29th Annual ENERGY BUYERS’ CONFERNCE

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29th AnnualENERGY BUYERS CONFERNCE

• Combustion Turbines Alternate Fuels
• Mike Zampano

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Discussion Outline

• Fuel Selection
• Fuel Availability
• Product Specifications
• Quality Concerns
• Delivery Logistics
• Bottlenecks
• Delivery Example
• Working With Suppliers

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Fuel Selection

• Combustion turbines generally are designed to run
  a primary fuel and a backup fuel
• Most times the primary fuel is natural gas and
  the backup fuel is a liquid distillate
• Fuel choice is predicated on air permits and gas
  turbine manufacturers specification
• Initially most liquid fuel was either low sulfur
  diesel or kerosene (500ppm max sulfur by weight)
• Small aero derived jet packs ran kerosene
• Frame units usually consumed low sulfur diesel
• EPAs Clean Diesel Program mandated much lower
  sulfur in road fuels, (from 500ppm max sulfur to
  15ppm max sulfur)
• Plan started to take effect mid 2006
• Refiners reduced production of 500ppm sulfur fuel
  (80 of diesel output must be 15ppm max sulfur)
• Many terminals shifted storage from low sulfur
  diesel to ultra low sulfur diesel
• Eventually all diesel, including off road diesel
  will shift to 15ppm fuel

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Fuel Availability

• As suppliers/marketers shifted focus from LSD to
  ULSD fuels power generators have faced shortages
  of 500ppm fuel
• Most cases 500ppm fuel was not available
• Forced generators to switch to ULSD fuels
• Forward timeline for sulfur reduction in NRLM
  diesel (non-road locomotive marine)
• 6/1/2012 Most LM diesel must meet 15ppm max
  sulfur
• 10/1/2014 Any wholesale purchasing/consumer
  plants must be 15ppm max sulfur
• 12/1/2014 All NR diesel must be 15ppm
• Essentially, at least in the northeast, there
  will be two possible sulfur grades for
  distillates
• All diesels/on-road kerosene will be 15ppm max
  sulfur
• Heating oils which right now range from 2000ppm
  to 5000ppm max sulfur
• Two future outcomes are likely
• Elimination of 500ppm diesels will occur sooner
  than deadline
• Distillate heating oils will drop in sulfur
• There is a move among heating oil marketing
  groups to move to an ultra low sulfur heating oil
• Some states may also push for mandates for
  inclusion of biofuels

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Product Specifications - Guidelines

• Generally speaking refiners of 15ppm distillates
  are governed by ASTM D975-09 (the final 09
  identifies the last year the specification was
  modified.)
• Combustion turbine manufacturers, power plants
  with GTs, should be knowledgeable of both ASTM
  D975-09 and ASTM D2880-03
• D2880-03 is the specification for gas turbine
  fuel oils
• D975-09 is mainly focused on the diesel product
  specifications
• D2880 is more concerned with product handling
  contamination
• D2880s No. 1 GT corresponds to kerosene as
  defined by D975-09
• D2880s No. 2 GT corresponds to No. 2 diesel as
  defined by D975-09

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Fuel Specifications Quality Concerns

• Sulfur levels
• Sulfur can precipitate out in the gas path
  creating corrosive compounds
• Should not be an issue anymore as fuel consumed
  in turbines will contain a maximum of 15ppm
  sulfur
• Lubricity
• Fuel additives to meet minimum lubricity
  standards
• Approved tests have wide reproducibility results
• Viscosity
• Resistance to flow
• May be an issue with slippage through fuel
  dividers pumps
• Can be an issue if switching from 2 diesel to
  1diesel or kerosene and a plants fuel system is
  designed for a more viscous product (2 diesel)

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Fuel Specifications Quality Concerns

• Ash
• Can be evidence of formation of abrasive solids
  or soluble metallic soaps (Basically non
  petroleum constituents)
• Can have a negative effect on buckets in the gas
  path
• Higher than normal ash levels can be an
  indication of possible fuel contamination
• Stability
• Today the distillate refining process is more
  severe, (hydrocracking heavy fractions, catalytic
  cracking, etc.), and negatively effects fuel
  stability
• Extended storage time, presence of oxygen, and
  heat can also lead to instability
• Unstable fuel is the enemy
• Premature filter plugging
• Deposits at high temperature injection points
  during combustion
• Additives can suspend further degradation but
  does not improve fuel stability

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Fuel Specifications Changes to ASTM 975-09

