Report Ministry of Foreign Affairs of Finland, Energy and Environment

Report

60K30025.05.q220-001 June 6, 2008

Ministry of Foreign Affairs of Finland, Energy and Environment Partnership with Central America

Peat deposits in Bocas del Toro and their use for electricity production in Panama

60K30025.05.q220-001

All rights are reserved. This document or any part thereof may not be copied or reproduced without permission in writing from Pöyry Energy Oy

Preface Energy and Environment Partnership with Central America was established as follow up to the cooperation activities of the Government of Finland with Central America. The launching of this Partnership was carried out during the United Nations World Summit on Sustainable Development in Johannesburg 2002, and the main objective of this initiative is to promote in Central America the use of renewable energy sources and clean technologies in a sustainable way, as well as to make the energy services more accessible to the rural population. The Steering Committee of the Energy and Environment Partnership with Central America accepted to finance the project to study peat deposits and their use in eelectricity generation in Bocas del Toro, Panama. The project has been carried out by Pöyry Energy Oy, together with the local counterpart, Autoridad Nacional del Ambiente (ANAM). The project report “Peat deposits in Bocas del Toro and their use for electricity production in Panama” (60K30025.05.q220-001), has been prepared by Mr. Aimo Vitikka and Mr. Pentti Leino from Pöyry Energy Oy. The peat geologist, Dr. Hannu Pajunen from the Geological Survey of Finland has reviewed peat resource inventories in the project area.

The project team, Mr. Leino, Mr. Vitikka and Mr. Pajunen visited Panama from 7th to 14th May, 2008. The purpose of the visit was to meet relevant stakeholders, to be acquainted with the Panamanian energy system and energy policy, to collect data, including maps, to collect peat samples from Changuinola. Due to the security situation in the project region during visit, samples could not be collected and therefore peat geologist Dr. Hannu Pajunen concentrated on analyzing results of the previous investigations.

Institutions, authorities and companies visited included CATHALAC, Empresa de Transmision Electrica, S.A. Reunion con la Autoridad Nacional del Ambiente, Ministerio de Comercio e Industria, Comision de Politica Energetica and Reunion con el Promotor de Proyecto, Changuinola PEAT S.A./Lakas Group. Senior Scientist, Project Manager, Ms. Lilian Suarez from Cathalac coordinated activities during the trip, while Cooperation Officer, Ms. Roxana Segundo took care of translation, when needed. Pöyry Energy will acknowledge Ms. Lilian Suarez, and Ms. Ms. Roxana Segundo, as well as Ms. Darysbeth Martinez, and other personnel of ANAM for a good cooperation during the project work in Panama.

Pöyry Energy Oy

Espoo, Finland

6.6.2008

2 ABBREVIATIONS ANAM Autoridad Nacional del Ambiente Btu British thermal unit CATHALAC Water Center for the Humid Tropics of Latin America and the Caribbean ETESA Empresa de Transmision Electrica, S.A. GDP Gross Domestic Product Gcal Giga Calorie GJ Giga Joule GPS Global Positioning System GSF Geological Survey of Finland GWh Giga Watt hour H1-H10 Decomposition degree (Von Post) IHRE Instituto de Recursos Hidraulicos y Electrificacion MC Moisture content MJ Mega Joule MWh Mega Watt hour SNT Sistema Nacional de Transmisión TWh Tera Watt hour Toe Ton of oil equivalent TPES Total primary energy supply

CONVERSION FACTORS

Toe MWh GJ Gcal toe 1 11.63 41.868 10 MWh 0.086 1 3.6 0.86 GJ 0.02388 0.27788 1 0.2388 Gcal 0.1 1.163 4.1868 1 PREFIX k = kilo = 1 000 M = mega = 1 000 000 G = giga = 1 000 000 000 T = tera = 1 000 000 000 000

CALORIFIC VALUES OF VARIOUS ENERGY SOURCES

Fuels Unit GJ MWh toe Heavy fuel oil T 40.60 11.278 0.970 Light fuel oil T 42.50 11,806 1.015 Diesel oil T 41.50 11.528 0.991 Hard coal T 25.21 7.003 0.602 Lignite T 11.30 3.139 0.270 Natural gas 1000 m3 36.00 10.00 0.860 Firewood T 12.00 3.330 0.300 Charcoal T 29.00 8.060 0.710 Wood chips Loose- m3 4.60 0.903 0.078 Forest residues T 8.64 2.400 0.206 Milled peat (45% MC) T 10.30 2.86 0.250 Sod peat (30% MC) T 13.80 3.83 0.340

1 Summary

Energy sector development in Panama The restructuring and privatization of Panama's state-owned electricity company IRHE was completed in 1998 with the sale of four electricity generation companies. The Government of Panama retained ownership and control of the transmission company, ETESA. Transmission network has open access and regulated rates. ETESA has been authorized by the Ente Regulador de los Servicios Públicos to provide the public service of high voltage electric energy transmission through a concession contract Panama has negligible hydrocarbon energy reserves and imports over 70% of its energy. Virtually all oil is imported, and the country neither produces nor consumes natural gas. The total primary energy supply is heavily dependent on exported oil; the proportion of oil is about 72%. Electricity consumption in Panama has increased on average more than 5% per year during the last decades, amounting 5.8 TWh (2006). The most important consumption sector is service sector, it accounts for 50% of all electricity consumption. The proportion of industry is quite small, only 5% of total electricity consumption. Some 60% of electricity is generated in hydropower plants, and 40% in oil-fired thermal power plants. Due to the increasing price of fuel oil, there will be a need to convert oil- fired condensing power generation to alternative fuels e.g. to coal and peat in Panama.

Bocas del Toro province, the target area for peat production The province of Bocas del Toro is situated in the north-western part of Panama, on the Caribbean coast. The population of the province is 110,585, i.e. 3.3% of the total population in Panama (in 2007). The capital of the province, Bocas del Toro, is located on the island of Colon. The main activity in the province is connected to the primary sector, which accounts for the 70% of the GDP of the province. Bocas del Toro province is the main area in Panama, which has potential to develop peat production. The areas of biggest interest are the deposits in the towns of Changuinola and Almirante, and another close to the village of Chiriquì Grande. Most of the studies have been carried out in Changuinola – Almirante site. The results encouraged the company Changuinola PEAT S.A. to request two mining concessions to evaluate both the Changuinola – Almirante and the Chiriquì Grande regions, and estimate their energetic potential.

Peat resources and utilization in Changuinola

The Changuinola peat deposit was reported to cover more than 8,200 ha (Cohen and others 1990). According to Phillips and Bustin (1996a) about 6,000 ha is located onshore and 2,000 ha offshore beneath the shallow marine sediments of Almirante Bay. When selecting the most potential area for peat production, the offshore section must be excluded.

The peat deposit can be divided to the western and eastern sections. In the west peat is good for fuel whereas in the east peat quality is poor. The eastern section must be excluded because of poor peat quality. The remaining 3,800 ha includes the domed

2 western section. This peat dome is eccentric with the highest surface elevations in the south-west. In the north-east, surface elevation is lower and the area borders to Caribbean beach barrier. Because of lower surface elevation, the north-eastern part of the western section, covering approximately 800 ha, should be excluded.

Compared to other coastal areas in tropical environment, the peat is better than Jamaican, Senegalese, or Sri Lankan peat but not quite as good as Indonesian peat. The western section of Changuinola peat deposit and the Mempawah peat deposit in Indonesia resemble each other because both of them are out of the reach of sea water or clastic deposition. In spite of the huge difference in environmental setting, the quality of Changuinola peat is close to that of the Finnish peat.

