BAHÍA DE BIZKAIA LNG TERMINAL & COMBINED CYCLE POWER PLANT AT THE PORT OF BILBAO (BASQUE COUNTRY – SPAIN)
Mr. Javier Aramburu President, Bahía de Bizkaia Gas, S.L.
INTRODUCTION
In the late 1990’s Spain began to liberalise its energy market. The process commenced within the electricity sector, and resulted in numerous projects for new, Combined Cycle Power Plants. The liberalisation of the gas sector commenced afterwards, and even though the process is making rapid progress, part of the applicable regulations have been developed subsequently. However, new initiatives are also currently arising within the gas sector.
Bahia de Bizkaia as a project is taking place against the backdrop of this new energy context in Spain. It comprises the construction, commissioning and operation of a Natural Gas Regasification Plant (Bahía de Bizkaia Gas, or BBG) and a Combined Cycle Power Plant (Bahía de Bizkaia Electricidad, or BBE).
The Bahía de Bizkaia project as a whole is headed by four equal partners, all top companies in the energy sector, such as: BP, Iberdrola, Repsol-YPF and Ente Vasco de Energía (the Basque Country’s Regional Energy Agency). They are firmly committed to bringing about this key strategic project, which will secure and guarantee sufficient high-quality Natural Gas-based energy supplies transported by sea, and will make industry more competitive in energy terms by bringing energy production closer to the point of consumption.
With investment totalling close to 655 million Euro, the project will strengthen the Spanish gas supply system by creating a new point of entry for gas in northern Spain, to be added to the three existing Regas Plants in Barcelona and Cartagena in the east of Spain, and Huelva in the south, as well as to piped supplies. It will also help provide more energy with greater efficiency and lower technical losses in the Basque Country, which is a major demand area.
The facilities will go into operation in 2003, with the Electricity Plant coming on line first (in May 2003), followed by the Regas Plant (in August 2003).
The very special circumstances that surround and make up the Project from its very beginning have helped bestow special interest on the same.
PROJECT HISTORY
Bahía de Bizkaia as a Project involves the construction and Commercial Operations of an LNG Regasification Plant (Bahía de Bizkaia Gas), which will have an annual regasification capacity of 6000 Nm3/h, and an 800 megawatt Combined Cycle Power Plant (Bahía de Bizkaia Electricidad).
The starting point for Bahía de Bizkaia lies within the Energy Strategy devised by the Basque Government, which has been brought about by means of several energy plans. As you may already know, the Basque Country is located in the north of Spain, and is characterised by a high demand for energy, as it is a highly industrialised area. Such Energy Strategy had at its basis during the 1980s the premises of energy efficiency, diversification, and the promotion of renewable energy sources, apart from guaranteeing energy supply for the area.
One of the first actions resulting from the aforementioned diversification policy was the lying out of the gas network in the Basque Country, which allowed for a decrease in oil reliance, apart from reducing the environmental impact associated to energy usage.
Bahía de Bizkaia Gas should be regarded as a further step within such diversification policy, as it will help guarantee gas supply for the Basque Country, as well as reinforce the Spanish Gas System.
On the other hand, the liberalisation of the Electricity Market paved the way for another project: the construction of a Combined Cycle Power Plant (Bahía de Bizkaia Electricidad). This was intended to make the most of the possibilities offered by the Regas Plant, as well as benefit from the different synergies between both projects, and help correct the shortage of power production in an area which, as mentioned above, has a great demand for such kind of energy, but not enough generation capacity.
After an initial contact by AMOCO, the Basque Government, through its Regional Energy Agency (EVE), carried out the first feasibility studies, which turned out to be positive. As a result, the project went ahead. Two further partners from the electricity and gas sectors respectively were invited to participate in the Project. Such companies were IBERDROLA and REPSOL YPF.
BP, IBERDROLA, REPSOL YPF and ENTE VASCO DE ENERGÍA established the twin companies Bahía de Bizkaia Gas y Bahía de Bizkaia Electricidad in April 1998, with equal partnership.
From that moment on, the Project started to move on. The EPC Contracts for the Construction of both Plants were signed halfway through the year 2000. A Joint Venture called UTE TIS, made up of Technigaz, Initec y Sofregaz, was awarded the construction of the Regas Plant. Another Joint Venture, called UTE BAIA, made up of Babcock & Wilcox, Abengoa and Idom, was awarded the construction of the Power Plant.
