When the lights flicker and dim, people understandably are quick to call for construction of new powerplants to generate the electricity they need. And since 1997, the U.S. electric generation plant base has enjoyed a boom unlike any since the 1980s. Last December, Engineering News-Record and The McGraw-Hill Cos.' Power magazine, collaborated to explore that boom and its significance for engineers, constructors and plant owner-operators (ENR 12/3/01).
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| (Photo courtesy of Parsons Brinkerhoff) |
Powerplants are only the starring characters of a drama that requires the supporting cast of fuel supply and transmission lines to achieve its full impact. As powerplant construction has grown to meet demand for new capacity, longstanding transmission pinchpoints have become serious threats to system reliability and new bottlenecks have become apparent. At the same time, pipeline construction has proceeded at a feverish pace to deliver the natural gas needed to fuel all but a tiny proportion of the new crop of generation plants.
Transmission construction remains a player in the wings, waiting its cue. But engineers and contractors are adding staff and bringing equipment out of mothballs in anticipation of a boom in new line construction. Pipeline construction is now in a momentary pause because of the Enron debacle but firms serving that market foresee a turnaround. The following report looks at issues facing delivery of fuel sources and the transmission of electricity.
New Energy Flowing to High-Voltage Lines
Sleepy sector of industry in turmoil awakens to growing opportunities
Rip Van Winkle has nothing on the U.S. electric-transmission industry, which has slept for nearly two decades while market restructuring changed the world around it. Now, it's waking up after years of underinvestment, and engineers and constructors are scrambling to prepare for new construction on a scale not seen since the 1970s.
Many see the demand coming, but they hesitate to say when it will hit. Few utilities are building more than "Band-Aid-type projects," says Abraham Pichardo, a high-voltage specialist recently hired by Edwards & Kelcey Inc., Morristown, N.J., in anticipation of the boom. "The business has been a little slow," but that could change "suddenly," he adds.
"There will be a sizable volume in the next five years," agrees Michael Cooper, Laverne, Calif.-based regional manager for MYR Group Inc. He expects serious shortages of skilled labor and notes that the industry's culture also has changed. Where once whole families moved with the crews from project to project, "those crews have since been dispersed," he says. He doubts families today will do that
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| DEMANDING New powerplants are taxing line capacity. (Photo courtesy of Parsons Brinkerhoff) |
Finding specialized equipment will be another likely challenge, says Cooper. Tools and equipment are coming out of mothballs and being modified for heavier lines�345-kv and 500-kv, rather than the 115-kv and 230-kv lines that were the norm, he says. MYR recently established a transmission fleet department to manage an expanded inventory of tools and equipment.
But deregulation's uneven pace makes utilities reluctant to invest in transmission, says Fred Haag, senior vice president of Quanta Services Inc., Houston. Their reduced role in generation is another factor. "Utilities don't have the revenue stream they had in the past," he notes. And some have deferred maintenance for so long while waiting for the picture to clear up that what would have gone to capital investment now has to be redirected to maintenance, he adds.
Utilities are looking for ways to increase existing line capacity rather than build new lines, says Rich Tangel, Edwards & Kelcey executive vice president. Using data from new environment-monitoring technologies, they can more precisely figure how much current they can push through existing lines, he says.
They are constructing high-voltage dc (HVDC) lines, too. Using only two conductors, HVDC can get more circuits on existing towers, Tangel says.
Reconductoring with new, higher-capacity wire and doubling circuits on single-circuit lines also are common, says Walt Womack, vice president at Burns & McDonnell, Kansas City. Older lines' towers, built before computers were widely available, were substantially stronger than necessary, he says. But computers have made it possible to determine more precisely how much unused tower strength is available, and lines are being modified to use more of the margin.
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| ADD-ON Substation upgrades can postpone need for new lines. (Photo courtesy of Parsons Brinkerhoff) |
"Once the need [for a new line] is recognized, NIMBY (Not-In-My-Back-Yard) becomes your biggest challenge," says Womack. On a recent project in south Texas, community resistance was strong. "They're real particular about what the line looks like and where it goes," he says.