Comparison of water content, dry bulk density, ash content and sulphur content in certain subtropical/tropical coastal areas and in Finland

Area Water content Dry bulk density Ash content Sulphur content (%) (kg/m3) (%) (%) Changuinola peat deposit1) 92.7 n.a. 3.3 0.23 Jamaica, Negril Morass2) 90.0 n.a. 16.0 1.6 Senegal, Niayes3) 87.6 125 16.0 Sri Lanka, Muthurajawela 89.4 82 14.9 4.6 Indonesia, Mempawah 90.0 95 0.39 0.13 Finland, average4) 90.8 87 3.4 0.20 1) Phillips and Bustin 1996a, western section, 2) Blackwood & Robinson 1985, 3) Korpijaakko 1985, 4) Virtanen et al. 2003

Los Alamos study considered both conventional peat production method, i.e. milled peat method, as well as wet mining method to be applied in Changuinola – Almirante. Milled peat production assumed that peat with a moisture content of 50% would be transported by truck to the power plant located next to the bog. The assessment of the wet mining process was based on a report done by Wheellabrator-Frye for the state of Alaska on wet mining peat for use in a peat-derived-fuel production facility. Los Alamos study concluded in 1990 that considering the projected electricity demand in Changuinola, a 30 MWe power plant size would be optimal. The boiler types recommended were either a fluidized bed boiler or a conventional suspension boiler. Annual peat consumption was estimated at 236,000 tons. The location of the power plant was defined near the peat bog to minimize transportation cost. Since the studies in 1980s and beginning of 1990s, the Changuinola - Almirante peat deposit, called San San - Pond Sak has been included in the Ramsar List of Wetlands of International Importance (9th June 1993). Due to the fact that Changuinola- Almirante peat deposit is currently a protected area of international importance, the Consultant cannot recommend peat production activities on the site.

3 Peat resources and utilization in Chiriqui Grande

The Chiriqui Grande peat deposit is located at the coastal plain east of the Chiriqui Grande village. Chiriqui Lagoon borders the deposit to the north and foothills of the mountain range to the south. There are numerous rivers flowing through the swamp. Cohen and others (1990) mention this as a potential deposit but they did not survey it. Some surveys have been carried out later, but the results are not public and not at Consultant’s disposal. According to the topographic map (1:50000) the swamp covers approximately 15 000 ha. The deposit may be several metres deep.

Changuinola PEAT S.A carried out peat investigations on Chiriquì Grande peat deposit from 1998 to 2002. Altogether 177 samples were taken and analysed. Peat quality proved to be approximately the same quality as in Changuinola – Almirante peat deposit. However, the results of the investigation made by Changuinola PEAT S.A. are confidential and they were not available for this study.

Changuinola PEAT S.A has decided to start wet mining of peat on Chiriquì Grande peatlands next year. Peat is envisaged to be both raw material for peat pellets and fuel for planned power plant (356 MWe) in Colon. Peat is envisaged to be transported by barges from Chiriquì to Colon. Colón is a sea port city on the Caribbean Sea coast of Panama. It is near the Atlantic entrance to the Panama Canal. The city is the capital of Panama's Colón Province and has traditionally been known as Panama's second city.

Peat lands in Chiriquì Grande region are not protected; therefore there are no obvious environmental obstacles to develop peat production and the use of peat as alternative energy resource in Panama.

4 Contents

1 INTRODUCTION...... 7

2 ECONOMIC DEVELOPMENT IN PANAMA ...... 7

3 ENERGY SECTOR IN PANAMA...... 8

3.1 Primary energy supply ...... 8 3.2 Electricity demand ...... 9 3.3 Electricity generation ...... 10 3.4 Transmission and distribution...... 12 3.5 Review of electricity market...... 13

4 BOCAS DEL TORO PROVINCE...... 15

5 PEAT LAND SURVEY IN BOCAS DEL TORO...... 17

5.1 Background ...... 17 5.2 The Changuinola peat deposit...... 18 5.2.1 Extent and depth...... 18 5.2.2 Topography and gravity drainage ...... 19 5.2.3 Vegetation ...... 20 5.2.4 Peat types ...... 22 5.2.5 Decomposition degree...... 23 5.2.6 Water content and dry bulk density ...... 24 5.2.7 Ash content ...... 24 5.2.8 Sulphur content ...... 25 5.2.9 Calorific value...... 25 5.2.10 Peat quality compared to other areas ...... 25 5.2.11 Selection of the most potential area ...... 25 5.2.12 Needs for additional data ...... 27 5.3 The Chiriqui Grande Peat Deposit ...... 28 5.3.1 Location and extent...... 28 5.3.2 Peat properties...... 29 5.3.3 Needs for additional data ...... 29 5.4 Conclusions about the peat deposits ...... 30

6 ASSESSMENT OF APPROPRIATE PEAT PRODUCTION METHODS IN BOCAS DEL TORO REGION ...... 31

6.1 Conventional peat production methods...... 31 6.1.1 Bog preparation...... 31 6.1.2 Milled peat production technology ...... 32 6.1.3 Sod peat production technology...... 37 6.2 Wet mining method...... 37 6.3 Peat transportation...... 38 6.4 Production method, Los Alamos study...... 39 6.5 Production method; Changuinola Peat S.A...... 39

5 7 ENVIRONMENTAL ASPECTS ...... 39

7.1 Changuinola - Almirante peat deposit ...... 39 7.2 Chiriqui Grande peat deposit ...... 41

8 ALTERNATIVE LOCATIONS FOR THE POWER PLANT AND POTENTIAL SIZE ...... 42

8.1 Changuinola and Almirante ...... 42 8.2 The town of David and its surroundings...... 42 8.3 Colon...... 43

TABLES

Table 3-1. Installed capacity and gross generation in 2006...... 11 Table 3-2. Length of the distribution lines by distribution company in 2006...... 13 Table 3-3. Number of clients of the distribution companies in 2006...... 13 Table 4-1. Population characteristics in Bocas del Toro and Panama according to the Census 2000. 15 Table 5-1. Comparison of water content, dry bulk density, ash content and sulphur content in certain subtropical/tropical coastal areas and in Finland ...... 25

FIGURES

Figure 2-1. Sectoral origin of the GDP in Panama (current prices, USD million)...... 7 Figure 3-1. Development of the total primary energy supply (TPES) in Panama...... 8 Figure 3-2. Development of electricity demand from 1970...... 9 Figure 3-3. Electricity consumption by sector in Panama in 2006, GWh...... 9 Figure 3-4. Electricity demand scenarios up to the year 2021...... 10 Figure 3-5. Development of electricity generation capacity from 1986...... 11 Figure 3-6. Electricity grid in Panama...... 12 Figure 4-1. Location of the Bocas Del Toro province...... 16 Figure 5-1. Location of the Changuinola and Chiriqui Grande peat deposits...... 17 Figure 5-2. The Changuinola peat deposit...... 18 Figure 5-3. A cross-section running through the western section in SW – NE direction. The cross- section indicates the vegetation zones, the peat types and the decomposition degree of peat (Phillips and Bustin 1996a). The upper part of the deposit is possible to drain by gravity...... 20 Figure 5-4. Vegetation zones of the Changuinola peat deposit (Phillips and others 1997)...... 21 Figure 5-5. A schematic cross-section indicating vegetation zones from the central bog-plain to the mangrove zone (reworked from Phillips and others 1997)...... 22 Figure 5-6. The decomposition degree decreases with increasing wetness. Fibric peat is the most common in the centre whereas sapric peat in the margins. (F = fibric, H = hemic, S = sapric; Cohen and others 1989)...... 24 Figure 5-7. Selection of the area best suitable for conventional fuel peat production...... 26 Figure 5-8. The Chiriqui Grande peat deposit...... 28 Figure 5-9. The Chiriqui Grande peat deposit, a satellite image...... 29 Figure 6-1 Surface profile of a peat production bog ...... 32 Figure 6-2. Milled peat production field...... 33 Figure 6-3. Production miller...... 33 Figure 6-4. Milled peat harrower...... 34 Figure 6-5. Milled peat ridger...... 35

6 Figure 6-6. Milled peat loader...... 35 Figure 6-7. Peat trailer...... 36 Figure 6-8. An example of a stockpile area on a production field...... 36 Figure 6-9. A cutter head suction dredge, used in wet mining in Burundi...... 38 Figure 6-10. Peat loading into a truck by a wheel loader...... 38 Figure 7-1. Changuinola- Almirante peat deposit...... 40 Figure 7-2. Chriqui Grande peat deposit...... 41 Figure 8-1. Pan-American Highway ...... 42 Figure 8-2. Location of Colon and Bocas del Toro...... 43

ANNEXES

Annex 1. The Electricity Sector In Panama

REFERENCES

1 INTRODUCTION

Peat is an important source for power plants in many different parts of the world, but it has never been considered in centre America before. However, the studies already carried out in Panama during 1980s and 1990s about peat’s deposits indicate that peat could result as a new significant energy source for the country.

