CAPITAL, MANPOWER, AND TRAINING REQUIREMENTS FOR SELECTED PROJECTS ON NON-OIL SOURCES OF ENERGY*

Aman R . Khan, President

Ahmed El-Difrawi, Manager S o h Applications, Gas Development Corporation

Chicago, USA

and '

Introduction

Since the First Arab Energy Conference sponsored by OAPEC three years ago in Abu Dhabi, a number of events have occurred which have influenced the develop- ment of alternative energy resources. Most of us recall that, in the seventies, the dramatic rise in oil prices caused considerable concern and alarm in the consuming countries and that, as a result, research and development efforts were expanded towards development and commercialization of alternative energy sources. Con- servation of conventional energy sources became an essential ingredient of nation- al energy policies and the goal of energy independence - or certainly minimiza- tion of dependence on OPEC oil - was propounded.

The rapid rise in oil prices also had a negative effect, in that it fanned the fires of inflation and made the public in consuming countries more conscious of energy conservation. As a result, demand for oil has'declined and led to surplus OPEC production capacity as well as an uncertain increase in real oil prices. I t is arguable whether inflation in the consuming countries caused an increase in oil prices or vice versa.

The fact remains that, within the last two years, demand for OPEC oil has drop- ped appreciably. Of course, there has been a corresponding increase in production from non-OPEC sources, and deregulation of oil prices, particularly in the United States, has witnessed a steep increase in drilling activity.

* This paper was presented at the Second Arab Energy Conference at Doha, Qatar, 6-11 March 1982.

Vol. VI, No. 2, Summer 1982

162 OPEC REVIEW

In addition, the change in political leadership in Washington has resulted in a change of philosophy in respect to the development of alternative energy sources. The present administration believes that the development of coal conversion, shale oil and other fossil fuels will happen without government assistance. Indeed, the US Department of Energy has made severe cutbacks in appropriations and programmes in the recent past.

Therefore, the prognosis and schedule for the development of alternative energy sources has been drastically altered, and under the present circumstances a discus- sion of the requirements of a nonexistent industry can only be highly speculative and based on the meagre information available from various pilot projects. Con- sequently, this paper only attempts to project the capital and manpower re- quirements for selected technologies which could materialize on the horizon by the end of the century, taking into account the fact that realistic development and commercialization of such technologies cannot occur in a climate of in- stitutional inertia.

Alternative energy sources

As a counterweight to the threat of uncertain oil supply, attention has naturally been focused on the development of indigenous fossil fuels, which are in plenti- ful supply. The largest single resource base in the US is coal, with proven recover- able reserves of 217 billion tonnes or 820 billion barrels of oil equivalent. In addition, the remaining recoverable reserves of coal in the US are estimated at five times this amount. The direct utilization of coal by electric utilities has increased with the rise in oil prices, but has been limited by the high costs of environmental control. The future utilization of coal will therefore require conversion to clean burning fuel such as gas or oil, in addition to direct firing with stack gas clean-up.

Another important non-conventional fossil fuel is oil shale, of which large de- posits of high quality are found in the Western US. Total proven recoverable shale reserves in the US amount to 80 billion barrels of oil equivalent, with estimated ultimate recoverable reserves of 1,040 billion barrels. The development of an oil shale industry is highly desirable, since it results in the direct production of liquid fuels which can replace imports.

The conversion of biomass into useful energy has also attracted considerable attention, both in the consuming and lesser developed countries as a replace- ment fuel for stationary loads.

And finally, the conversion and utilization of solar energy has been actively en- couraged and merits attention as a potential alternative energy source.

CAPITAL., MANPOWER AND TRAINING REQUIREMENTS 163

Although there are other potential alternatives, the present evaluation is restricted to selected alternative projects and examines the capital investments required, together with the manpower and training needs for the establishment of these new technologies. The projects considered are fossil fuel (coal and shale) and solar.

Fossil fuel projects

Capital investment requirements

Estimates of capital investments required for the development and production of non-conventional energy from new technologies cannot be as exactly defined as those for oil and gas. In the absence of commercial installations or marketed processes, technical data and economic evaluations of pilot projects have to be scaled up to commercial parameters. Obviously, this results in maximum and minimum limits within which projected investments can be made based on known technology, on the assumption that performance and reliability will be assured.

Table 1 presents the capital requirements estimated for the production of gas and oil from coal and shale by various processing routes. These estimates are based on first generation technology and have been reduced to a common denominator - US dollars of capital investment per million BTU per day of energy production. The investments are estimated in 1981 dollars and the effects of inflation would have to be factored in, The capital intensive nature of a fueI source project, however, provides an indication of its price profile in the future. Usually, the more capital intensive the project, the less dependent it is on general inflation rates once the facility has been built. As a result, the cost of the energy from the facility would grow much more slowly than inflation.

