train and barge freight rates.

Hopper car costs were obtained from a manufacturer. Replacement was assumed to take place every 15 years, with a negligible salvage value. Car costs were escalated appropriately. Fixed charges were assumed to be 17.5 percent. This is slightly less than the transmission lines, as no property taxes are included.

• Maintenance costs were based on published data on cars in unit train service, escalated and levelized.

Based on the long-term trend, rail freight rates and barge rates were assumed to escalate at the rate proportional to the projected GNP deflator, adjusted appropriately, as were car maintenance costs.

Coal Slurry Pipelines

• Investment costs were estimated in detail on an order-of-magnitude basis for a specific intermediate case and then adjusted as appropriate for the other alternatives.

Fixed charges were taken at the rate of 13 percent, based on 80 percent debt and 20 percent equity financing, i.e., nonutilitytype financing. The assumed capitalization structure used in developing the fixed charge rate, combined with certain tax advantages, resulted in tax write-offs in the early years of operation which would be substantially in excess of the taxable revenues that would be generated by the pipeline. It was assumed that these tax writeoffs would be used to offset corporate tax liabilities due to income from other sources. If it had been assumed that the slurry pipeline was a stand-alone operation, then these tax advantages would not be available, and a fixed charge rate of 15 percent would be appropriate.

• Energy costs were based on actual utility rates. The energy costs included consideration of pumping costs and preparation plant energy costs. Recirculation was not assumed.

• Material and labor costs were escalated for 1986 initial operaFigure 5

ORDER-OF-MAGNITUDE
ESTIMATE OF COST
600 KVDC
TRANSMISSION LINES
(Two at 900 Miles Each)
(Millions in 1986 Dollars)

tion at a rate proportional to the projected GNP deflator, adjusted as appropriate.

• Annual costs shown cover nominal costs for minimal water treatment; e.g., pH adjustment. Investment Estimates

Coal pipelines and electric transmission lines require the largest investment of the four alternatives studied. Coal transportation by rail or rail-barge requires lower investment expenditures If the carrier provides the coal cars, there is essentially no investment required of the utility other than the facilities at the power station. This study is based on the use of utilityowned cars, as this option is becoming more predominant with the industry because of its economic and logistic advantages.

As an example, a 900-mile coal pipeline, delivering 9 million tons of coal per year to generate 3200 MW, is estimated to cost $1,309 million based on a 1986 operating date. Figure 4 shows the basis of this estimated cost.

On the other hand, transmitting 3200 MW of electric power 900 miles via two 600 kV (DC) circuits requires an investment of approximately $2,453 million, based on initial operation in 1986. The basis of this estimate is summarized in Figure 5.

For a 900-mile movement of 9 million tons of coal, via rail or railbarge transportation, the initial utility investment for hopper cars in 1986 dollars is estimated to be $107 million for an all rail transport mode and $44 million for a railbarge transportation alternative with a 300-mile rail movement. Additionally, approximately $4 million would be required for coal in transit. The barges and towboats are assumed to be provided by the carrier.

These initial investment figures are obviously important, but no finite conclusions should be made without completely evaluating the alternatives with regard to both investment and operating costs.

Two of these alternatives are heavily investment-oriented (coal pipeline and electric transmission lines), but the other two (rail and rail-barge transportation) are more sensitive to inflationary factors as they relate to annual costs. The latter factors include labor and transportation rates (i.e., operating labor and railroad and rail-barge haulage rates). The capital investment items do not escalate once they are installed, with the exception of the rail cars which must be periodically replaced.

Total Transportation Costs Total transportation costs include fixed charges on investment and annual operating and maintenance costs.

In the case of rail or rail and barge transportation, the freight charges remain the major component with relatively small amounts for investment and maintenance. Rail freight rates and rail-barge freight rates used in the study are shown in Figure 6, and are based on mid-1981 conditions, utilityowned coal cars, and the assumed routes (see Figure 1).

Although it is believed that the rates shown are approximately representative of those typically resulting from current negotiations with carriers, it should be understood that all rail and barge transportation rates are negotiated and are therefore subject to the Figure 6

vicissitudes of the marketplace.

In the case of the capital-intensive pipelines and transmission lines, the major component of the annual costs are the fixed charges on investment, with the levelized operation and maintenance being relatively small. The pipeline fixed charges are about 65 to 94 percent of the annual costs, with the balance the operating and maintenance costs. With between 6 and 35 percent of their annual costs fixed, the coal piplines are inflation resistant, with only a small component of the annual costs subject to escalation forces.

In an evaluation of owning and operating costs in which a capital intensive alternative is evaluated to be approximately equal to an operating intensive alternative, it usually may be assumed that the two alternatives are economically equivalent. Actually, for a regulated

utility, the capital intensive alternative may be the more attractive of the two, if the state public service commission responds to commensurate rate base adjustment requests on a timely basis Figure 7 indicates the portion of the annual costs subject to escalation factors for each transportation system considered.

The variations in the transmission line percentage costs are due to the 12R line losses which vary both with electrical load and energy transporting distances. Because of this, additional generating plant capacity is required, but only with the transmission line alternative. This variation does not exist with the other alternatives as the generating plants are assumed to be located reasonably close to the load centers.

Figure 8 shows the levelized annual owning and operating costs for each of the four alternatives for the three distances studied: 500, 900 and 1,500 miles. It illustrates the impact that both inflating operating costs and large capital investment equipment have on annual costs and how they vary with transportation distances and size of the power block being transported.