This Project presented to the Energy and Environment Partnership with Central America includes an elaboration of the Study by Los Alamos in 1990 for demonstrating the possibility of construction of a peat-fired power plant located in Bocas Del Toro province. The project could have an important social and economical impact on the people in the area in terms of improving employment and income.

General objective of the project, presented by the Energy and Environment Partnership with Central America, was to carry out a technical assessment of peat as an alternative power generation option in Bocas del Toro in Panama. Specific objectives of the work were to assess peat quantity and quality for energy use in the region, peat production methods to be applied and possible location sites for the power plant.

2 ECONOMIC DEVELOPMENT IN PANAMA Panama is a relatively small country with a land area of 75,990 km2 and a population of 3.3 million. Because of its key geographic location, Panama's dollarized economy rests primarily on a well-developed services sector which accounts for about three- fourths of GDP.

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Figure 2-1. Sectoral origin of the GDP in Panama (current prices, USD million).

8 Services include e.g. operating the Panama Canal, banking, the Colon Free Trade Zone, Public Utilities, insurance, container ports, flagship registry, and tourism. Agriculture includes also mining. Major agricultural products are bananas, rice, corn, coffee, sugarcane, vegetables; livestock; shrimp. Important manufacturing branches are construction, brewing, cement and other construction materials and sugar milling.

The high levels of Panamanian trade are in large part from the Colón Free Trade Zone, the largest free trade zone in the Western Hemisphere. The zone accounts for about 90% of Panama's exports and over 60% of its imports.

Economic growth is expected to be bolstered by the Panama Canal expansion project that began in 2007 and should be completed by 2014. The expansion will more than double the Canal's capacity, enabling it to accommodate ships that are now too large to transverse the transoceanic crossway.

3 ENERGY SECTOR IN PANAMA

3.1 Primary energy supply

Panama has negligible hydrocarbon energy reserves and imports over 70% of its energy. Virtually all oil is imported, and the country neither produces nor consumes natural gas. Due to the less energy intensive production structure, overall energy demand is quite low (i.e. 0.80 toe/capita) compared with the industrialized countries of similar size. However, primary energy supply in Panama has increased, on average about 1% per year from 1.7 Mtoe in 1971 to 2.6 Mtoe in 2005. The total primary energy supply (TPES) is heavily dependent on exported oil, the proportion of oil is about 72%, the proportion of renewables and waste is about 16% and the proportion of hydro is about 12%.

Source:IEA

9 3.2 Electricity demand

Electricity consumption in Panama has increased on average more than 5% per year more from 1970 to 2006 (i.e. from 0.8 TWh to 5.8 TWh).

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Figure 3-2. Development of electricity demand from 1970. Electricity consumption amounted to 5.8 TWh in 2006, i.e. 1,800 kWh/capita. The most important consumption sectors are private and public services, they account for 50% of all electricity consumption. The proportion of residential sector is 27%. The proportion of industry is quite small, only 5% of total electricity consumption (in 2006).

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Figure 3-3. Electricity consumption by sector in Panama in 2006, GWh.

10 Panamanian energy authorities have made two electricity demand scenarios, moderate and optimistic up to the year 2021. Electricity demand is expected to increase quite rapidly; according to the moderate scenario, electricity demand would reach 12.3 TWh in 2021, and 13.1 TWh according to the optimistic scenario, respectively.

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Figure 3-4. Electricity demand scenarios up to the year 2021.

3.3 Electricity generation Installed generation capacity has increased from 854 MW in 1986 to 1,540 MW in 2006. New hydro capacity has been commissioned late 1990s, i.e. in 1999 (62 MW) and in 2002 (86 MW) and in 2003 (130 MW). Major increase in thermal capacity has been parallel to hydropower, i.e. in 1999 (160 MW) and in 2002 (85 MW). Thermal capacity is almost entirely based on fuel oil. Coal is not used as a power plant fuel, so far.

Panamanian generation system has considerably reserve capacity, because maximum capacity demand is currently about 1,000 MW. Maximum capacity demand increased from 446 MW in 1986 to 971 MW in 2006. The firm power of hydroelectric plants, according to the National Dispatch Center (“Centro Nacional de Despacho”), is of approximately 583 megawatts.

According to the moderate electricity demand scenario, maximum capacity demand would increase to 1,969 MW in 2021, and to 2,057 MW according to the optimistic scenario, respectively.

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Figure 3-5. Development of electricity generation capacity from 1986.

Gross electricity generation was 6.0 TWh in 2006. 59% of electricity was generated in hydropower plants, 41% was generated in oil-fired thermal power plants (Table 3.1). Due to the increasing price of fuel oil, there is a need to convert oil-fired condensing power generation to alternative fuels e.g. to coal and peat in Panama. Electricity exports and imports were quite small, exports amounted to 83 GWh and imports 34 GWh in 2006.

Table 3-1. Installed capacity and gross generation in 2006.

Installed Gross capacity generation MW % GWh % Hydropower Fortuna 300.00 19 % 1483.33 25 % AES Panama 475.98 31 % 1694.39 28 % Edemet Edechi 12.52 1 % 59.58 1 % Hidro Panama 2..0 0 % 9.79 0 % Arkapal 0.67 0 % 1.47 0 % ACP 60.00 4 % 322.42 5 % Hidrocandela 0.53 0 % 1.75 0 % Subtotal 852.50 55 % 3572.73 59 % Thermal power Bahia las Minas 280.00 18 % 725.8 12 % Pan Am 99.00 6 % 698.42 12 % Pedregal Power 55.35 4 % 422.82 7 % Copesa 46.00 3 % 11.38 0 % AES Panama 42.80 3 % 0.3 0 % Edemet Edechi 10.00 1 % 0.13 0 % Ternor 12.59 1 % 0.24 0 % ACP 119.80 8 % 556.25 9 % Bocas Fruit Company 22.80 1 % 34.83 1 % Subtotal 688.34 45 % 2450.17 41 % TOTAL 1540.84 100 % 6022.90 100 % Copyright © Pöyry Energy Oy 60K30025.05.q220-001

12 3.4 Transmission and distribution The transmission system consists of the high voltage transmission lines with voltage equal or higher than 115 kilowatts, sub-stations, transformers and related electric equipment necessary for the transportation of electric energy from the point of delivery at the generator to the reception point of the distributor or Major Customer; it includes international interconnections and all the necessary assets required for its proper operation.

The transmission system, SNT (Sistema Nacional de Transmisión) of ETESA (Empresa de Transmisión Eléctrica, S.A.) consists basically of 10 sections of 230 kilowatt lines that go from the Hydroelectric Station Bayano to the sub-station Progreso near the border of the Republic of Costa Rica and through the related sub- stations. It also has 115KV lines, one section that goes from the Bahía Las Minas Thermoelectric Station in Colón to the sub-station Panama I, and another section that goes from the Caldera substation to the Hydroelectric Stations La Estrella and Los Valles.

Figure 3-6. Electricity grid in Panama.

At the beginning of 2007 an Interconnection Contract to the Electric Transmission System was entered into by the companies AES Changuinola, S.A. and ETESA. The company AES Changuinola, S.A. is developing the Changuinola hydroelectric Project with an installed capacity of 222.5 MW, which enters in operation in 2010 allowing increasing in the supply of national electric generation.

13 ETESA began in November 2005 the construction of the 230 kV line of Bocas del Toro to guarantee the development of the hydroelectric, and possibly peat potential in the region. According to ETESA, the 230 kV transmission line is expected to be in operation by the end of 2008.

Distribution system in Panama consists of 115 – 13.8 kV lines, totalling 5,534 km, 13.2 – 2.4 kV lines, totalling 7,790 km and 600 V lines totalling 25,665 km. Three companies take care of distribution i.e. Edemet, Electra and Edechi. Edemet is the largest distribution company in terms of the length of the lines.

Table 3-2. Length of the distribution lines by distribution company in 2006.