Manpower requirements - coal gasification

Manpower requirements for a coal gasification facility are based on basic and secondary labour for the construction and operation of both the plant and the associated coal mine. Labour requirements are considered for a four-year con- struction and 20-year operation phase of the system. The requirements are ex- pected values based on a sample of 17 counties in the US, which are potential sites for gasification. Figures of labour availability at the county level are used to estimate in-migration requirements which can be considered as the training requirement impact of the technology.

The base considered in this study is a high-BTU system with a capacity of 250 billion BTU/day yield. The labour requirements are determined, which are the number of person-hours required for each of the skills in the construction and

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CAPITAL, MANPOWER AND TRAINING REQUIREMENTS 165

operation of the mine and plant system. Since the study focuses on existing tech- nology, labour requirements for research, development or design of the gasifica- tion system are not included. Labour requirements for the plant and mine system are compared with'locally available labour in potential gasification counties.

TABLE 2

Expected labour requirements for a high-BTU coal gasification system

Basic Secondary Basic Secondary construction construction operating operating

Required 3,64 1 4,142 1,831 2,870 In-migration 2,54 1 2,387 860 5 29

The construction of a surface mine requires around two years, whereas an under- ground mine requires about four years with maximum permissible worker density, single-shift construction and year-round work. The figures are taken from US counties currently being considered for gasification. The mining data are based on productivities currently being realized in these counties. About one half of the miners needed to operate a mine are employed during the construction phase. Employment figures are calculated from typical mines with a capacity of 3.1 million tons/year for an underground mine and 4.4 million tonslyear for a surface mine. The estimated number of underground miners varies from 1,400 to 2,300 over a four-year period, and surface mines require between 300 and 690 miners for a two-year period.

A gasification facility requires about four years to construct. Construction time is calculated as the time required between ground breaking and completion of the facility. The basic labour force required for a 250 billion BTU/day facility with an accompanying underground mine is between 3,800 and 4,100 personnel. This is based on a standard singIe-shift workforce and year-round construction. Basic construction requirements for a facility with an accompanying surface mine lie between 3,100 and 3,340.

Secondary labour is required to support workers performing the primary labour associated with the coal mine and gasification plant, to provide the social infra- structure consistent with the change in population. Secondary jobs are those trades and services which are supported by the payrolls of primary workers. Secondary labour is estimated during both the construction and the operating, or steady state, period. It provides an indication of the impact of the energy system. When compared to the availability of labour at the plant site, secondary construction period labour provides an indication of the capacity of the location to accommodate construction. OPEC "I1 - c

166 OPEC REVIEW

The types of manpower required for the construction and operation of the gasifi- cation plant and mine can be categorized (table 3).

TABLE 3

Manpower categories for coal mining and gasification facility

Administrator Mason Blue collar workerlsupervisor Material handler Boilermaker Mechanic and repairer Chemist Millwright Carpenter Mining operative Clerical worker Operating engineer Draftsman Painter and paperhanger Electrician Process operator Engineer Insulator Sheetmetal worker Ironworker Surveyor Labourer Welder Machinist

Plumber, pipefitter, welder and flamecutter

Manpower requirements - shale oil

Although no commercial shale oil plant is in operation yet, projections have been made on the construction and operating staff requirements in studies con- ducted for the US Department of Energy. Table 4 shows these requirements for a 50,000 b/d commercial plant operation.

TABLE 4

Projected staff requirements for oil shale plant

Time for construction (years) Average staff during construction Maximum staff during construction Operating staff: Plant

Mine Total

4 900

2,000 500 41 9 919

Figure 1 shows the employment requirements as a function of time in the devel- opment of a commercial oil shale f a d t y . The categories of manpower require- ments for the commercial shale oil facility are quite similar t o those shown in table 3 for the coal gasification plant, since in both cases there is a mining opera- tion followed by a processing plant.

t t

L91

168 OPEC R E V E W

Training requirements - coal gasification and shale oil

The training requirements for both coal gasification and shale oil comprise two principal areas - mining and process plant operation. In the mining operation, the number of mining operatives varies according to whether there is under- ground or surface mining. For the commercial coal gasification facility (250 billion BTU/day), about 1,370 mining operatives are needed for an underground mine to produce the coal required by the gasification plant. A surface or strip mine would need only 400 mining operatives to produce the same output. Never- theless, for commercial coal and shale plants, a major aspect will be the training of mining operatives in the use of modem equipment designed to mine and re- move coal or shale rock efficiently and rapidly.

A second aspect of training is in the processing plants to convert coal or shale to gaseous or liquid fuels. The requirements by occupation for these plants are no different to those for a chemical processing plant or refinery. But the basic difference is that these plants handle large quantities of solids and the chemical reactions occur in either the solid/liquid or solidfgas phase. Therefore, the plant operators will have to be trained in the new technologies of coal or shale conver- sion.

