Iraq electricity debacle

This is a long post, but really worth the read. Yesterday I linked to a story I found via Tim Lambert's excellent blog, Deltoid, now moved to the ScienceBlogs consortium. There I found a link to a very long article in Spectrum magazine of the Institute of Electrical and Electronics Engineers (IEEE) by Glenn Zorpette. It is about restoring the electricity grid in Iraq. I quote here from a relatively small portion. Read the whole thing if you can. It seems to me this is the story of much of the US Iraq debacle.

Remember the rosy stories about how the US was going to rebuild Iraq? Iraqis would greet us with flowers and we would reciprocate with infrastructure. Now we know that the US, unable to make good on its promises, has said "nevermind" to the infrastructure pledge, despite the fact that we were largely to blame for destroying the infrastructure in the first place with our "shock and awe" campaign prior to the invasion. This example is emblematic because it is a case of huge amounts of money yoked to lack of foresight and larded with incompetence, in other words, the Iraq debacle in miniature. The larger story is geopolitics, oil company interests and neocon madness. But let's stick to the small picture on the ground. It isn't pretty.

For starters, Zorpette's article contains gem factoids like this:

All of the money pledged so far for Iraq's reconstruction adds up to roughly $60 billion, according to a report last July by the U.S. Government Accountability Office (GAO). U.S. officials whom I interviewed in Iraq this past October said that the current consensus was that the final tally might be as high as $100 billion. For comparison, in the first two years of their reconstruction after being devastated in wars, Germany, Japan, Haiti, Bosnia, Kosovo, and Afghanistan together received a total of $25.6 billion, in 2003 dollars, according to the United States Institute of Peace, a congressionally created organization devoted to conflict resolution. The first European Recovery Program, known as the Marshall Plan, which rebuilt much of Western Europe after World War II, spent the equivalent of about $90 billion in today's dollars between 1948 and 1951.

Electricity and water are the cores of a modern society's infrastructure. Prior to the war, Sadaam siphoned off electricity from the grid in the Kurdish north and Shiite south to supply Bahgdad 24 hours a day. The "donor" areas suffered routine, but scheduled, blackouts. Now the electricity tends to stay where it is produced, a reflection of the changed balance of power in the New Iraq. This means Baghdad only has electricity 6 to 9 hours a day, while Basra, in the Shiite south, has about 15 hours a day. The loss of electricity is no small matter politically:

In the most recent survey by the International Republican Institute, a prodemocracy advocacy group in Washington, D.C., 2200 Iraqis were asked which of 10 different problems "requiring a political or governmental solution" was most important to them. The first choice, by a margin of about 10 percent, was "inadequate electricity." "National security" came in fifth; the "presence of multinational forces" was seventh; and "terrorists" was eighth.

At first glance, oil rich Iraq shouldn't be at a loss for electricity. You generate electricity principally with oil or natural gas, both in abundance. But alas, it's not that simple. Here is Zorpette's account:

In the vicinity of the Quds complex, I notice several towering flare stacks across the street from the power plant, at an oil field called East Baghdad. Atop one of the stacks, an enormous orange flame indicates that natural gas pouring out of the oil deposits is being burned off steadily to keep it from exploding. Such flaring goes on continually all over Iraq. It is so widespread in the huge southern oil fields west of Basra that it actually fills the night sky with light.

The flaring is notable because if all that gas were captured, pressurized, and distributed rather than being burned off, it could be used to meet more than half of Iraq's demand for electricity. At the moment, Iraq is flaring more than 28 million cubic meters of gas a day. It's enough to fire at least 4000 MW of electricity.

The gas is sorely needed. Most of the generating units installed or refurbished so far during reconstruction—40 out of a total of about 57—are based on combustion turbines. They run optimally only when being fueled by natural gas, which few of them are at the moment. The rest are running on diesel fuel or heavy derivatives of crude oil left over after the more desirable fuel grades are separated out in refining.

Those more desirable grades of crude are shipped out of Iraq, to bring desperately needed revenues into the country. And the Ministry of Electricity pays the Ministry of Oil only a small fraction of the world-market price for the fuels it needs to generate electricity. Thus, the Electricity Ministry must be content with whatever it can get, and generally what it gets are fuels that few other utilities in the world would be willing to burn.

