Tag: Old Harbour

It’s a step in the right direction however LNG is not clean energy and will be going the way of coal plants in the not so distant future. Solar plus commercial energy storage is approaching… Jason Robinson, CEO Solar Buzz Jamaica

Ground has now been broken for the 200 megawatt cogeneration power station at Jamalco’s alumina refinery complex in Halse Hall, Clarendon.

New Fortress Energy is expected to hire 425 persons during the construction stage of the planned US$265-million natural gas facility.

The plant is to be developed in two phases of 100 megawatts per hour each.

Speaking at the ground-breaking ceremony this morning, Prime Minister Andrew Holness explained the components of the project.

He said the plant should help to ensure lower costs and lower emissions and will benefit the Jamaican economy.

New Fortress will also supply a 190 megawatt gas-fired power plant in Old Harbour, St Catherine, being developed by the Jamaica Public Service Company from its marine terminal at Portland Bight.

In this November 2016 photo, co-chairman of Fortress Wes Edens (left) poses with Prime Minister of Jamaica Andrew Holness and President & CEO of the Jamaica Public Service Company (JPSCo) Kelly Tomblin at the offcial commissioning of the JPS LNG plant at Bogue in Montego Bay.

Power utility boss Kelly Tomblin views Softbank’s acquisition of Fortress Investment Group, to which New Fortress Energy is affiliated, as positive for furthering plans to build out gas facilities in Jamaica,

American company New Fortress Energy is a gas supply partner to Jamaica Public Service Company (JPS).

Last November, the partners celebrated the commissioning of Jamaica’s first LNG-fired plant at Bogue in Montego Bay, and they are about to start development on another gas facility in St Catherine. In both cases, New Fortress invests separately in the gas-supply infrastructure, while JPS develops the power plant.

The marine terminal and gas power plant development at Old Harbour in St Catherine is to get off the ground “in a couple of weeks,” said Tomlin, the president and CEO of JPS, on Friday.

JPS secured funding locally for its plant, while New Fortress planned to finance the project themselves with cash rather than debt, Tomlin, who noted that the acquisition by Softbank means “they will have a lot more cash”.

New Fortress did not return Gleaner calls up to press.

Last Wednesday, the two parties jointly announced a US$3.3 billion deal for Softbank of Japan to acquire New York-based Fortress Investment Group. Fortress, which is co-chaired by Pete Briger and Wes Edens, said its senior executives would remain with the company.

EXCITED ABOUT DEAL

“I am in dialogue with Wes Eden,” said Tomblin. “I am assured that this acquisition doesn’t harm the project and that also he is excited about this deal; and so too the members on the ground who work for New Fortress,” said Tomlin.

Asked about any other implication to Jamaica, she said there would be “absolutely none”.

New Fortress plans to build and operate a liquefied natural gas marine terminal and pipeline within the Portland Bight area or close to the Goat Islands, according to the environmental report released last year.

The project will be executed through affiliate NFE South Holdings Limited. The marine terminal will feed gas to the 190MW plant that JPS will be developing at Old Harbour.

Gleaner

In this August 2016 photo, New Fortress Energy (NFE) hosts a tour of its Montego Bay terminal. Walking the port are (from left) Brendan McElmurray of NFE, Minister without Portfolio in the Ministry of Economic Growth and Job Creation Dr Horace Chang, Attorney General and Member of Parliament for West Central St James, Marlene Malahoo Forte, Ed Marsh of the Port Authority of Jamaica, Johnathan Klion of NFE, and chairman of the Montego Bay Free Zone, Mark Hart.

The plan to build and operate a liquefied natural gas marine terminal and pipeline by American company New Fortress Energy (NFE) will place the facility five kilometres offshore within the Portland Bight area or close to the Goat Islands, according to the environmental impact assessment (EIA) released this month.

New Fortress will execute the marine terminal and pipeline project through affiliate NFE South Holdings Limited. A public consultation on the project is set for September 28 in Old Harbour.

The environmental report done by CL Environmental Consultants Limited on behalf of New Fortress also estimates that the project will provide nearly US$1 billion worth of value over its lifetime and create about 300 direct jobs in the process. Indirect jobs are estimated at 200 to 600.

“Based on this analysis, the final net present value of the project, after application of social cost benefit analysis, turns out to be US$953.4 million. Hence, the project should be undertaken as it has multiple social benefits which are reflected in the final positive NPV of the project,” the report stated.