Table 5 presents the basic operating and maintenance labour broken down by categories for the coal gasification facility. A majority of the occupations are fairly standardized and no special training would be needed. Mining operatives, process operators and mechanics, however, constitute more than 80 per cent of the workforce and, as stated earlier, special training programmes will have to be developed and implemented for these categories in order to ensure the continued and safe operation of the facility.

Solar projecb

Capital investment requirements

For purposes of this study, the solar technologies are defined as wind, photo- voltaic, ocean thermal electric, small-scale (non-utility) hydroelectric and all solar active and passive thermal technologies. Associated labour requirements are assessed accordingly. Ail economic information is reported in terms of con- stant dollars.

Assuming that world oil prices will remain high and that there will be a low market penetration of solar technologies, table 6 presents a forecast of total energy usage and the share of solar.

CAPITAL, MANPOWER AND TRAINING REQUIREMENTS 169

Year

1985 1990 2000

TABLE 5

Basic operating and maintenance labour requirements by occupation for coal gasification facility

(250 billion BTUJday)

Administrator or manager Blue collar worker/supervisor Chemist Clerical worker Drafter Electrician Engineer Machinist, all-round Mason Material handler Mechanic and repairer Mining operative Operating engineer Painter Process operator Surveyor Technician, engineering and science Welder and flamecutter

Total

TABLE 6

Solar market penetration

Total energy use qua&*

89.01 94.68

104.84

21 140

4 60

5 13 25 19 40 10

348 1,370

2 4

258 8

35 25

2,387

Solar market penetration

q u d

0.10 0.50 2.00

* quad = quadrillion BTU = loi5 BTW

170 OPEC REVIEW

Less than two per cent of total energy usage in the US is forecasr . a be the share of solar energy by the year 2000. The gross capital investment requirements for the low solar usage case have been estimated to be about $50 billion for the period 1980-2000. But, in order to equate this in terms of other alternative energy technologies, capital costs can be estimated for individual solar techno- logies. Thus, table 7 presents an estimate of the capital investment required for solar type plants producing 100 billion BTU/day of energy (1.2 million Kw), or approximately 17,300 b/d of oil equivalent. It should be cautioned that the investments presented in table 7 are only best estimates. Nevertheless, the average capital cost of solar technologies is at least two to three times that of fossil fuel alternatives presented in table 1.

Manpower and training requirements

Solar energy is a relatively new and developing field and in the US about 2,000 establishments in the public and private sectors are engaged in solar energy activi- ties. The major effort in these establishments is directed towards space heating and cooling and water heating. I t is estimated that, from 1980, about 23,000 employees were engaged in solar energy work, although not all employees worked full time in this field.

The principal occupational category in solar research and development activi- ties is mechanical engineering, and the most frequently reported occupation in solar installation activities is plumbing/pipefitting. About 40 per cent of the research and development employees are engineers, whereas nearly 50 per cent of the employees engaged in installation are skilled craft workers.

For the investments considered in table 7 for the development of solar sources, the labour requirement for the construction and operation of the facilities can be estimated as a function of the labour cost input of the total investment.

In the use of the solar thermal application, it is estimated that a total work force of about 20,000 would be required, of which more than 90 per cent would be skilled labour involved in the manufacturing and installation, with the balance in engineering, administration and sales.

Many solar energy projects require special skills or knowledge in regard to solar energy technology, as well as the application of traditional skills to solar energy work. The single largest occupation which requires specialized training is engi- neering devoted to solar technology. The construction and installation aspects require skills which already exist in other industries. Initially, projections of full-time solar energy employment were forecast to double the present level by the mideighties, but, with the cutback in solar research and development funding, it is difficult to foresee this occurring.

CHITAL, MANPOWER AND TRAINING REQUIREMENTS

TABLE 7

Investment requirements for solar plants Capacity: 100 billion BTUlday

Type of plant Range of capital investment $/barrel oil equivalent per day

Photovoltaic 7 1,000-9 1,000

Solar thermal 86,600- 1 10,600

Wind 54,120-70,000

OTEC 1 15,000- 140,000

171

Average capital cost 1 O3 (SlMMBTUlday)

14.0

17.0

10.7

22.0

Conclusion

This brief analysis of the capital, manpower and training requirements for se- lected alternative energy projects indicates that large investments will be neces- sary to ensure even the start-up of alternative programmes on a limited scale. The investment ratios are much higher than for the development of conventional hydrocarbons on an oil equivalent basis. Furthermore, although the occupation- al skills may not be too different from those currently available in industry, specialized training in the new technologies will be needed, especially at the plant operating level. In the particular case of solar energy, the investment ratios are higher than for fossil fuel sources, and the impact that solar energy can make in the overall energy mix is consequently insignificant.

Because of the success of energy conservation measures which have been im- plemented worldwide, the demand for oil has declined substantially, and this has acted as a brake on the development of non-oil sources. Therefore, it can be concluded that, in spite of the current efforts in the development of non- conventional energy sources, the mdor sources of energy supply will continue to be oil and gas during the next decade.

172 OPEC REVIEW

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