The beginning of the year 2001 saw the commencement of construction works. The first tests for the Power Plant commenced in November 2002, and Bahía de Bizkaia Electricidad started its Operations in May 2003. Bahía de Bizkaia Gas is expected to start operating in August 2003.
The total investment for the Project amounts to 655 million Euro; 338 million Euro have been invested on the Power Plant (Bahía de Bizkaia Electricidad), and the remaining 317 million Euro have been invested on the Regas Plant (Bahía de Bizkaia Gas).
The construction of both Plants has had a relevant and very positive effect on local construction and capital goods companies, apart from helping re-vitalise the industrial and economic network in the surrounding area.
A total of 2000 jobs have been created during the construction of the Plants, and 100 direct jobs will be created when the Plants are in operation, apart from other kinds of indirect and induced employment.
The case of IZAR shipyard, for example, is worth mentioning in this respect. The shipyard is located nearby, and they have built two methane vessels for the Bahía de Bizkaia project, with investment totalling 400 million Euro, and 3.2 million work-hours associated to them.
PROJECT PARTNERS - A PROFILE
As mentioned above, BBE-BBG is headed by four leading companies within the energy sector, such as: REPSOL, IBERDROLA, ENTE VASCO DE ENERGÍA (the Basque Country’s Regional Energy Agency) and BP AMOCO.
REPSOL is an integrated oil company, devoted to activities in the hydrocarbons sector. It is made up of four main business areas, such as: exploration and production, oil refining and marketing, chemical and gas, and electricity. Within the gas sector, REPSOL acts as a distributor of liquefied gases derived from oil (LPG) through Repsol Butano, S.A., and as a distributor of Natural Gas through Gas Natural SDG, S.A. As a matter of fact, REPSOL is the leading distributor of LPG in Spain, and the second in the world when it comes to packed LPG.
REPSOL aims, as its strategic target within the Natural Gas and Electricity sectors, to achieve a full vertical integration of the process, ranging from gas production to the production of power by Combined Cycle Power Plants. Bahía de Bizkaia stands as an obvious example of such objective.
IBERDROLA, which has its headquarters in Bilbao, is a leading electricity company in Europe. The bulk of its activity consists of the generation, transportation, distribution and commercialisation of electricity. IBERDROLA is also a relevant figure in some other sectors, such as: alternative energies, Natural Gas commercialisation, Engineering, Consulting, Telecommunications, Information systems, State Agents and Added-Value Services for customers. Such activities are carried out by their Industrial Group.
ENTE VASCO DE LA ENERGÍA (EVE), is the Public Agency under Private Law for the Basque Country, which aims at planning, co-ordinating and controlling current and future energy activities for the Public Sector in the Basque Country. In line with this target, it holds a share in Natural Gas transportation, distribution and commercialisation corporations, as well as in some others devoted to hydrocarbons exploration and distribution, renewable energies, geological resources, infrastructure and services and energy efficiency, amongst others.
BP AMOCO emerged in 1999 from the merger of BRITISH PETROLEUM, which was established in 1909, and AMOCO, an American oil company created in 1889. The resulting company is now devoted to the exploration and operation of gas and oilfields worldwide. BP AMOCO holds a share in the BBE-BBG Project through subsidiary companies fully owned by them.
BP AMOCO is a leading company in the United Kingdom, as well as the leading gas and oil producer in the country, thanks to its offshore oil rigs in the North Sea and the Shetlands. As to the USA, BP AMOCO is one of the largest hydrocarbon producers, on account of its oil rigs in the Gulf of Mexico, Texas and Alaska. It is also the second largest company in terms of gas reserves. With regard to South America, BP AMOCO can be considered as one of the most relevant investors in countries such as Argentina, Colombia, Trinidad-Tobago, and Venezuela.
It is worth noticing that the diverse corporate targets detailed above for each one of the Partners has not meant an obstacle to the success of the project. In fact, their unfaltering belief in the need and convenience to execute this joint project has been a determining factor which has allowed the aforementioned project Partners to overcome the obstacles one might expect to find along the way in a Project lead by such four representative companies. A BRIEF TECHICAL PROFILE OF THE PLANTS
BAHÍA DE BIZKAIA GAS REGASIFICATION PLANT:
The Regas Plant Bahía de Bizkaia Gas will initially process gas from Trinidad-Tobago and Nigeria. Its initial dispatch capacity was expected to be 400.000 Nm3/h; however, prior to the completion of construction works, project Partners decided to increase such capacity to 800.000 Nm3/h, which means an annual dispatch of 6 bcm. Furthermore, the Plant could even increase its capacity up to 9 bcm in the future.