In arriving at that final figure, the EIA considered the financial profitability measured at market prices; the net benefit of the project measured in terms of economic prices; then adjusted for the impact of the project on savings and investment, income distribution, the impact of the project on merit goods and demerit goods, and the environmental impact.

LNG plan

The project forms part of the wider plan to bring LNG to the national grid. The marine terminal will feed gas to the new 190MW plant that Jamaica Public Service Company is developing at Old Harbour. New Fortress is also supplying gas to JPS’ Bogue plant from a terminal developed in Montego Bay.

The marine terminal EIA report reasoned that consumers, but in particular the manufacturing sector, would benefit from the lower cost of electricity and the establishment of a more reliable power supply.

“This will lead to more possibility of manufacturing that will lead to creation of employment opportunities for unskilled and skilled workers. This is hard to quantify and hence the number are not adjusted for it. Which means that the social benefit stayed below is a lower bound,” the report stated.

The NFE project involves constructing a marine terminal comprising of a vessel berth and offshore offloading and regasification platform.

“The location will be up for approval by the Port Authority of Jamaica in the Portland Bight area of Jamaica,” said the environmental report.

It adds that the facility will accommodate a floating storage unit or FSU vessel for LNG storage and a LNG carrier delivering gas to the FSU. The platform would contain equipment to regasify LNG as well as related process and safety equipment.

“The liquid gas from the FSU would be carefully regasified and the gas would then be released into an undersea pipeline which will be mostly directionally drilled in basically a straight line from the platform to the vicinity of the JPS plant,” stated the EIA, which adds that the pipeline, at some five kilometres in length, would connect to the JPS gas power plant on shore.

“In addition, the project will construct a new, or refurbish an existing, automotive diesel oil line from storage tanks to the renovated power plant in order to enhance the reliability of the facility in case of LNG delivery interruptions.”

The marine terminal will be constructed offshore in the western side of Portland Bight, at a distance about 200 metres from the shipping channel to Port Esquivel in approximately 14 metre of water depth. “This location offers sufficient depth to berth the FSU and the LNG carrier vessels without the need for dredging, yet has sufficient protection from storm wave impacts as a result of the shape of the Bight,” stated the report.

Energy Policy

NFE is expected to supply JPS as well as potential future industrial users with natural gas. The main objective is to provide the Jamaica Public Service Company’s Old Harbour Plant with a cleaner and more cost-effective fuel in furtherance of the goals of the National Energy Policy.

NFE will conduct the project through its NFE South Holding and with the sponsorship of Fortress Investment Group, a global asset management firm with approximately US$70.64 billion of assets under management and an experienced investor in transportation, infrastructure and energy assets around the world, the environmental report said.

The annual fuel savings from the project is projected at US$74.2 million which represents a 38 per cent reduction in cost. The report adds that, assuming a 75 per cent pass-through to the consumer and a 25 per cent mixed of the generating capacity of the JPS, it will result in a seven per cent reduction is consumer prices. This figure matches the fuel savings published in a separate EIA report on the JPS Old Harbour plant upgrade released in April, as the projects are complementary.

JPS, which has a licence from the Jamaican Government to operate the national electricity grid, is constructing the 190MW plant adjacent to its existing Old Harbour facility in St Catherine, which has the capacity to generate 220MW of power. The current plant will be dismantled once the new one is commissioned.

Gleaner

BY AVIA COLLINDER Business reporter collindera@jamaicaobserver.com

 

LNG is coming to Jamaica

 

New Fortress Energy, the company which has won the contract to supply the island’s sole power distributor the Jamaica Public Service Company (JPS) with LNG for substations in Bogue, Montego Bay and another to be developed in Old Harbour, St Catherine, said it buys supplies from sources worldwide.

The company has declined to comment whether its suppliers include Trafigura Beheer, from which the Jamaica Observer understands it has sought to make buys.

Meanwhile, the Electricity Sector Enterprise Team (ESET) has indicated to theBusiness Observer that it does not matter where in the world the gas comes from.

Trafigura is the world’s third-largest private oil and metals trader. That company is also seeking to grow its market for LNG supply globally.

 

However, in 2011 the Dutch company was involved in controversy for a $31-million political donation to the the People’s National Party administration, which was then the governing party.

The company continues to sell supplies through third-party deals to the local market, including spot purchases made by Petrojam.

Describing the surge in LNG demand as an “LNG revolution”, Trafigura says on its wesbite that it plans to double supplies sold year over year from base year 2013 when the company transported one metric tonne (mt) of LNG globally.

The company has three full-time traders based in Geneva supported by its US Natural Gas team in Houston, Texas, and a European Natural Gas team, working with 27 LNG regional offices in key export and import countries across the globe.

