ADWEC 2008 Statement of Future Capacity Requirements 2008 ...

RSB Approved Version- 4 th August 2008
supplies to more profitable industrial purposes. Abu Dhabi and the UAE more
generally are therefore not alone in needing to consider alternate fuels to known
natural gas supplies.
7.1.2 Technologies
Oil Stations
GCC oil fired stations are typically built using the conventional configuration of
steam boilers with steam turbines, however some of Saudi Arabia’s crude oil fired
stations will be equipped with gas turbines adjusted to the firing of crude oil. The
main reason for constructing oil fired stations is insufficient gas supplies. On the Red
Sea coast in Saudi Arabia almost all existing and new power plants will be fired with
crude oil.
Kuwait is also planning that part of its new capacity will be fuelled with crude oil.
Since GCC crude oil closely approximates light oil it can easily be used in power
generation. When crude oil is used as the main fuel, it is possible to construct
cogeneration power plants (electricity and water) with a fuel utilisation factor close to
90%, i.e. the same as natural gas. The main disadvantage of crude oil is its very high
spot price. A crude oil price of 100 US$/barrel is equivalent to about $17.6 - $18
MBTU 18 depending on the crude oil specification. This is about 70% - 80% higher
than the recent high North American market price of gas ($10 per MMBTU 19 ) and
approximately five times higher than price of coal ($3 per GJ = ~$3.2/MMBTU).
Oil fired stations are also somewhat more unreliable than gas fired stations, thereby
reducing the reliability of the entire system via an increased system forced outage
rate. Furthermore oil fired stations also tend to have higher operation and maintenance
costs than gas fired stations.
In economic terms it is perhaps better to consider the opportunity cost of burning oil,
i.e. the revenue forgone by not exporting the oil. As long as more revenue can be
earned by exporting the oil than the total costs (including environmental, security of
supply and infrastructure etc) associated with burning alternate fuels in place of oil,
then the oil should be exported and not burnt in domestic power stations.
18 There are approximately 6 GJ per barrel of oil, 1 GJ = 0.9478 MMBTU or 1 MMBTU = 1.055 GJ,
and so $100 per barrel / 6 GJ = $16.67 per GJ / 0.9478 = $17.6 per MMBTU.
19 According to the MEED magazine of 16 May 2008, Qatar sold LNG to the Korean Gas Company in
2007 at about $11 per MMBTU, and to Japanese buyers in early 2008 up to $12 per MMBTU.
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