The basic engineering design for the Plant was executed by Kellogg, while construction of the same was awarded to a Joint Venture made up of Initec, Sofregaz y Technigaz.
The main elements that make up the Plant can be listed as follows:
An LNG maritime Terminal that can reception methane vessels from 70.000 to 140.000 m3. The Terminal is equipped with four 16” unloading arms, with an unloading capacity of 12.000 m3/h. Such capacity allows for the unloading of a 135.000 m3 vessel in 12 hours.
An LNG storage area made up of two tanks, with a capacity of 150.000 m3 each. They are elevated, full-containment tanks, and their external dimensions are 77 metres in diameter and 54 metres height.
A Regasification Plant in itself, with a regasification capacity of 800.000 Nm3/h. The regasification process is done by means of 4 seawater vaporisers that make use of water previously used in the Power Plant to cool off the Condenser.
BAHÍA DE BIZKAIA ELECTRICIDAD POWER PLANT:
The Combined Cycle Power Plant Bahía de Bizkaia Electricidad, S.L., is made up of a 2x1 configuration, as it relies on two Gas Turbines and one Steam Turbine. Its net power capacity amounts to 776 megawatt, and it has been built by a Joint Venture made up of the companies Babcock & Wilcox, Abengoa and Idom.
The fuel used for the Power Plant will be Natural Gas supplied by the Regas Plant; however, during the first months of its operations, and until the Regas Plant comes into service, it will be supplied by the general gas network.
The main elements that make up the Power Plant are the following:
Two Heavy-Duty Gas Turbines (2 x 254 megawatt), equipped with an 18-phase air compressor and low Nox burners.
One Steam Turbine (1x 282), with intermediate condensation and reheating, made up of two sections: high and low and low-pressure.
Two HRSG boilers with three pressure levels, and a reheater.
Three electrical generators able to perform at 15,75 kV, and three main transformers which will increase voltage up to 400 kV.
A Steam Condenser with titanium pipes, with a seawater cooling system.
A 125 metre-high Exhaust Stack.
An open-circuit seawater cooling system.
SPANISH REGULATORY FRAMEWORK AND ENERGY SYSTEM PLANNING
Each of the Bahía de Bizkaia Projects is bound to its corresponding regulatory framework. Thus, the Power Plant Bahía de Bizkaia Electricidad falls within the context of the new framework for the Electricity Sector, as defined by Law 54/1997, dated November 27th. Such Law introduces into the Spanish legal system Directive 96/92/CE from the European Parliament and Council dated December 19th, on common regulations for the domestic electricity market.
Such regulatory framework, which is based on the aforementioned Law, as well as on its subsequent regulatory development, established, amongst others, the principle of freedom to build power generation plants, with the exclusive limitation of their compliance with the corresponding technical and environmental regulations.
The hydrocarbons sector in itself has also experienced a liberalisation process, whose starting point lies at the coming into force of Law 34/1998, dated October 7th and the subsequent regulatory development, even if it seems to be making slower progress than the electricity sector.
What can be inferred from the dates mentioned above is that the project Bahía de Bizkaia started against the background of the recent establishment of two new, and not yet fully developed, legal frameworks, which added some uncertainty to the whole issue. In fact, the regulatory development for the electrical sector took place quite rapidly, which helped reduce uncertainty, and gave rise to a great number of new projects for Power Plants. In the case of the hydrocarbons sector, regulatory development came some time later.
Therefore, one of the special features for the Regas Plant was the fact that it started when neither the regulatory system for the gas market nor the corresponding infrastructure for its transportation and distribution had yet been fully developed. This involved a special risk associated to the economic return system, and consequently, to the expectations for the profitability of the Plant.
Obviously enough, this kind of background involved an element of risk which was somehow eased by the fact that there were two initial gas consumers in line from the very beginning. One of them was the Power Plant Bahía de Bizkaia Electricidad, with an annual Natural Gas consumption of approximately 1.1 bcm; the second one was the local Gas Company, Sociedad de Gas De Euskadi, with a similar consumption rate.
The subsequent development of the gas system regulations, as well as the current system planning, has allowed to clear up some of the unknown factors, and confirm the favourable hypothesis developed by project Partners at the start of the same.