Company 115-13.8 kV 13.2-2.4 kV 600 V Total Edemet 3,436 3,930 5,483 12,849 Electra 342 2,967 4,865 8,174 Edechi 1756 893 1,993 4,642 Total 5,534 7,790 12,341 25,665 Electra s the largest distribution company in terms of the number of clients. The number of new clients was increasing 5% from the year 2005 to 2006. Edechi takes care of electricity distribution in Bocas del Toro province.

Table 3-3. Number of clients of the distribution companies in 2006.

Company 2005 2006 Edemet 290,380 301,394 Electra 288,111 304,846 Edechi 87,539 90,790 Total 666,030 697,030

3.5 Review of electricity market

Panama restructured its electric sector, following the privatization of the Instituto de Recursos Hidraulicos y Electrificacion (IRHE), which for years controlled the generation, transmission and distribution of electricity in Panama.

The restructuring and privatization of Panama's state-owned electricity company IRHE was completed in 1998 with the sale of four electricity generation companies. The companies were created as a result of the restructuring of IRHE earlier in 1998, which accompanied the establishment of a competitive electricity generation market.

x Forty-nine percent of the shares of Empresa de Generacion Electrica Fortuna were awarded to Americas Generation Corporation, which is a consortium formed by Coastal Power and Hydro-Quebec. El Paso Corporation, which possessed along with Hydro Québec the 49% of the shares of Fortuna, has sold its participation in the plant in Panama to Enel.

x Forty-nine percent of the shares of Empresa de Generacion Electrica Bayano and Empresa de Generacion Electrica Chiriqui were sold to AES Corporation.

14 x Fifty-one percent of the shares of Empresa de Generacion Electrica Bahia Las Minas were awarded to Enron International, and later on to Suez Energy International (Belgium) In September 1998, the three electricity distribution companies were sold:

x Fifty-one percent of the shares of Empresa de Distribucion Electrica Metro- Oeste and of Empresa de Distribucion Electrica Chiriqui were sold to Union Fenosa, a power group from Spain.

x Fifty-one percent of Empresa de Distribucion Electrica Noreste was sold to Constellation Power, a wholly owned subsidiary of Baltimore Gas & Electric.

A regulatory body (Ente Regulador) was created to regulate the electric sector.

The Government of Panama retained ownership and control of the transmission company, ETESA. Transmission network has open access and regulated rates. ETESA has been authorized by the Ente Regulador de los Servicios Públicos (National Authority for the Regulation of Public Services) to provide the public service of high voltage electric energy transmission through a concession contract in force until the year 2025.

ETESA must allow the non-discriminatory access of third parties to the channels of transportation and transformation of the system, under the conditions agreed with the market agents (their customers) and according to the terms established by Act No. 6 of February 1997, its Regulations and the Regulations for Operation.

In order to have access to the chain, the market agents must submit an application to ETESA which evaluates it and after authorizes the connection having the right to condition this approval for the accomplishment of additional investments by the Agent in order to avoid the negative effects that the agent's connection might cause. The Regulations described under Act.No.6, Enactment N° 22 of June 1998 and the Regulations for Operation, establish the procedure to submit the application.

ETESA is responsible for the inspection of the new installations and complementary works, with the help of its own staff or through consultants. The inspection will be paid at the cost of the agent owner.

The market agents who use the Transmission System are subject to regulated rates and the charges include the payment of the connection services and the use of the main transmission network.

Charges for the connection service: These charges show the costs of the assets used for the connection of a user when they are intended for individual use and the assets remain the property of ETESA.

Charges for the Use of the Transmission System (CUST): These charges show the cost assigned to every user for the use of the main transmission system; the main transmission system refers to the equipments that belongs to ETESA and that is used by two or more market agents. The Regulation Rate is revised every four years.

4 BOCAS DEL TORO PROVINCE The province of Bocas del Toro is situated in the north-western part of Panama, on the Caribbean coast. Its extension is 8,745 kilometers and it is formed by 9 principal islands. A variation of the tidal is much lower on the Caribbean coast than on the Pacific coast. Tidal range about 70 centimetres between high and low water on the Caribbean coast whereas the range is over 700 centimetres on the Pacific coast.

The cycle of rainfall is determined primarily by two factors: moisture from the Caribbean, which is transported by north and northeast winds prevailing during most of the year, and the continental divide, which acts as a rainshield for the Pacific lowlands. In general, rainfall is much heavier on the Caribbean than on the Pacific side of the continental divide. Although rainy-season thunderstorms are common, the country is outside the hurricane track. Rainfall varies regionally from less than 1,300 mm to more than 3,000 mm per year. Almost all of the rain falls during the rainy season, which is usually from April to December, but varies in length from seven to nine months.

The population of the province is 110,585, i.e. 3.3% of the total population in Panama (in 2007). The capital of the province, Bocas del Toro, is located on the island of Colon. Household size is larger and population is younger in Bocas del Toro compared with the national average. In addition, the proportion of male population in relation to female population is clearly higher in Bocas del Toro compared with the national average. Illiterate rate in Bocas del Toro is 16.9%, whereas the national average is 7.6%.

Table 4-1. Population characteristics in Bocas del Toro and Panama according to the Census 2000. Bocas del Toro Panama Household size, people 5.2 4.1 Population under 15 years, % 43.2 32.0 Population 15 - 64 years, % 54.1 62.0 Population over 64 years, % 2.7 6.0 Male/Female population 109.4 101.8 Median age 18 25 Illitarate, % 16.9 7.6

The province’s population is divided in three defined different human groups: the native indigenous people, the population with Antillean origin and the colons. 38% of the total population of the province is made of 3 different ethnic groups: Ngöbe – Buglè, the Teribes and the Bokotas.

Figure 4-1. Location of the Bocas Del Toro province.

Bocas del Toro province consists of three districts:

x Bocas del Toro, including Bocas del Toro, Bastimentos, Cauchero, Punta Laurel and Tierra Oscura, with a total surface area of 430 km2, established in 1855

x Changuinola, including Changuinola, Almirante, Guabito, Teribe, Valle del Risco, El Empalme and Las Tablas with a total surface area of 208 km2, established in 1903

x Chiriqui Grande, with a surface area of 4,005 km2, established in 1970

17 The main activity of the region is connected to the primary sector, which accounts for the 70% of the GDP of the province, distinguished especially for the production of bananas, the most important agricultural product. 65% of the active population are involved in agriculture and cattle rising.

Bocas del Toro is the province with one of the smallest number of electricity clients of the distribution companies. The distribution company, Edechi provides electricity in the province. The number of clients totalled 2,400, which is 2.6% of Edechi’s total number of clients (90,790 in the end of 2006).

5 PEAT LAND SURVEY IN BOCAS DEL TORO

5.1 Background In the Caribbean coast, Cohen and others (1990) located two peatland areas: one near to Changuinola and another near to Chiriqui Grande (Fig. 5.1.).

Figure 5-1. Location of the Changuinola and Chiriqui Grande peat deposits.

Near Changuinola, three peatland areas, totalling 15,600 ha, were surveyed preliminarily. The central part (later the Changuinola peat deposit) indicated the highest potential for peat production. Since its discovery in 1985, the deposit has been subject to several studies (e.g. Cohen and others 1989, 1990, Phillips and others 1994, Phillips and Bustin 1996a, 1996b, Phillips and others 1997, Troxler 2007).

The Chiriqui Grande peat deposit has been surveyed in some extent, but reports or scientific publications are not available.

The peat inventory review is based on existing public data and on discussions in Panama, May 2008.

18 5.2 The Changuinola peat deposit

5.2.1 Extent and depth

The Changuinola River borders the peat deposit to the north-west, a Caribbean beach-barrier to the north-east, the Almirante Bay to the south-east and the foothills of a mountain range to the south-west (Fig. 5. 2.).

Figure 5-2. The Changuinola peat deposit.

19 In 1990, the Changuinola peat deposit was estimated to cover 8,200 ha with an average thickness of 8 m (Cohen and others 1990). Later the average thickness was estimated at 6.5 m and the onshore proportion of peat deposit at 6000 ha (Phillips & Bustin 1996a). About 40% of the peat deposit is below the present sea level.