Labor skills were lost when demand for them grew slack. MYR's Cooper notes that transmission construction requires skills in heavy rigging and hydraulic tools to a greater degree than other types of construction. Anticipating a shortage of skilled labor, MYR is actively recruiting through high schools and trade schools. But an initiative by the California-Nevada Line Apprenticeship, Riverside, Calif., attracted quite a bit of interest and the program may soon go national.
For $2,000, Cal-Nevada Director Armando Mendez placed a 60-second ad video on the Direct-TV Outdoor Channel for four weekends starting Jan. 27, 2002. The message was that apprentices could earn money while learning a well-paid trade and working outdoors, says Mendez. More than 350 people nationwide called the Cal-Nevada telephone number in the ad, he says. Most were directed to a corresponding local center of the National Joint Apprenticeship Training Program, of which Cal-Nevada is one. When the counting was done, Cal-Nevada reaped less than a dozen inquiries from its area. Some others received as many as 70, he says.
The results impressed officials in the Outside Construction Division of the National Joint Apprenticeship Training Committee, sponsored by the International Brotherhood of Electrical Workers and the National Electrical Contractors Association. Directors of other training centers have expressed interest in sharing costs to run the ads year-round, and it will be a topic of discussion at a mid-June division meeting in Oregon, says Mendez.
Quanta's Haag is moving in another direction and bringing in foreign nationals. Quanta has picked up some linemen from major transmission projects recently completed in Indonesia and the Philippines, and is investing as much as a year each to arrange for them to come to the U.S.
The supply of professional staff has shrunk, too. "Transmission line design engineers are hard to find," says Burns & McDonnell's Womack. "The electrical curriculum got away from power systems decades ago and never got back to it. We're hiring young civil-structural engineers and making them line designers," but achieving full-fledged competence takes four years, he says.
Haag expects to see plenty of construction using helicopters, which allow access to difficult sites without right-of-way wear and tear. A few big contractors will quickly lock up the market's available supply of other major equipment and absorb its capacity, he says.
Contract forms also are changing. "We're looking at build-finance schemes now with extended payback," says Haag. Under such an arrangement, Quanta would take responsibility for engineering, procurement and construction, finance the construction and delay payment on projects up to $100 million, he says. Quanta also is willing to own and operate the completed line.
The Bonneville Power Administration, Portland, Ore., is experimenting with contracts for transmission work. BPA recently awarded 155 miles of line in three major transmission projects to Duke Energy, Charlotte, N.C., under a five-year, $182-million, furnish-and-install contract (ENR 4/29 p. 17).
The awakening industry also is finding changes in materials. Edwards & Kelcey's Pichardo says most lines built today use fiber-optic-on-steel conductor, for example, combining the functions of transmission, protection and telecommuni-cation. The conductor, called optical ground wire (OPGW) or fiber-optic ground (FOG), does not require an overhead shield wire, so it saves on labor.
Polymer insulators also are a recent innovation, says Pichardo. Self-cleaning, they improve line performance and reduce flashover. They are lighter than porcelain insulators and easier to install. They also are less satisfying to vandals prone to roadside target practice, because bullets just pass through the material, he adds.
Enron's Pall Drags Market Down As Owners Postpone Expansions
But E&C firms see better times over the long haul
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| (Photo courtesy of the GulfStream Natural Gas Systems LLC) |
To contractors and consultants, last year's Enron Corp. debacle looms like an 800-pound gorilla over the natural gas pipeline market. "Ever since the Enron deal, we've seen most of our clients cut back on their capital spending," says David L. Edgar, manager of pipelines for Mustang Engineering Inc., Houston. "We've seen companies that had pipeline projects [planned] shut them down, which caused us to reforecast our revenue for this year." Because many energy companies were tarred with Enron's brush, "financing is real hard to come by," says Lonnie Hamilton, vice president of business development for Willbros Engineers Inc., Tulsa, Okla.
But more than Enron is to blame for the slowdown. Steve Dracos, senior vice president for business development at Houston-based Universal Ensco Inc., recalls that last summer the company bid a 380-mile pipeline and an 800-mile pipeline, but "then the powerplant market fell out from under" those projects. Operators try to cut down on long lead times by commissioning design services years before a project's scheduled construction start, but continuing a pattern familiar to E&C firms serving the industry, many of those proposals eventually fizzle for financial or other reasons, Dracos says.
