Covanta gets more time to save Tampa Bay
- From: Vol 4, Issue 12 (December 2003)
- Category: General
- Region: Americas
- Country: United States
- Related Companies: American Water Services, Covanta, Poseidon Resources, Stone & Webster and US Filter
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The troubled contractor’s bankruptcy move has won it at least three more months. GWI’s US correspondent Larry Chertoff looks at the chances of the desal plant’s success.
In a quick hearing on 25 November, United States bankruptcy judge Cornelius Blackshear refused to grant Tampa Bay Water [Authority] a restraining order to remove Covanta Tampa Construction Company from the Tampa Bay desalination facility. The judge further refused to grant Tampa Bay Water a longer-term injunction that would have allowed the authority to operate the plant while trying to resolve its dispute with Covanta.
Tampa Bay Water planned to call four witnesses but the judge stopped the proceedings after hearing only Tampa Bay Water’s general manager Jerry Maxwell. Instead, Judge Blackshear ordered the parties to try to mediate their underlying differences. A progress report is due on 4 February.
This legal action keeps Covanta in the project with three to five months of breathing space to get the troubled desal plant up to a sustained average daily throughput of 25 million gallons with a seven-day peek generation approaching 29 MGD.
Covanta views the ruling as life-saving. Tampa Bay sees it as a stay of execution. The company has been in voluntary bankruptcy protection since 30 October – one day before it was scheduled to begin a critical performance test. Bankruptcy protects Covanta from any change in status not approved by the bankruptcy court.
Covanta Tampa Construction needs the $8.5 million per year, 30-year operating contract, its only asset, to emerge from
bankruptcy in the first quarter of 2004 with its parent, Covanta Energy.
Tampa Bay Water, displeased with poor plant performance and anxious about parent company Covanta Energy’s bankruptcy, would like to replace the company with one of several operators it has been interviewing: American Water, US Filter or Ionics.
The underlying dispute is rooted in the original design developed by Stone & Webster while working for the developer, Poseidon Resources. Shortly after Tampa Bay Water awarded the contract to Poseidon, Stone & Webster declared bankruptcy and was replaced by Covanta Tampa Construction. Covanta’s inherited plans required a fluidised dual-sand pre-treatment system to filter raw water before precision filtration and reverse osmosis.
When the plant was about half complete and on schedule, Covanta’s parent company, caught up in the late-1990’s energy schemes, went bankrupt along with most of its hundred plus wholly owned subsidiaries.
Concerned about the financial structure of the project and relieved that all permitting issues were resolved, Tampa Bay Water exercised its right to buy out Poseidon. Covanta did complete the work on schedule and budget. However, it has never been able to sustain full capacity for more than a few weeks, rather than the desired six months without clogging cartridge filters and blinding the reverse osmosis system. The plant now averages about one-half the guaranteed water
production, about 3 billion gallons to date.
Replacing filters and keeping more than 20% of the parallel process trains off-line for cleaning would have a $75 million impact over the 30-year life of the plant, according to Maxwell. Without a fix, the cost of finished water would increase from the guaranteed $2 per 1000 gallons to near $3.
Covanta’s Scott Whitney believes that the company is slowly approaching design throughput by “optimising” operations. Maxwell wants a more aggressive and more expensive solution: replacing the dual-sand filters with membrane microfiltration at a cost to Covanta of up to $8 million.
Covanta has begun to accept that some hardware changes may be required and is considering activated carbon filtration at a capital cost of no more than $2 million.
Meanwhile, Poseidon, now a consultant to Tampa Bay Water, still contends that its plans were correct and that, if Tampa Bay had let it complete the job, the plant would be running at design specifications. They believe Covanta may have cut corners in the final months of construction. Poseidon advocates rebuilding the first-stage dual-sand filters to original design specifications.
Did Covanta deviate from the original design specs? Or is this the normal process to bring a new technology on-line? Whitney says: “It is for the judge to hear and the courts decide”. Until that day, the plans for many new desalination plants in Florida, Texas and California will be on hold.