5.2.2 Topography and gravity drainage

The topographic data is very limited and maps with surface counters have not been possible to draw. The swamp surface was estimated to be raised, because the vegetation pattern was zoned and concentric. Later raised surface was confirmed by levelling. According to the topographic data given by Phillips and others (1997), the maximum elevation of the deposit is 6.67 m above mean sea level and the minimum elevation 6.73 m below mean sea level. The data consists of a levelling traverse running in NE – SW direction.

Using gravity, the deposit can be drained to the depth of mean sea level + 1.5 m. Thus, at the highest section of the levelling traverse about four metres, measured from the peatland surface, can be drained by gravity (Fig. 5.3). The depth of peat deposit has to increase a site depended minimum to cover bog preparation costs. If we suppose that the thickness of usable peat deposit has to be at least one and half metres, the conventional peat production is possible in those areas where surface elevation exceeds mean sea level + 3 m.

Figure 5-3. A cross-section running through the western section in SW – NE direction. The cross-section indicates the vegetation zones, the peat types and the decomposition degree of peat (Phillips and Bustin 1996a). The upper part of the deposit is possible to drain by gravity.

5.2.3 Vegetation

The peatland can be divided into two sections. In the west, the peat deposit is domed and its vegetation depended on precipitation whereas in the east, the deposit is affected by salty sea water. The origin of water affects both vegetation and peat quality.

In the west, dense tropical forest vegetation occurs in the marginal slope but the central area supports low herbaceous plants such as sedges, grasses, peat moss, ferns, and other plants that can exist in wet, nutrient-poor conditions (Cohen and others 1989). Phillips and others (1997) have made a more detailed vegetation mapping. They divided the mire into the following vegetation zones (phasic communities) from the margin to the centre: (1) Rhizophora mangle mangrove swamp, (2) mixed back-mangrove swamp, (3) Raphia taedigera palm swamp, (4) mixed forest swamp, (5) Campnosperma panamensis forest swamp, (6) sawgrass ± stunted forest swamp

21 and (7) Myrica – Gyrilla bog-plain. Areal distribution of these communities is shown in Fig. 5. 4 and a schematic cross-section in Fig. 5.5.

Figure 5-4. Vegetation zones of the Changuinola peat deposit (Phillips and others 1997).

Rhizophora mangle swamp occurs as a narrow zone in the sheltered shoreline of Almirante Bay. The vegetation consists of Rhizophora mangle, Acrostichum aureum, Raphia taedigera, unidentified epiphyte ferns and salt-tolerant grasses and sedges. The dominant arborescent species is R. mangle. Raphia palm is common on the shoreward side of the mangrove fringe. Back-mangrove forest swamp is a more complex community occurring behind the mangrove swamp and along the banks of black-water creeks. Vegetation varies from salt tolerant to non-salt tolerant. Trees dominate but open sawgrass areas may occur behind the mangrove fringe.

Raphia taedigera palm swamp covers extensive areas in the peatland margins. Raphia forms monospecific stands and is an important peat-forming plant. According to current believe, the palm was introduced from Africa some 450 years ago. However, Phillips and others (1997) have found macroscopic plant remains at the depth of three metres and Raphia pollen at the depth of 7.8 m. This indicates that Raphia palm has been part of Panamanian vegetation at least three thousand years.

The mixed forest swamp occurs in the marginal areas, usually peatland side of the Raphia palm forest. The dominating species include Raphia, Campnosperma, Symphonia, and Euterpe. Two or three of these species dominate but the combination of trees varies from site to site. The most common and distinctive tree is c. 30 m high Symphonia. It does not form monospecific stands.

As the previous community, Campnosperma panamensis forest swamp occur in the marginal areas. Campnosperma panamensis form monospecific stands with unbroken canopy. Phillips and others (1997) have compared aerial photos from 1954, 1981 and 1992 and observed that these stands develop rapidly but may be short-lived. The understory vegetation is sparse and open including the shrubs Miconia, Tococa and Ardisia and the herb Sagittaria.

Swagrass / stunted forest swamp is a transition zone between the closed forest swamp, described above, and the bog plain. The sedge vegetation is diverse. The most common trees are Myrica mexicana and Cyrilla racemiflora and shrubs Ilex guianensis and Chrysobalanus icaco. Ferns and moss grow among sedges.

Figure 5-5. A schematic cross-section indicating vegetation zones from the central bog- plain to the mangrove zone (reworked from Phillips and others 1997)

Myrica – Cyrilla bog-plain covers the nutrient-poor central region. Dominant vegetation consists of stunted sedges, grasses (Sagittaria lancifolia), ferns and moss. Arborescent vegetation is stunted and consists of Myrica mexicana and Cyrilla racemiflora. Stunted Campnosperma and shrubby Symphonia may occur.

5.2.4 Peat types

In wet, oxygen-poor conditions, plant material decays partially and the undecomposed part is accumulated as peat. Usually, the most important peat- forming plants groups are moss, sedges and trees. In the Changuinola peatland, some moss has been observed but as elsewhere in tropical environment, it cannot be considered as a peat-forming plant. Thus, trees and sedges are the most important peat-forming plant groups.

23 In undisturbed deposits, the oldest peat occurs at the base wherefrom the age of the peat degreases with decreasing depth. In stratified deposits younger layers cover older ones, and currently observed changes in peat types indicate ancient changes in peat-forming vegetation.

According to its botanical origin, Cohen and others (1989) has classified the Changuinola peat as: (1) freshwater swamp-forest peat, (2) sedge – grass – fern peat, (3) Sagittaria et al. peat, (4) Nymphea - Sagittaria peat, (5) marine Rhizophora (mangrove) peat, and (6) transitional brackish-water peat. The classification was based on microscopic analysis.

The basal part of peat deposit consists of freshwater swamp-forest peat. In marginal areas the proportion of swamp-forest peat increases and it may form main part of the deposit. The most common peat types are sedge – grass – fern peat and Sagittaria et al. peat. These peat types represent freshwater, open marsh settings. Nymphea – Sagittaria peat indicates more watery conditions. Rhizophora and brackish-water peat has been found only in the eastern part, adjacent to the Bay Almirante. These peat types indicate the effect of sea water.

5.2.5 Decomposition degree

The decomposition degree of peat may vary from undecomposed to completely decomposed. The degree increases with decreasing proportion of recognisable plant remains. It can be measured by using American, Swedish or Russian methods. In Changuinola, Cohen and others (1990) have used the American classification (fibric, hemic, sapric).

Hydrology is the main factor controlling the decay process and is especially vital in tropical environment. If the water level is high and remains constant year round, plant material accumulates at low rate of decomposition. In contrast, low or seasonally variable water level results in more decomposed peat.

Data from the Changuinola deposit indicate decreasing decomposition rates with increasing wetness. The proportion of fibric peat increases and that of sapric peat decreases with increasing wetness (Fig. 5.6). Thus, swamp-forest peat, occurring in marginal areas, is the most decomposed peat type, whereas Sagittaria and Nymphea - Sagittaria peats, typical for the domed central section, are the least decomposed.

Figure 5-6. The decomposition degree decreases with increasing wetness. Fibric peat is the most common in the centre whereas sapric peat in the margins. (F = fibric, H = hemic, S = sapric; Cohen and others 1989).

5.2.6 Water content and dry bulk density

Cohen and others (1990) have done only a few water content analyses from the Changuinola peat deposit. Results vary from 92 to 95% but they predict a more likely range from 85 to 98%. According to Phillips and Bustin (1996a) the average water content for the western section is 92.7%, for the eastern section 84.3% and for mangrove peats 84.5%. Their data is more comprehensive including 255 samples. Cohen and others (1990) estimate an average dry bulk density of 100 kg/m3 for the central region and about 150 kg/m3 for the margins.

Compared to site descriptions, estimated dry bulk densities are rather high and might be a source of error when estimating peat resources. Phillips and others (1997) describe a very watery peat deposit. Most probably, the volumetric sampling is difficult or even impossible. This is the case especially in the central region, where the deposit is extremely wet, slightly decomposed and fiberous. If the volumetric sampling is not possible, samples for the water content analyses should be taken carefully and water content used to calculate the dry bulk density.