Figure 9 provides a tabulation of the levelized annual owning and operating costs of the alternatives studied, based on a 1986 initial operating date, showing the cost differentials over the lowest cost alternative. The chart shows that coal-water slurry pipelines are the most economical system analyzed here in all cases. Rail and barge transportation systems are the next most attractive alternative in all but those cases where very large blocks of power were transmitted over extreme distances. In those cases, transmission lines were more cost effective.

Advanced Systems

In the years since OPEC began rapidly escalating the world price of oil, considerable attention has been given to the development of

less costly substitutes for oil. Two alternatives which have attracted some attention are coal-oil mixtures and metha-coal, a thixotropic mixture of pulverized coal and methyl (wood) alcohol.

In consideration of the potential use of these alternative fuels (and certain similar derivatives), Ebasco has tentatively explored a number of transportation scenarios which would use technologically advanced systems to transport mixtures of coal with liquid fuels. Examples would include:

• Transport of a slurry of coal from the Powder River Basin and crude oil from the Overthrust Belt (a relatively new field in the nearby Rockies) via a slurry pipeline to Texas, where the majority of the crude oil would be separated from the mixture and refined, and the coal burned in a steam

electric generating station.

Transport of a slurry of coal from the Powder River Basin and methanol (synthesized from the coal) via a slurry pipeline to an electric utility with substantial oil and gas-fired capacity. There the slurry could be separated, the methanol sold for conventional uses and/or fired in lieu of oil or gas in the existing units, and the coal fired in a new or existing plant designed to fire coal. Alternatively, the metha-coal mixture might be fired if existing plants were feasibly convertible to metha-coal firing, or if new methacoal firing plants were built.

Although we have not presented an analysis of the relative costs of these advanced technologies, it would appear that a coal slurry pipeline which transports the coal in a liquid fuel medium (instead of in water) may be potentially more economical. However, this conclusion is based on the following specified preconditions:

• There is a need to transport both the coal and the liquid fuel medium to the discharge end of the pipeline, ie, there is a market for both the coal and the liquid fuel at the pipeline discharge end

It is less costly (or no more costly) to produce or obtain the liquid fuel at the pipeline inlet end than at the discharge end

• There are no insurmountable technological problems with the full scale coal-oil or metha-coal pipeline systems.

• In the case of the crude oil-coal

slurry, there is adequate refinery capacity at the pipeline discharge end to accept the throughput.

• It is possible to obtain the right of eminent domain for the pipeline right-of-way

Given these premises. and recognizing the economical viability of the similar coal-water slurry pipeline, a conclusion of potential economical viability follows Further, although we have not evaluated the economics in

detail, we believe they could be quite favorable. Also, the water problems associated with the coalwater slurry are avoided with the coal-crude oil slurry pipeline, and substantially mitigated or avoided with the metha-coal pipeline. In both systems, there is no contaminated transport water to be treated, then used or discharged. There are no water makeup needs with the coal-crude oil slurry, and the water requirements for production of the methanol (for the metha-coal pipeline) are substantially less than for a coal-water slurry pipeline; in fact, given sufficient moisture in the coal, process requirements for water may be negligible.

Conclusions

Based upon the parameters assumed in the study, coal-water slurry pipeline transportation systems are the lowest cost mode of energy transportation analyzed here, followed by the rail-barge system. However, the proposed coal-water slurry pipelines presently have problems with right-ofway acquisition (due to the absence of eminent domain legislation), and environmental issues (makeup water sources and effluent water disposal).

Barge and rail transportation systems are worthy of consideration if (a) navigable waters for barge movements are available, and (b) the tonnage, total distances and split between rail and barge hauling distances are in proportions which will result in a competitive cost, given the variability of the tariff structure.

Coal-water slurry pipelines and transmission lines are more inflation-proof than rail or rail-barge modes of transportation because of the low overall operating and maintenance cost associated with coal slurry and power transmission lines. This should be weighed against the high operating cost of the rail and barge system alternatives when selecting the type energy transportation to use for your new coal-fired power plant.

If coal pipelines are to be viable, the right of eminent domain must be available to the user. In order to accomplish this, utilities must pursue this with their legislative leaders, both at the state and national level. Additionally, suitable supplies of makeup water must be obtained, and provisions made to treat and dispose of the effluent water.

Consideration should be given to advanced pipeline concepts, including coal-oil slurry transport and metha-coal slurry transport. These concepts may have potential economical and environmental advantages over conventional coal-water slurry pipelines.

Before implementing an energy facility that involves the long distance transport of large blocks of energy, due consideration should be given to comparative assessments of the engineering, economical and environmental feasibility of the energy transport systems available. These assessments would be made within the constraints of the specific energy transport scenario anticipated, with particular attention to resolution of any potential problems which might have an impact on the end

user.

As chief consulting engineer in Ebasco's Atlanta Regional Office, Mr. Greco supervises a broad range of mechanical consulting services for electric utilities and energy-intensive industries. These services include engineering economic studies, conceptual design studies, specialized engineering and retrofit engineering.

A principal engineer in the Consulting Engineering Department, Atlanta office, Mr. Sherlock supervises conceptual engineering studies and alternative energy studies involving fuel acquisition and transportation. He also performs econometric studies on availability improvements, conceptual engineering and cycle optimization. Before joining Ebasco in 1974, Mr. Sherlock was a nuclear power engineer with Tenneco.