Taking the long view during the current downturn, E&C firms are gearing up for renewed activity. "We are doing more upfront planning and project management for jobs of all sizes," reports J. Daniel Pigott, vice president for corporate engineering at Blue Bell, Pa.-based Henkels & McCoy. "It puts more pressure on finding and lining up the qualified resources for these projects."
Owners' interest in one-stop shopping is drawing both plaudits and skepticism. Turnkey delivery for compressor stations is becoming more popular, says Bob Sprick, vice president of business development for Gulf Interstate Engineering Co., Houston. "Typically a construction contractor would receive a package of a couple of hundred drawings that we would have prepared," Sprick says. "Now, a lot of the operating companies are providing no more than a set of P&IDs [piping and instrumentation diagrams] and preliminary plot lines. The bottom line is, we're going to price in the risks associated with the project and pass them on to the client."
So far, says Sprick, "We haven't seen the trend on the pipelines to go to [engineering, procurement and construction delivery] as we have on compressor stations." Still, EPC delivery is increasing in popularity. In a step toward raising Willbros' stake, "We're doing more and more projects where we're partnering with the client and sharing risk and sharing rewards," says Hamilton. "If the project's right, we might even take an equity position."
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| SPECIAL DELIVERY Turnkey approach for compressor stations is gaining favor among owners looking for one-stop shopping. |
But some remain skeptical. Owners' efforts to transfer risks associated with right-of-way acquisition and permitting "is something that we don't like as an engineering services company," says Mustang's Edgar. In a practice referred to as "reverse auctioning," operators are inviting bids on services like inspection and right-of-way location. "That makes it very, very competitive," Edgar says. "We see guys bid low enough that we know they're losing money." Operators are thinking twice about this strategy, since it can lead to reduced quality of services, he says.
Even as EPC delivery gains momentum, Edgar estimates that "90% of the clients still do [project delivery] the traditional way," providing a contractor with a complete set of design drawings. In an unusual strategy that Sprick says will "take a little bit of risk off us," the owner will reimburse Gulf Interstate on a lump-sum basis for overhead and fees on a forthcoming pipeline project in Northern California, and on an hourly basis for direct costs. If actual work-hours exceed the estimate, Gulf Interstate will be reimbursed on a direct-cost basis. Sprick calls this approach "a good way to share risks" and to "make sure we're not building in too many contingencies for the price."
Along with project delivery, technology continues to evolve. In a dramatic reversal from only a decade ago, global positioning systems account for about 90% of pipeline surveying, with conventional methods now used just 10% of the time, says Dracos. Clients want data like pipeline depths, joint numbers and weld locations to be recorded electronically and fed directly into their geographic- information-systems databases, Dracos says.
HIGHER STRENGTH. The continuing development of high-strength, high-yield pipe heads the list of trends in materials. Strong steel means less steel, and lower pipeline cost. Steel pipe rated X70�so called because it can tolerate 70,000 psi before deforming�is already in common use. The next step will be pipe rated X80, and X120 is on the horizon.
As this higher-strength steel pipe raises tolerances, "Mechanized welding and ultrasonic welding inspection continue to take a bigger and bigger place in our industry," says Dracos. Mechanized welding helps eliminate variability and improves consistency and quality control, he says.
Advances are also on the way for plastic pipe, which now accounts for 90% of distribution lines, says Jim Albrecht, a spokesman for the Gas Technology Institute, Des Plaines, Ill. Although maximum strength today for plastic pipeline is about 100 psi, GTI is working with manufacturers to develop 300-psi pipe. Manufacturers are also testing ways to incorporate a magnetic element as the plastic is extruded so that pipe can be located without maps, Albrecht says.
On the equipment track, executives cite the increased use of directional drills as offering both cost and regulatory benefits. Says Mustang's Edgar: "If you're crossing a creek or a marsh area, it makes the permitting agency happier that you're not cutting the river or cutting the creek."
Regulatory issues continue to be a frequent stumbling block. "If we have a project in which we're responsible for engineering and right-of-way, now you're having to deal with multiple agencies for approvals on the same project," says Henkels & McCoy's Pigott. And contractors must often shrink work areas to minimize environmental impact, a requirement that raises costs and stretches out construction schedules.