5.2.7 Ash content

According to Cohen and others (1990) the average ash content is 4% varying from 1 to 25%. Samples having ash content higher than 25% were excluded. Ash content is the lowest (less than 2.5%) in the domed western part, but increases to the margins (swamp-forest peat). Mangrove peat has the highest ash content, averaging 11%. Phillips and Bustin (1996a) report an average ash content of 3.3% for the western section, 10.5% for the eastern section and 18.6% for mangrove peat. These averages are slightly higher than those reported earlier because Phillips and Bustin did not exclude samples having ash content higher than 25%.

25 5.2.8 Sulphur content

According to Cohen and others (1990) the sulphur content is very low, averaging 0.15% in the domed western part, wherefrom the average values increase toward the Caribbean Sea and toward the Almirante Bay. In regard to peat types, the sedge - grass peat has the lowest average sulphur content (0.2%) and the mangrove peat the highest (7.0%). Data published by Phillips and Bustin (1996a) is more comprehensive and indicates average content of 0.23% for the western section, 2.2% for the eastern section and 3.5% for mangrove peats.

5.2.9 Calorific value

The calorific value averages 10,000 Btu/lb (23.3 MJ/kg) with a range of 8,824 to 11,310 Btu/lb (Cohen and others 1990). Compared to other areas, the calorific value is high.

5.2.10 Peat quality compared to other areas

Compared to other coastal areas in tropical environment, the peat is better than Jamaican, Senegalese, or Sri Lankan peat but not quite as good as Indonesian peat (Table 5.1). The Negril Morass in Jamaica and the Muthurajawela peat deposit in Sri Lanka have been affected by sea water and the Niayes deposits in Senegal by wind- blown sand. The western section of Changuinola peat deposit and the Mempawah peat deposit in Indonesia resemble each other because both of them are out of the reach of sea water or clastic deposition. In spite of the huge difference in environmental setting, the quality of Changuinola peat is close to that of the Finnish peat.

Table 5-1. Comparison of water content, dry bulk density, ash content and sulphur content in certain subtropical/tropical coastal areas and in Finland Area Water content Dry bulk density Ash content Sulphur content (%) (kg/m3) (%) (%) Changuinola peat deposit1) 92.7 n.a. 3.3 0.23 Jamaica, Negril Morass2) 90.0 n.a. 16.0 1.6 Senegal, Niayes3) 87.6 125 16.0 Sri Lanka, Muthurajawela 89.4 82 14.9 4.6 Indonesia, Mempawah 90.0 95 0.39 0.13 Finland, average4) 90.8 87 3.4 0.20 1) Phillips and Bustin 1996a, western section, 2) Blackwood & Robinson 1985, 3) Korpijaakko 1985, 4) Virtanen et al. 2003

5.2.11 Selection of the most potential area

The Changuinola peat deposit was reported to cover more than 8,200 ha (Cohen and others 1990). According to Phillips and Bustin (1996a) about 6,000 ha is located

26 onshore and 2,000 ha offshore beneath the shallow marine sediments of Almirante Bay. When selecting the most potential area for peat production, the offshore section must be excluded.

The peat deposit can be divided to the western and eastern sections (Fig. 5. 7). In the west peat is good for fuel whereas in the east peat quality is poor. The eastern section must be excluded because of poor peat quality.

The remaining 3,800 ha includes the domed western section. This peat dome is eccentric with the highest surface elevations in the south-west. In the north-east, surface elevation is lower and the area borders to Caribbean beach barrier. This part of the peat deposit may have the highest recreational value. Because of lower surface elevation and higher recreational value, the north-eastern part of the western section, covering approximately 800 ha, is excluded.

The remaining 3,000 ha has the highest potential for fuel peat production. Additional studies, related to peat production, should concern this area.

Figure 5-7. Selection of the area best suitable for conventional fuel peat production

27 5.2.12 Needs for additional data

5.2.12.1 Peatland inventory The Changuinola peat deposit has been subject to several papers, and its characteristics are rather well known. The deposit has been described as a modern analogue for back-barrier coals. However, the detailed inventory for peat production is not yet done. Phillips and Bustin (1996a) reported 78 coring sites resulting in an average survey site density of 1 site per 105 ha. The “site network” is sparse and uneven.

A detailed peatland survey should produce sufficient data for peat production plans. The sufficient accuracy of survey depends on the surface and subsoil topography and on the variations in depth and peat quality. Usually, the grid of 50 x 100 m is used in northern glaciated areas but grids of 100 x 100 m or 100 x 200 m can be used in extensive and homogenous deposits.

Based on existing data, the survey grid of 100 x 200 m (1 site per 2 ha) is recommended at the beginning. The accuracy must be increased when necessary. Especially in the margins and near the Changuinola River layers of clastic sediments may occur.

The area, having the highest surface elevation, is the most interesting for conventional peat production. Therefore, the topographic survey should be done in an early phase. Minimum surface elevation for conventional peat production is mean sea level + 3 m. Therefore topographic survey should be concentrated on the area having surface elevation higher than mean sea level + 2 m. The surface elevation has to me measured at each survey site. In addition to the potential peat production area, topographic survey should cover stockpile areas, roads and outlet ditches.

At each survey site, a continuous set of samples is taken for example with a Russian (Macauley) type peat sampler. The core extends from the sediment surface to the underlying mineral soil. Peat/soil type and the decomposition degree are determined in the field. Special attention is paid to the proportion of clastic sediments.

At every second survey site, a combined sample is collected for laboratory analyses. The sampling grid is 200 x 200 m or 1 sample per 4 ha. The samples are volumetric, if possible. The combined sample consists of several sub-samples collected, for example from four depths (50 – 100 cm, 150 – 200 cm, 250 – 300 cm, 350 – 400 cm).

In the laboratory, samples are dried at 105°C to constant weight. Dry weight and fresh weight are used to calculate the water content and dry weight and fresh volume to calculate the dry bulk density. If volumetric sampling is not possible, the dry bulk density can be calculated using correlation between water content and dry bulk density. The ash content is determined by igniting dry peat at 815°C and by calculating the proportion of ignition residue. Sulphur content and calorific value are determined and expressed on dry weigh basis.

28 5.2.12.2 Peat/carbon accumulation

The Changuinola peat deposit has been a long-term carbon sink. Currently the accumulation continues and it will continue in the future, supposing that the conditions remain as they have been in the past.

There is a lot of basic information on the vegetation, peat types and age. The existing data is sufficient to locate two or three additional cores. Each of them should be studied for botanical composition, dry bulk density, carbon content and age. The results indicate past accumulation of dry matter and carbon. If the deposit is stratified, the rates can be calculated for each layer indicating e.g. differences in peat-forming vegetation.

5.3 The Chiriqui Grande Peat Deposit

5.3.1 Location and extent

The Chiriqui Grande peat deposit is located at the coastal plain east of the Chiriqui Grande village (Fig. 5.8).

Figure 5-8. The Chiriqui Grande peat deposit.

29 Chiriqui Lagoon borders the deposit to the north and foothills of the mountain range to the south. There are numerous rivers flowing through the swamp (Fig. 5.9). Cohen and others (1990) mention this as a potential deposit but they did not survey it. Some surveys have been carried out later, but the results are not public and not at Consultant’s disposal. According to the topographic map (1:50000) the swamp covers approximately 15 000 ha. The deposit may be several metres deep.

Figure 5-9. The Chiriqui Grande peat deposit, a satellite image.

5.3.2 Peat properties

According to oral information from Changuinola Peat S.A, the properties of Chiriqui Grande peat deposit correspond to those of Changuinola peat deposit.

5.3.3 Needs for additional data

5.3.3.1 Inventory

The peat deposit should be surveyed in detail, using the accuracy and methods proposed above for the Changuinola deposit. Special attention should be paid on the proportion of clastic sediments and on the signs of paleohydrology.

30 5.3.3.2 Vegetation, present and past

Vegetation mapping can be based on that carried out by Phillips and others (1996) in Changuinola. The mapping is done at the phasic community level, using the same communities. Aerial and satellite images can be used to identify uniform areas. Preliminary mapping, based on image interpretation, must be checked in the field.

Based on macroscopic plant remains, peat types are determined during the inventory. However, field determinations are more or less rough. A more detailed study is based on microscopic identification of plant remains. It is possible to determine the major peat forming plants and the swamp succession at the phasic community level.

