575 Lexing@on Avenue PRI Tower New York, New Yo'rk"'10022 733 Bishop Street "S1 P. 0. Box 68 B. David Swenson Honolulu, Ha wa i i96810 Supervisor of Regional Economists Pacific Ocean Division Yasuhiro Murota U. S. Army Corps of Engineers Institute for Policy Science Building 230 Saitama University Ft. Shafter, Hawaii 96859 3-23-1 Kataseyama Fujisawa Graeme Thompson Kanagawa, J@pan 251 Chief Economist New Zealand Planning Council Gunnor Ose P. 0. Fox 5066 Vice President Wellington, New Zealand Head of Bulk Commodities Group R. S. Platona. S Ted W. Vorfeld Dronning Maude, Gate 3 President P. 0. Box 1357 Vika Thermal Engineering Corp. 01501, Norway 3049 Ualena St., Suite 210 Honolulu, Hawaii 96019 Queensland Coal Board 169 Mouy Street Jay K. Winter Brisban-e, Queensland 400 Vice President Bul k Systems, Inc. Takio Sakaguchi 1130 Panosama Drive Vice President Long Beach, California 90802 Bulk Systems, Inc. 1130 Panosama Drive Soo-Kil Yoon Long Beach, California 90802 Director General Petroleum Bureau Louis B. Schoen Ministry of Energy and Resources Group Vice President Merrok, Seoul Philipp Brothers, Inc. Korea 9100 Wil'shire Boulevard Beverly Hills, California 90212 Us br,---xrtrzAnnt of Commerce NOAA Center Library 2234 O'cuth Ko1:,so-.,-1 ,venue Charleston, Sc 25405-2413