• Biodiesel
• In 2009 the ASTM 975 diesel specification allows
  up to 5 of biodiesel
• All biodiesel blended in must meet ASTM 6751
• ASTM 6751 is the guiding specification for B100
  (100) biodiesel
• Since 5 or less biodiesel meets ASTM 975 there
  is no requirement to report content
• Once biodiesel is blended into fuel there is no
  way to determine if the bio blend stock met the
  ASTM 6751 specification
• EN 14078 or ASTM D7371-07 can be run to determine
  biodiesel
• Uses Infrared Spectroscopy
• Identifies volume of Fatty Acid Methyl Esters
  (FAME) in a middle distillate
• Presence of Fatty Acid Ethyl Esters (FAEE) will
  throw the test results off
• Cannot be run in the field
• Takes about 20 minutes to obtain results in the
  laboratory

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Biodiesel Quality Concerns

• Stability
• Like petroleum diesel unstable biodiesel can lead
  to gum sediment formation
• Stability is affected by biodiesel base stock
  biodiesel
• Different bio base stocks can affect stability
  differently
• Higher percentages of biodiesel, higher chance of
  stability problems
• 5 or less biodiesel should not adversely effect
  stability
• EN 14112 can be run to determine OSI, (Oil
  Stability Index)
• EN 14111 can be run to determine Iodine Index
• Iodine index measures the number of carbon double
  bonds in the fatty acid
• The number of double bonds are an indication of
  the bio feed stock
• Roughly the more double bonds, the less stable
  the fuel stock
• Can be a length of storage determinant
• Cold flow
• Biodiesels have higher cold flow properties
• Bio base stocks determine cold flow properties

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Delivery Logistics

• Acquiring the alternate fuel is half of the
  solution to running delivering the fuel to the
  plant is the other half of the equation
• Understanding the delivery system
• Terminal configuration
• Capacity
• Inventory on hand
• Loading rack design
• Alternate terminal location
• Delivery
• Carrier
• Distance
• Reliability

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Supply Chain Bottlenecks

• Bottleneck factors
• Terminal configuration
• Carrier capacity
• Distance to plant
• Off loading capability

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Breaking Down Supply Chain Bottlenecks

• Terminal Configuration
• Loading positions for ULSD
• Configuration of loading rack
• Multiple products served through a bay can be a
  limit on potential volume loaded
• Carrier capacity
• Number of available trucks
• Dispatch reliability/efficiency
• Overall reliability
• Distance terminal to power plant
• Road(s) configuration
• Traffic congestion
• Average turn around time

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Breaking Down Supply Chain Bottlenecks contd

• Power plant configuration
• Number of off loading positions
• Stationary pump availibility
• Ease of ingress/egress
• Ability to pump out of tank into truck
• Length of hose required
• Hours of operation (for receiving fuel)
• Understanding the supply chain
• Evaluating bottlenecks allows one to estimate the
  daily deliverable volume
• Plant particulars allow one to determine daily
  fuel requirement
• Together they allow one to estimate reliance on
  liquid fuel consumption

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Delivery Example 1

• Plant size 70mwh
• Plant type Combined cycle
• Liquid fuel ULSD
• Btu per gallon 125,000
• Overall gross heat rate 7,000 (on liquid fuel)
• Distance from terminal 50 miles
• Average round trip time 2.95 hours
• Hourly plant fuel burn 3,920
• Estimated trucks per 12 hour shift 3
• Hours run 8
• Total gallons burned 31,360
• Minimum trucks required 1

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Delivery Example 2

• Plant size 550 mwh
• Plant type Combined cycle
• Liquid fuel ULSD
• Btu per gallon 125,000
• Overall gross heat rate 7,000 (on liquid fuel)
• Distance from terminal 50 miles
• Average round trip time 2.95 hours
• Hourly plant fuel burn 30,800
• Estimated trucks per 12 hour shift 25
• Hours run 8
• Total gallons burned 246,400
• Minimum trucks required 8

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Selecting And Working With Suppliers

• Know your supplier
• Do they own or lease storage?
• How much storage do they have?
• Will they have sufficient fuel on hand and or a
  backup supply source?
• How is quality control handled?
• Does the supplier representative understand fuel
  chemistry and quality control?
• Do they do their own testing?
• What is their testing protocol?
• Do they understand the delivery requirements?
• Are they reliable?
• Does your representative understand power plant
  operations?

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Conclusion

• A good supplier will understand power plant
  operations power production/distribution
• They will have a good understanding of combustion
  turbines as well as the relationship between
  natural gas oil consumption operations in these
  plants
• They will have a firm understanding of product
  quality control
• Provide adequate product testing
• Will be reliable
• On spec product
• Good delivery performance
• Remember its not just price!

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Sprague Owned Terminal Network
Spragues terminals hold over 300 million
gallons of liquid storage
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• Questions?

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Appendix 1
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Appendix 2