5.3.3.3 Hydrology, present and past

There are several rivers flowing trough the swamp. To understand the present function of the ecosystem, it is necessary to study the present hydrological system including e.g. discharge and its annual variation, suspended and dissolved load and their variations.

The study of paleohydrology is based on the results of peat inventory and on the published paleoclimatic data and on the history of relative sea level variations.

5.3.3.4 Peat/carbon accumulation

By studying the past it is possible to estimate the future. Dry matter and carbon accumulation rates should be studied at several locations. Essential data include the dry bulk density, the carbon content and the age. If the botanical composition is known, accumulation rates can be calculated for different vegetation communities. If the hydrological regime is maintained, the future accumulation will correspond to that in past centuries.

5.4 Conclusions about the peat deposits

According to published data, peat in the western domed section of the Changuinola peat deposit is good for fuel. It consists of grass and wood remains and has a medium or high rate of decomposition. The water content and the dry bulk density are at medium level. Because of its domed topography, the area is depended on precipitation. The origin of water results in low ash and sulphur contents. The Chiriqui Grande peat deposit has been surveyed in some extent but the results are not public not at our disposal. According to oral information, the quality of peat corresponds to the quality of Changuinola peat.

The Changuinola peat deposit has been subject to several studies, but the inventory for peat production is not yet done. If it is taken to peat use in the future, the inventory has to be done before any production plans. The use of peat is possible in the Chiriqui Grande area, but the peat resource should be surveyed in more detail. Additional information related to hydrology, vegetation and peat accumulation is also needed.

6 ASSESSMENT OF APPROPRIATE PEAT PRODUCTION METHODS IN BOCAS DEL TORO REGION

Bocas del Toro province is the main area in Panama, which has potential to develop peat production. The areas of biggest interest are the deposits in the towns of Changuinola and Almirante, and another close to the village of Chiriquì Grande.

Most of the studies have been carried out in Changuinola – Almirante site, which marked the existence of this resource in an area of 82 km², with an average depth of 8 meters, for an approximate volume of 118 millions of cubic tonnes. According to the Los Alamos End-Use Assessment (1990) it is sufficient to supply a 30MW power plant for 300 years.

These results encouraged the company Changuinola PEAT S.A. to request two mining concessions to evaluate both the Changuinola – Almirante and the Chiriquì Grande regions, and estimate their energetic potential.

6.1 Conventional peat production methods Conventional peat production is based on the drying of peat by solar radiation on open production fields. Before the actual production starts the bog must prepared. Conventional peat production methods are based on drainage of a bog by gravity.

6.1.1 Bog preparation The preparation of the bog consists of two phases: 1) bog drainage 2) surface cleaning and profiling

Drainage is normally made by opening ditches at 20 meters distance. Work can be carried out with hydraulic and tractor excavators. Water is led from feeder ditches into the main drain.

Figure 6-1 Surface profile of a peat production bog

Surface cleaning is done with a screw leveller, a grader and a leveller. The work items included in surface cleaning are removing of surface vegetation, surface profiling, construction of bog road and stockpile area. Peatlands with a natural tree cover must be cut and stumps must be removed.

6.1.2 Milled peat production technology The milled peat method, which produces peat in crumb or powder form, superseded sod peat as the primary method of production in North European countries during the 1950s. The milling method is the most important production method for both energy and horticultural peat. Currently, about 85 % of the peat is produced by using it.

The working phases of milled peat production are milling, harrowing, ridging, loading and stockpiling. Dried milled layer is collected to a stockpile using different methods.

Haku method is the most commonly used method in Finland. About 80 % of the milled peat is collected using it. The efficiency of the Haku method can be increased by using the Tehoturve method. It differs from the traditional Haku method in the way the ridge is formed. In the past the ridge has been driven into a stockpile immediately, after which a new harvest has been milled on the field. In Tehoturve method even 4 - 6 harvests can be collected on the same ridge.

Another peat collection methods are ridge transportation, mechanical collector and pneumatic harvesting methods. The ridge transportation method is no longer used in Finland. The pneumatic harvester and collector methods are used at smaller and shallowing peatlands, and about 20 % of the milled peat is produced by using them.

Figure 6-2. Milled peat production field. Milling In milling, a thin upper layer of the field is loosened and pulverized. The milling depth usually ranges from 5 to 20 mm. The surface is milled using a 6.5-9 metre- wide miller. Depending on the quality of the peat, either an active miller with rotating blades or a passive miller with cutting edges is used. At the milling stage, the moisture of the peat should ideally be reduced to approximately 40 per cent. The peat is dried using the heat of the sun and therefore the milling must be performed in sunny weather.

Figure 6-3. Production miller.

34 Harrowing In order to assist drying, the milling is turned 1-3 times during the drying period using a harrow with plastic spoons. The harrow operates over a width of 19 metres. Harrowing breaks down the thin isolating layer, increases the absorption of solar radiation, increases the proportion of air in the milled layer, and breaks down the newly formet capillarities. In Northern Europe drying takes around two days in all. The temperature, air humidity, wind and the quality of the peat affect evaporation and thus the time required.

Figure 6-4. Milled peat harrower.

Ridging Peat that has dried to the appropriate moisture level is piled into the middle of a strip approximately 20 metres in width by a tractor-towed milled peat ridger. The target of ridging is to transport the dried milled layer as completely as possible on the ridge. The ridge is a pile that is the length of the strip and is around 40 cm high and 80 cm wide. The ridger works over a width of approximately nine metres. Underneath the ridger there are flexible brush elements which ensure accurate lifting of the dried peat from the production site and a high yield.

Figure 6-5. Milled peat ridger.

Loading The peat is loaded both in the Haku and in the Tehoturve methods from ridge using a tractor driven belt conveyor, in which a transverse grouser track lifts the peat on the conveyor. The belt conveyor transports the peat in a tractor driven trailer driven usually on the next strip. After this, the strip is ready to be milled again to produce the next harvest. The trailers have a capacity of around 30-70 cubic metres.

Figure 6-6. Milled peat loader.

Figure 6-7. Peat trailer. Stockpiling The peat is transported by trailer to the storage pile, which is situated alongside the vehicle access road. One stack may contain several tens of thousands of cubic metres of peat, and there may be several stockpiles at a single production site. Stockpiling may be performed by driving a tractor-trailer combination onto the stockpile and unloading the peat there. Alternatively the peat is unloaded at the base and then driven onto the stockpile with a bulldozer slope grooming machine. When the stockpile is ready, it is generally covered over with plastic to ensure high quality.

Figure 6-8. An example of a stockpile area on a production field.

37 In Panama e.g. 30 MWe peat-fired condensing power plant would need about 170,000 -190,000 tons of milled peat (MC 40-45%) and required peat production area would be about 150 ha. Based on the Finnish experience, estimated costs of milled peat would be 7-9 Eur/MWh.

6.1.3 Sod peat production technology Sod peat drying differs from milled peat drying so that the grain size and the peat mass on the field are greater, which results in a longer drying time. However, sod peat is less dependent on weather than milled peat production due to more scattered harvests. The working phases of sod peat production are lifting, harrowing, ridging, loading and stockpiling. Lifting Sod peat is milled from the production area at a depth of 30-50 cm using a sod peat loader with a lifting plate or screw fitted with cutting blades. The milling moisture of the peat is normally over 80 per cent.

At the same time the lifting machine macerates the peat with its screw gear and compresses and shapes it through its nozzles into sods, which are left on the field to dry. The sods are either cylinders 40-70 mm in diameter or wave-shaped ribbons. Harrowing In favourable weather conditions, sod peat dries to the harvest moisture content in about one week. During the rainy seasons, the drying may take several weeks. The sods are harrowed 1-2 times by a harrower with a working width of 19 metres. The aim is to decrease the moisture of the sods to around 35 per cent. Ridging Harvesting is performed in the same way as in the Haku method. The sods are brought to the ridge by a tractor-towed ridger, and the revolving plastic plates separate out the fine aggregate contained in the sod peat. Loading The sods on the ridge are loaded by a sod peat loader onto a tractor-towed trailer. The sod peat loader also has a screen. Stockpiling The sod peat is transported to roadside stockpiles by a tractor-drawn trailer. Stockpiling is generally performed by an excavator.