On a different order, it is worth mentioning that planning for the electricity and gas sectors for the years 2002 to 2001 was finally approved on October 2nd, 2002. With regard to the hydrocarbons sector, planning so far is just for guidance, except for: basic network pipelines, the establishment of the full Natural Gas regasification capacity to supply the system, and storage facilities for hydrocarbons strategic reserves. In all these cases, planning is obligatory and requires the minimum amount to guarantee hydrocarbons supply.
In conclusion, the regasification capacity is subject to planning, and any request for an increase in capacity must be included within the same. This had a direct impact on Bahía de Bizkaia Gas, which had started up way before the corresponding planning was issued.
The applicable planning for Bahía de Bizkaia Gas Regasification Plant includes an initial capacity of 400.000Nm3/h for the second quarter of the year 2003, as well as an expansion to 800.000Nm3/h for the last quarter of the year 2004, apart from another potential expansion to 1.200.000Nm3/h.
With regard to Natural Gas demand within Spain, it is worth noticing that it has increased at a steady pace from its introduction in the 60s. During the last five years, gas consumption has doubled, with an annual average increase close to 14%. From the year 1995 to 2000, Natural Gas usage as part of the total primary energy consumption increased from 7,7% up to 12,2%. However, in spite of this, gas consumption is still far from the average shown in other European Union countries, where gas amounts to more than 23% of primary energy. This leads us to expect a future increase in demand, based amongst other reasons, on gas demands for Combined Cycle Power Plants.
The chart below shows current expectations for natural gas demand.
Natural Gas demand evolution
50
45
40
35
30
25 bcma
20
15
10
5
0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Commercial & Domestic demand/Industrial demand/Combined Cycle demand
Taking into account all the above, it can certainly be stated that, in spite of the initial uncertainties derived from the lack of regulatory development and even a definite energy planning, the project Bahía de Bizkaia has been a success. Furthermore, we can state for sure that it has also moved ahead of energy requirements for the coming years.
ENVIRONMENTAL ISSUES
The firm commitment undertaken by Bahía de Bizkaia Partners with Safety and the Environment has shown from the very beginning of the Project in the usage of the best state-of-the-art technology available, aimed at complying with the most demanding Safety and Environmental regulations, both current and future.
A large amount a human and material resources has been devoted to the identification and assessment of a possible environmental impact, as well as to the search for the most appropriate technical solutions for Plant design at the highest safety and environmental standards.
The Environmental Impact Assessment is a sine-qua-non requirement for the provision of objective information to the proper environmental organisation, as per the current legislation (such as: Royal Decrees 1302/1986, dated June 28th, and 1131/1988, dated September 30th). The Environmental Impact Assessment for BBE and BBG was carried out by a prestigious group of external experts in the required areas, as follows:
The definition, co-ordination and writing-up of the Environmental Impact Assessment for the facilities was carried out by Idom, Ingeniería y Consultoría (engineering and environmental consultants): Labein (Technology Centre) carried out a study of the potential atmospheric impact and noise pollution. Azti (Fishing and Food Institute) was responsible for a hydrodynamic and dispersion study of the heat generated in the local marine environment. Ekos carried out a study of land living organisms and bird life The Polytechnic University in Madrid, more specifically the Aerodynamics Dept, carried out a study of aircraft flight regime.
Furthermore, the potential impact on air and seawater quality was assessed in detail, as well as noise pollution and visual impact.
In terms of air quality, the technology applied for the Gas Turbines at the Power Plant ensures that the associated impact is limited to a minimum, thanks to the usage of state-of-the-art low NOx gas burners, as well as to the ad hoc design and size of the exhaust stack.
In terms of seawater quality, the effective integration of the Condenser cooling circuit at the Power Plant and the seawater vaporiser circuit at the refrigeration unit helps guarantee a minimum thermal impact. Such kind of impact is usually a foremost issue in this kind of facilities, as a consequence of the compensation of temperatures resulting from the aforementioned processes.
All corrective measures suggested and put forward in the Environmental Impact Assessment were applied to project design from its origins. Similarly, a comprehensive Environmental Monitoring System was devised as well, which has been applied from the commencement of construction, and will proceed on to the operations phase.
The Bahía de Bizkaia Project was approved as environmentally feasible by the corresponding environmental institution, such as the Ministry of Environment, through the required Environmental Impact Statement.
PERMITS AND ADMINISTRATIVE AUTHORISATIONS
As we have already mentioned, the project Bahía de Bizkaia involves the construction and commissioning of two industrial facilities: an LNG Regasification Plant, and a Combined Cycle Power Plant. Both Plants are located on Bilbao Port Authority land in the town of Zierbena, Bizkaia, Basque Country, Spain.