"The fuel situation is a mess," says Keith W. Crane, senior economist at the Rand Corp.'s Washington office. He was an advisor to Ambassador L. Paul Bremer, the civil administrator of Iraq after the war. "There are no prices, no incentives, nothing."

Diesel fuel, which isn't produced in sufficient quantities in Iraq, is trucked to the generating plants from Turkey at great cost. But that obstacle is nothing compared with the problems of the heavy fuels, including something called Bunker C, which powers a lot of Iraq's generating plants. Even under the best circumstances, a PCO generation specialist in Iraq tells me, a combustion turbine running on crude oil or diesel fuel requires two or three times as much maintenance as one running on natural gas. And present-day Iraq isn't an example of the best circumstances.

Before these heavy fuels can be burned in a combustion turbine, they have to be treated with a substance called an inhibitor to mitigate the effects of elements like vanadium that would damage the turbine blades. The inhibitor binds the vanadium to magnesium, to keep the vanadium from corroding the blades. Unfortunately, the resulting compounds are deposited on the turbine blades. So the units have to be taken out of service every week to have their blades cleaned.

"To buy inhibitor, in dollars per liter, is more expensive than crude," one engineer tells me. "Last summer," he goes on, "we bought all the inhibitor on the shelf in the world for a four-month supply in Iraq. Let me put it in simple terms: nobody's dumb enough to do what we're doing."

Iraq's 110 combustion turbines alone could in theory generate well over 4000 MW if they were being fueled by natural gas. So far, though, the actual output of these combustion turbine generators hasn't come close to half of that figure.

Which brings us to the Army Corps of Engineers complete overhaul of the Quds electric power generating station north of Baghdad, designed to increase electricity production by 10%, a major and important undertaking, given the economic and political importance of electricity.

"The basic problem with Quds is, we have four LM6000s out there that essentially don't have a fuel supply," says a U.S. power-generation engineer who did a yearlong tour in Iraq. "We installed a third of a billion dollars' worth of combustion turbines that can't be fueled."

The LM6000 combustion turbines are a type known as aeroderivative. They are basically Boeing 747 turbines mounted on heavy stands. They work well on natural gas, but to run on diesel, they need high-quality fuel and a fair amount of operational sophistication, two things in short supply today in Iraq. "The first time I went to Quds and saw those LM6000s, the first words out of my mouth were, 'What the hell are those things doing here?'" says the generation specialist in Iraq.

There are two distinct accounts of how the LM6000s wound up at Quds. The power-generation engineer no longer in Iraq says that they were purchased partly as a result of a misunderstanding. The buyers had bought them thinking that their dual-fuel classification meant they could be powered by crude oil and natural gas. (In fact, it meant they could be fired by highly pure diesel fuel or natural gas.) When the bids were made, in September of 2003, "no one understood that the LMs can't run off crude," the engineer says.

However, representatives of General Electric Co. and the PCO strongly deny this account. They say that the PCO bought the turbines intending to fuel them with a "distillate" derived from the crude oil pumped at the East Baghdad facility across the street. They were stymied, they say, when it turned out that East Baghdad couldn't pump crude fast enough to give them distillate in sufficient quantities to run the LM6000s.

The LM6000s are supposed to run continuously for months at a time, to avoid the thermal shocks of being cycled on and off. Each of the four units has special tandem high-pressure filters, built by Westfalia Separator Deutschland GmbH, in Oelde, Germany, to remove impurities and debris from the diesel fuel. If one filter clogs, operators are supposed to switch on the fly to the other filter, allowing the turbine to keep running while the clogged filter is cleaned. But the plant's Iraqi operators have had trouble switching between filters, and at the moment three of the four units are damaged and unusable.

It may be just as well. If the operators could somehow manage to get all four LM6000s running continuously, they would consume a truckload of diesel fuel every 45 minutes, I am told. All of it would have to come down from Turkey. At $85 a barrel.

The LM6000s "need high-quality fuel, and a lot of care, and a lot of experienced people to run them," says one of the Iraqi engineers brought out of retirement. "Still, if you are in a sea and drowning, you will grab anything," he adds with a shrug.

Why not pay a few technicians from Westfalia to spend a couple of weeks here showing the Iraqis how to properly operate the filters? The American engineer gives me a patient, sad smile. It would cost at least $60 000 a day to do that, he estimates, if you figure in the costs of the security teams and everything else you'd need to provide safe lodging and transportation for the technicians.