However, as to sales programmed for Jamaica, the company said it has no comment.

“We don’t comment on our day-to-day commercial arrangements,” Victoria Dix, media liaison for Trafigura said when asked to channel questions about the Caribbean market, including Jamaica.

Bloomberg describes Trafigura Beheer as the world’s current largest LNG trader, reporting at year end December 2015 that the commodity trader “boosted the amount of LNG handled to 4.2 million metric tonnes in the financial year ended September 30, from 1.7 million a year earlier following a doubling in volumes… that made it the world’s biggest independent LNG trader.”

A source close to New Fortress Energy told the Business Observer that it is normal for ships to swap cargo and there may have been spot purchases, but that there is, however, no long-term relationship with Trafigura.

 

More directly, the company, through a spokesperson, said it sources LNG from all over the world.

“In addition to supplying our own gas from the United States, New Fortress Energy sources gas from all over the world. As a matter of policy, we cannot comment further,” New Fortress said.

He stated that in relation to Bogue, “we’re making significant progress and are excited to provide natural gas to help further Jamaica’s clean energy transition. We’re in close coordination with JPS on the process and timeline”.

Chairman of ESET Dr Vincent Lawrence told the Business Observer on Monday that the source of LNG was immaterial.

“ESET is not aware of any trades, swaps or short-term source arrangements that New Fortress Energy may make in satisfying its contractual arrangements with JPS.

“NFE under its Gas Supply Agreement arrangements can supply gas from any origin. However, in ESET granting approval of the Gas Supply Agreement between JPS and NFE, in order to ensure security of supply, NFE had to demonstrate as to its long-term ownership of and access to gas from the United States including the ability to obtain any required export permits.”

Lawrence added, “The contractual arrangements are private and between two private companies,” further adding that “the GOJ is not a party to the contractual nor day to day delivery arrangements”.

The island is moving towards the majority use of LNG as fuel for energy, with the aim of reducing dependence on oil which is subject to price volatility.

To that end, JPS has retrofitted its 115MW gas turbine plant in Montego Bay from automotive diesel oil to dual fuel use. The conversion, it was projected, will result in an approximate 40 per cent fuel price reduction.

New Fortress has also secured the supply contract for the JPS’s planned 195MW plant in Old Harbour which is being razed and will be rebuilt and expanded.

Start-up of LNG use at the JPS Bogue plant is due to begin in August, when construction of fuel lines and storage facilities are expected to be completed.

New Fortress is also slated to construct an expandable 100MW, natural, gas-fired, cogeneration plant for alumina producer, Jamalco, replacing a previous plan for a coal-fired alternative

 

The Observer

Tomblin

 

The Jamaica Public Service Company (JPS), managers of the national electricity grid expects Golar LNG to ship liquefied natural gas to Jamaica, despite its heavy losses.

Golar is contracted to New Fortress Energy (NFE), the latter being JPS’s selected partner to develop and supply natural gas to the Jamaican utility. New Fortress is five months behind schedule with deliveries.

JPS President and Chief Executive Officer Kelly Tomblin said that even in the worst-case scenario, the power utility remains protected.

“Golar is a public company with a market cap of about US$1.5 billion and a balance sheet with over US$4 billion of assets. It’s been in business since 1946 and is widely followed by investors all over the world,” said Tomblin in a response to Gleaner queries.

“New Fortress Energy has indicated to me that they have been a dependable and reliable partner in preparing to deliver gas to Jamaica. JPS is protected contractually if New Fortress fails to bring gas, as required in the gas supply agreement.”

NFE earlier this year contracted Golar for two years to ship LNG to Jamaica. The first shipments will feed JPS’s plant at Bogue in Montego Bay, which has already been retrofitted to burn gas as well as diesel oil.

In early June, NFE acknowledged Gleaner queries regarding the implications of Golar’s finances, but did not follow through with a response.

NET LOSSES

Golar reported net losses of US$80 million for its first quarter ending March. The loss was mainly because of its US$61.5 million in operating expenses, towering over its US$18.6 million in revenues for the period. Over 12 months, Golar posted a US$197.6-million net loss for financial year 2015 and US$43 million in net losses for 2014.

Last month, CEO Gary Smith resigned, and its former CEO, Oscar Spieler, retook control of the company amid restructuring of the operations.

