Iraq Economy: Light At the End of the Tunnel Part III

[Kat]

...all that we need is the existence of companies with materials and expertise because we have the money and fuel." - Minister of Electricity Karim Waheed

Continued follow up on FbL's great Iraq Economy Series. This is a continuing look at Iraq's electricity situation.

In response to a request, Haditha Dam. Also, great pictures of what passes for electrical wiring in Iraq. Old video, but an excellent review of Haditha and its potential. It is right now providing nearly 24/7 electricity to Ramadi and surrounding Anbar.

The fact is that Iraq's economy is growing, and large projects are underway to continue to improve the flow of electricity. Second to the Hydro-Carbon Law (development of oil infrastructure and revenue sharing), electricity effects the overall political and economic development of Iraq. While oil may bring in the money, electricity may be the gauge by which the security and future economy can be measured.

Part I: Light At the End of the Tunnel - History of Abuse and Neglect

Part II: Light At the End of the Tunnel - The Electrical Surge

Part III: Powering Iraq's Future

Many other electricity capacity building and sustainment projects are continuing and have picked up speed since the down turn of violence late 2007. However, many of these plants continue to be built with gas or diesel fuel burning turbines. This presents several additional problems including the continued lack of sufficient fuel to drive these turbines. Fuel is also costly with oil at $108/bbl. Even though Iraq is an oil rich nation, it still lacks the refining capacity to produce sufficient fuel with the necessary purity to keep these plants operating without costly damage.

Another problem is that burning fuel creates high corrosives and forces almost weekly maintenance on the turbine props and internal engine systems, taking these power plants off the grid. The decision to build fossil fuel plants was based on several factors, namely: time, money and expertise.

Compared to a hydro-electric or thermal plant that takes between two and five years to build, fuel burning plants can be built in as little as six months to a year. Iraqi engineers are more familiar with these plants since they have been the main electrical producers for over five decades. That means more available expertise to manage and maintain these plants. They are also less costly for initial build and set up (though more costly in maintenance). Since September 2007, the US has cut funding to these programs to hundreds of millions, barely a drop in the bucket compared to the estimated needs.

The Minister of Electricity recently gave a presentation that indicated the MoE would require $25 billion between 2008-2016 to rehabilitate, build and generally bring electrical production up to meet demand. The 2008 budget for the MoE is $1.5 Billion. However, he indicated that 2008 would be the year that many MoE projects would propel Iraq much closer to meeting its demands. These projects include:

"2008 will be the year of gatherers for the Ministry of Electricity in the projects that are currently implemented, such as the stations of: Samawah with a 90 Mega Watts, South of Baghdad steam station which is of two units each one with 50 Mega Watts, South of Baghdad gas station with a production capacity of 400 Mega Watts, North of Baghdad station with 60 Mega Watts, Al-Quds station with 250 Mega Watts and Al-Musayyib station with a production capacity of 400 Mega Watts.

The minister predicts that, with sustained investment and reconstruction, the electrical grid could be producing 14,408 MW by 2009.

(click here for a larger image)

Based on previous predictions and outcomes, this prediction may be too aggressive. However, one of the ways that this may be accomplished is by taking advantage of one of the other natural resources that Iraq has in abundance: natural gas. Besides stand alone natural gas pockets, there is an abundance of natural gas available from oil production and refinement. Most of this natural gas is "flared off" or burned into the atmosphere to reduce internal pressure from drilling. According to a report from the IEEE (Institute of Electrical and Electronics Engineers), Iraqi oil production is flaring off enough natural gas to power all of Iraq's electrical plants and then some, decreasing its dependency on oil, gasoline and diesel fuels to power the country.

Most of Iraq's fossil fueled plants could be converted simply to burning natural gas. It would require installing pressurizing and delivery equipment at these oil production sites as well as developing delivery infrastructure. Some delivery infrastructure already exists along with pressurizing machinery, but has laid dormant and incomplete since the invasion. Iraqi engineers do not have the expertise to handle this project. It is one of the many projects, along with building privately owned electrical plants, that Waheed has called on foreign companies to tender for or invest in the development.

...all that we need is the existence of companies with materials and expertise because we have the money and fuel."

The development of this system will also require the assistance and cooperation of the Ministry of Oil. This ability and cooperation will depend on the future of the Iraq Hydro-Carbon Law that will layout the legal structure and protections for foreign investment to reconstruct and develop iraq's oil infrastructure.

There is a light at the end of the tunnel for Iraq and Iraqis. It's coming faster every day as security continues to improve and stabilize. What Iraq needs now are people and companies who are willing to invest in that future for this generation and the generations to come.

[I suggest reading this equally long, but highly informative report (Re-engineering Iraq) from the IEEE completed in November 2007 (based on the price of oil quoted and several projects noted). It gives a very good ground view of the challenges and improvements to Iraq's electrical production. The writer visits several electrical plants and substations throughout Iraq, including in Sadr City, speaking with engineers, army officers and many others about security, economics and engineering. There is a surprising (or not) section about a power plant with four GE turbines that were bought erroneously by the MoE with USAID money. The Iraqi engineers from the MoE misunderstood the phrase "duel fuel" and did not realize that it did not burn diesel fuel like the other existing turbines in the plant. Now, $350 million worth of equipment sits idle and in disrepair since 2004. These turbines could burn natural gas. Right across the street is the East Baghdad oil plant that has three stacks "flaring off" natural gas. According to the reporter/engineer, one stack could fuel the four turbines and double the production of the electric plant. The equipment for this was being installed prior to the invasion and now sits running to ruin. Right across the street.]