Suddenly, that gas I saw being flared across the street at the East Baghdad field seems all the more wasteful. The gas from just that one flare stack could fuel two of the LM6000s, the American engineer tells me. I ask the obvious question: why aren't they building the pressurization system and short pipeline that could get the gas across the street to the combustion turbines?

It turns out that just before the first Gulf War, in 1991, an Italian company had installed all of the infrastructure needed to capture, dry, pressurize, and clean up the natural gas at East Baghdad. But when the war broke out the Italians fled before they could get the system running. The equipment has lain there ever since, unused and sinking into disrepair.

In 2004, $50 million of Iraqi money was set aside to refurbish the gas equipment at East Baghdad. Another $250 million was earmarked to reconstruct gas pipelines and compressors to move gas from the huge southern oil fields as far north as Quds. But the Ministry of Oil didn't commit to using the funds during that calendar year, so the money was transferred to the Ministry of Finance, as specified in the legal code then in effect in Iraq.

What happened to the $300 million then? "We have no clue," says the U.S. power-generation engineer, who was working in Iraq at the time and following the situation.

In the meantime, the insurgency has staged devastating attacks on pipelines, timed perfectly for maximum disruption. The attacks have made it impossible to undertake a large pipeline project today.

At Quds, though, no long pipeline is needed, because the gas comes out of the ground literally across the street from the power plant. So yet another project, called the East Baghdad Oil-Gas project, has been proposed to get the gas to Quds. Because the costs of buying and trucking diesel fuel from Turkey are so high, the projected $33 million cost of the project would be recovered within three months of completion, the generation specialist says. Still, the project was recently shelved as Iraqi and U.S. officials balked at its cost at a time when funds were being shifted to security. "It's insane," the PCO generation specialist in Iraq says of the decision.

The expert at the U.S. Embassy in Baghdad responds: "We're trying to negotiate with the Ministry of Oil to make [the East Baghdad project] a priority for them."

Why did reconstruction officials limit themselves to combustion turbines? After all, had they begun putting in at least a few steam-thermal plants in the spring of 2003, their fuel problems wouldn't be nearly as extreme as they are now. Combustion turbines and steam-thermal plants have fundamental differences. A combustion turbine is spun by the hot exhaust gases of a burning fuel; in a steam-thermal plant the fuel is burned to make steam, which spins the turbine. Only the steam, not the hot, corrosive exhaust, flows through the turbine. So it doesn't really matter what kind of fuel you burn to make the steam, and the plants require much less maintenance.

"When we were starting to rebuild," says one of the formerly retired Iraqi engineers now working at Quds, "the U.S. didn't take the advice of the Ministry of Electricity on where to build plants and what kind of plants to build. It was a shortcoming in planning."

The expert at the embassy offers a different view. He notes that the initial decision to begin installing combustion turbines in the country was made by Iraqi officials, not U.S. officials, well before the start of the 2003 war. Those Iraqi officials had used United Nations Development Programme (UNDP) money to buy a dozen combustion turbines—including the four GE Frame 9s at Quds.

But just because the Iraqis had started putting in combustion turbines doesn't mean the United States should have installed lots more of them, some experts contend. One U.S. engineer puts it bluntly: "It doesn't mean it wasn't a stupid thing to do." To the dozen combustion units the Iraqis had bought under UNDP, the rebuilders added, or are adding, 30 more.

Who decided to limit new generation plants to combustion turbines? "Absolutely everyone operating in Iraq at that time," says a former official of the Coalition Provisional Authority, which ran Iraq in the war's aftermath. The blame should be spread among the Army Corps of Engineers, USAID, PCO, CPA, the State Department—and also the Ministry of Electricity, this former official insists.

But other officials and engineers, not only Iraqis but a few Americans, too, say that the Iraqi Ministry's engineers were never happy with the plan to exclude steam plants. "The Iraqis, from the beginning, wanted steam plants," declares the U.S. power-generation engineer who was there at the time.

The perceived problem with steam plants, everyone agrees, was that they take three to five years to build. "Both the Iraqis and the U.S. wanted results in months (if not days) rather than years," the former CPA official writes in an e-mail. Combustion turbines can be installed in as few as 18 months.

This is the reconstruction effort in microcosm, if you can call hundreds of millions of dollars and wasted opportunities a microcosm.

The incompetence boggles the mind.

But don't worry. I'm sure they are well prepared for bird flu.