Tomblin expects the LNG projects at Bogue and, later, at Old Harbour, along with additional capacity from renewable plants, to reduce the power utility’s reliance on heavy oil from 95 per cent to 50 per cent in the medium term.

steven.jackson@gleanerjm.com

 

The Gleaner

 

JAMAICA Public Service (JPS) customers will be asked to pay more for their electricity this month — partly due to the recent increase in the Special Consumption tax (SCT) on heavy fuel oil (HFO), the light and power company advised yesterday.

The company said the spike is also due to an increase in the cost of the fuel used for electricity generation, caused by rising oil prices on the international market, and the continued devaluation of the Jamaican dollar.

“This is definitely not the best news for us at JPS, or for our customers,” JPS President and CEO Kelly Tomblin said in a release.

The Government last month introduced the $7 per litre increase as part of the revenue package to help finance its $580-billion 2015/16 Budget, but Finance Minister Audley Shaw, at the time, assured the panicking public that the tax would only apply to fuel at the pumps.

“This tax doesn’t apply to JPS at all. It is only related to SCT for fuel for road transport,” Shaw said at a post-budget press conference. The SCT is expected to yield $6.4 billion for the Government’s coffers.

In announcing the 12.8 per cent increase yesterday, the JPS urged consumers to “conserve on their electricity usage, as the upward trend in oil prices has resulted in an increase in the cost of electricity”.

“The overall increase will result in residential customers paying US$0.21 per kWh on average for electricity in June, compared to US$0.19 in May. This means that the average residential customer using 165kWh of electricity for the month, will see a $500 increase in his or her June bill, which will move from $3,875 in May to approximately $4,372 this month,” the JPS said.

The JPS president stressed that, despite the increase, electricity bills are still 20 per cent lower than they were in June 2015 when customers were paying US0.27 per kWh. The company argued that Jamaica continues to enjoy one of the lowest electricity rates in the region, behind Belize and Trinidad.

Reacting to the news, Private Sector Organisation of Jamaica (PSOJ) President William Mahfood reiterated that the sector had recognised from the outset that the imposition of the tax on the HFO and Liquefied Natural Gas (LNG) would have an incremental increase in the cost of electricity of five per cent.

“As far as the price of oil goes, this is a matter that is beyond our control (but) we still feel there should be some amount of hedge put in place to mitigate against future increases in the price of oil,” he remarked, noting that the sector is in full support of the phasing out of older power plants which rely on HFO and diesel.

He said that, while the phasing out of JPS’ 190-megawatt facility at Old Harbour will take a couple more years, eventually more plants will convert to LNG.

Mahfood said also that, like rising oil prices, the devaluation of the dollar against the US currency is out of Jamaica’s hands and can only be militated against by economic growth.

 

The Observer

The JPS power plant in Old Harbour

 

In an update last week on the US Department of Energy’s (DOE) website American LNG— associate company of New Fortress Energy – said there were likely to be delays at its planned US$250-million onshore LNG export facility at Titusville, Florida. Operations will likely begin in 2017, not in April 2016 as projected before.

American LNG is controlled by Fortress Equity Partners, which is also the parent of New Fortress Energy.

New Fortress Energy won out of a field of eight bidders to provide a long-term natural gas solution for JPS power plants, starting with Bogue in Montego Bay.

In March this year, New Fortress also secured the contract to supply gas to the planned Jamaica Public Service Company (JPSco) Ltd 190MW power plant in Old Harbour, St Catherine.

American LNG, on March 7 committed to supply New Energy with up to 2.26 Bcf/year (billion cubic feet per year).

Overall, American LNG received approval in 2015 to export up to 600,000 mt/year of LNG (approximately 30.2 Bcf/year regasified) in ISO containers to countries with which the US has free-trade agreements.

Now it said that developments at its Titusville facility indicated a likely commercial operation date in 2017 instead of April 2016.

Efforts by the Jamaica Observer to find out from New Fortress how this would affect plans for Bogue were not answered up to press time.

New Fortress last year signed the supply accord with JPSCo to provide LNG for the power company’s 120-MW Bogue power plant at Montego Bay. To this has been added Old Harbour.

The 190MW gas-fired plant is intended to replace 292 megawatts of Heavy Fuel Oil Power Plants in Old Harbour and Hunts Bay which are being phased out.

American LNG told the Department of Energy that it is now producing LNG from its Hialeah facility near Miami from which the first export of LNG occurred February 5.

Natural gas for the facility is supplied by Peninsula Energy Services Co to an affiliate of American LNG.

The project has approval to export LNG in ISO containers to non-free trade agreement nations.

In March, LNG World news online reported that American LNG made the first export from the facility on February 5, 2016.

 

The Jamaica Observer