Their intended industrial activity and physical location have been essential to establish the kind of permits and authorisations required for such Plants. Thus, land concession, construction execution and facilities operations all require as a prior step the attainment of permits authorisations, and licenses from many different institutions and official bodies.
In view of so many requirements to comply with, swift and efficient processing of the same has turned out to be essential for the execution of the Projects within a reasonable extension of time.
The following are the main institutions involved in the authorisations process:
Spanish Government
Ministry of Economy, General Directorate for Energy and Mining Ministry of Environment Ministry of Development
Basque Government
Land Regulation, Housing and Environment Department. Industry, Commerce and Tourism Department.
Regional Government for Bizkaia
Land Regulation Department
Local Authorities
Bilbao Port Authority Zierbena Town Hall
The following are the main permits and authorisations to be obtained:
Industrial
Administrative Authorisation for the facilities (Previous authorisation) Ministry of Economy Execution Project Authorisation: Ministry of Economy Commissioning Certificate: Ministry of Economy Registration at the Administrative Registry for Gas Transporter Facilities: Ministry of Economy Registration at the Administrative Registry for Power Producers: Ministry of Economy
Environmental
Environmental Impact Statement: Ministry of Environment Activity License: Zierbena Town Hall Activity License for Potentially Hazardous Activities: Basque Government Environment Vice-Ministry Land to Sea Disposal Authorisation: Basque Government Environment Vice-Ministry Administrative Authorisation for Hazardous Waste Production: Basque Government Environment Vice- Ministry Opening License: Zierbena Town Hall Port Authority Land Lease Administrative Concession for Port Land: Bilbao Port Authority Authorisation for seawater usage
Territorial and Urban Development
Territorial Adaptation: Regional Government for Bizkaia Works License: Zierbena Town Hall
The great number of authorisations to be attained, as well as of different institutions involved in the process, the need to go through Public Information processes, and the fact that most of the aforementioned authorisations are interdependent has meant that the attainment process has been quite complex and protracted.
Furthermore, especially in the case of the Regasification Plant, regulations concerning industrial authorisations and permits had not yet been fully developed when proceedings started, which has made the process even more complex.
The following paragraphs provide an impression of the final extension of time required for the attainment of same of these permits and authorisations for Bahía de Bizkaia:
Joint Environmental Impact Statement (BBE and BBG) Preliminary enquiries: December 1998 Application submission: 5.07.99 Granted: 16.11.00
Administrative Authorisation for Power Plant Facilities (BBE) Application submission: 5.07.99 Granted. 2.01.01
Administrative Authorisation for Regas Facilities (BBG) Application submission: 5.07.99 Granted. 12.03.01
Activity License for both Facilities (BBE and BBG) Application submission: 27.06.99 Granted: 23.02.01
Works License for both Facilities (BBE and BBG) Application submission: 25.10.00 Granted: 23.02.01
Waste Disposal Authorisation Application submission: 12.11.99 Granted: 7.02.01
Bilbao Port Authority Land Lease Application submission: 11.05.00 Granted: 2.11.000
BBE Project Execution Authorisation Application submission: 15.06.01 Granted. 1.02.02
BBG Project Execution Authorisation Application submission: 22.06.01 Granted: 20.03.02
BBE and BBG Construction Licenses Application submission: 25.10.00 Granted. 23.02.01
As can be inferred from the information above, the process prior to the commencement of construction works has taken more than two years, as a result of the amount of permits to be submitted for and of the complexity of the authorisation process in itself.
CONCLUSIONS
Bahía de Bizkaia is a key project in the development of the Spanish energy system, and much more so for the Basque Country, as it involves the possibility of an increase in the regasification capacity, apart from opening a new gateway for gas in the north of Spain. Similarly, the associated Combined Cycle Power Plant will help satisfy an ever-increasing demand for power by means of more efficiently produced and less polluting energy.
The execution of this project has certainly not been easy: the lack of a fully-fledged regulatory framework involved numerous unknown factors. On the other hand, the fact that the project was headed by four Partners with diverging interests in some respects created as well an element of uncertainty so as to the development of the same.
In spite of all such obstacles - and some others which can never fail to arise in a project of great magnitude like the one which concerns us here -, the firm belief on the part of the Partners in the convenience of completing such a project must be acknowledged as a key factor for the now nearly completed successful execution of the challenging project Bahía de Bizkaia.