6.2 Wet mining method

A wet mining peat method, or hydraulic peat mining as it is also called, has been carried out in some flooding production sites. Large hydro-peat production tests were carried out by Electrowatt-Ekono in Burundi 1983 - 85 using suction dredge. After dredging the peat slurry was pumped onto firm ground or on a drying field on the upper part of the bog. The final production took place with a conventional sod peat method on the drying area.

Figure 6-9. A cutter head suction dredge, used in wet mining in Burundi.

6.3 Peat transportation From the stockpiles peat is transported with trucks directly to end-users. Peat transportation itself is very proven technology, but bad road conditions near the bog area at least during rainy seasons may cause difficulties for the deliveries.

Figure 6-10. Peat loading into a truck by a wheel loader. Long distance sea transportation of peat can be done by using barges. However, short distance road or railway transportation is needed prior sea transportation.

39 6.4 Production method, Los Alamos study

Los Alamos study considered both conventional peat production method, i.e. milled peat method, as well as wet mining method to be applied in Changuinola – Almirante

Milled peat production assumed that peat with a moisture content of 50% would be transported by truck to the power plant located next to the bog. The assessment of the wet mining process was based on a report done by Wheellabrator-Frye for the state of Alaska on wet mining peat for use in a peat-derived-fuel production facility.

6.5 Production method; Changuinola Peat S.A. Changuinola Peat S.A. has requested and received mining concession for the Chiriquì Grande peat deposit. The company is planning to produce annually more than a million tons of peat.

The current plans to utilize the Chiriqui Grande peat reserves are based on wet mining technology. The peat is dredged and pumped to drying facilities. Then the dry peat will be transported by barges to the power plant. Wet peat mining method has not been used in large scale (> million tons/year) in peat production yet, the crucial point is to put into practise the drying of peat. The advantage of wet peat mining compared with conventional peat production is that drainage of the bog is not needed.

Due to confidentiality , details of the production method cannot be presented in this document.

7 ENVIRONMENTAL ASPECTS

7.1 Changuinola - Almirante peat deposit

Changuinola - Almirante peat deposit, called San San - Pond Sak has been included in the Ramsar List of Wetlands of International Importance in 9th June 1993.

Figure 7-1. Changuinola- Almirante peat deposit.

The Convention on Wetlands is an intergovernmental treaty adopted on 2 February 1971 in the Iranian city of Ramsar, on the southern shore of the Caspian Sea. Thus, though nowadays the name of the Convention is usually written "Convention on Wetlands (Ramsar, Iran, 1971)", it has come to be known popularly as the "Ramsar Convention". Ramsar is the first of the modern global intergovernmental treaties on the conservation and sustainable use of natural resources, but, compared with more recent ones, its provisions are relatively straightforward and general. Over the years, the Conference of the Contracting Parties has further developed and interpreted the basic tenets of the treaty text and succeeded in keeping the work of the Convention abreast of changing world perceptions, priorities, and trends in environmental thinking. The official name of the treaty, The Convention on Wetlands of International Importance especially as Waterfowl Habitat, reflects the original emphasis upon the conservation and wise use of wetlands primarily as habitat for waterbirds. Over the years, however, the Convention has broadened its scope of implementation to cover all aspects of wetland conservation and wise use, recognizing wetlands as ecosystems that are extremely important for biodiversity conservation and for the well-being of human communities, thus fulfilling the full scope of the Convention text. For this reason, the increasingly common use of the short form of the treaty's title, the "Convention on Wetlands", is entirely appropriate. (Changing the name of the treaty requires amending the treaty itself, a cumbersome process that for the time being the Contracting Parties are not considering.) The Convention entered into force in 1975 and now (as of December 2006) has 153 Contracting Parties, or member States, in all parts of the world. Though the central

41 Ramsar message is the need for the sustainable use of all wetlands, the "flagship" of the Convention is the List of Wetlands of International Importance (the "Ramsar List") - presently, the Parties have designated for this List more than 1,634 wetlands for special protection as "Ramsar sites", covering 145 million hectares (1.45 million square kilometres), larger than the surface area of France, Germany, Spain, and Switzerland combined.

Due to the fact that Changuinola- Almirante peat deposit is currently a protected area of international importance, the Consultant cannot recommend peat production activities on the site.

7.2 Chiriqui Grande peat deposit

Figure 7-2. Chriqui Grande peat deposit.

Because Chriqui Grande peat deposit is not a protected area, there are no international, environmental limitations for peat production activities on the site.

42 8 ALTERNATIVE LOCATIONS FOR THE POWER PLANT AND POTENTIAL SIZE

8.1 Changuinola and Almirante Los Alamos study concluded in 1990 that considering the projected electricity demand in Chaguinola, a 30 MWe power plant size would be optimal. The boiler types recommended were a fluidized bed boiler and a conventional suspension boiler. Annual peat consumption was estimated at 236,000 tons (50% moisture content). The location of the power plant was defined near the peat bog to minimize transportation cost.

8.2 The town of David and its surroundings San José de David (official name) is Panama's third largest urban area and due industrial production, peat fired cogeneration would be an option in David and its surroundings. However, peat should be transported about 100 km from Chriqui Grande.

David is the capital of the province of Chiriqui and has an estimated population of 124,500 inhabitants (in 2005).. It functions as a hub for the province's commercial activities, mainly agriculture and cattle raising and supplies the rest of the country. It also serves as port of exports and imports with neighboring Costa Rica. It is connected to the rest of the country by the Pan-American Highway, and the Enrique Malek International Airport. It is one of the highest industrialized cities in the country.

Figure 8-1. Pan-American Highway

8.3 Colon

Changuinola PEAT S.A. has been developing a peat-fired power plant, with a total capacity of 356 MWe to Colon. Colón is a sea port city on the Caribbean Sea coast of Panama. It is near the Atlantic entrance to the Panama Canal. The city is the capital of Panama's Colón Province and has traditionally been known as Panama's second city.

Figure 8-2. Location of Colon and Bocas del Toro.

44 ANNEX 1. THE ELECTRICITY SECTOR IN PANAMA

Panama restructured its electric sector in 1998, following the privatization of the Instituto de Recursos Hidraulicos y Electrificacion (IRHE) which for years controlled the generation, transmission and distribution of electricity in Panama. The Government of Panama only retained ownership and control of the transmission company (ETESA). A regulatory body (Ente Regulador) was created to regulate the electric sector as well as the telecommunications and water sectors. Note that the following structure of the electric sector is changing due to mergers and acquisitions.

I. GENERATION COMPANIES

1. ENEL FORTUNA, S.A. International associate: Enel (Italy) and Hydro Quebec (Canada) x Installed Capacity: 300 MW x Type of generación: Hydroelectric

2. AES Panama S.A. International associate: AES Corporation (USA) x Installed Capacity: 510 MW (Chiriqui Plant 90 MW, ESTI 120 MW and Bayano Plant 260 MW, Thermo Plant 40 MW). x Type of generación: Hydroelectric, Thermo

3. BAHIA LAS MINAS S.A. International associate: Suez Energy International (Belgium) Installed Capacity: 253 MW x Type of generación: Thermoelectric, 120 MW conversion to coal from Colombia planned.

4. COPESA International associate: None Installed Capacity: 46 MW Type of generación: Thermoelectric

5. PAN AM GENERATING LTD. International associate: Dynegy (USA); Equitable Resources, Inc. (Noresco) (USA) Installed Capacity: 96 MW Type of generación: Thermoelectric

6. PEDREGAL POWER COMPANY International associate: El Paso Energy Installed Capacity: 55 MW Type of generación: Thermoelectric

II. TRANSMISSION COMPANY

Empresa de Transmision Electrica S.A.

III. DISTRIBUTION COMPANIES

1. Empresa de Distribucion Electrica Metro Oeste (EDEMET) 2. Empresa de Distribucion Electrica de Chiriqui (EDECHISA) Both companies are controlled by Union Fenosa (Spain) They cover different areas of the country.

3. Elektra Noreste S.A. This company is controlled by Constellation Power (USA)

IV.REGULATORY BODY Ente Regulador de los Servicios Publicos

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