THE country cannot continue to depend on oil if the island intends to make meaningful progress with its economy, a leading energy engineer has said.
Certified energy manager and energy auditor, Owen Gunning, who is also president of the Jamaica Society of Energy Engineers, wants a full-scale effort to be made to reduce Jamaica‘s dependence on oil as its base fuel and insists that a ‘more action, less talk’ approach should be adopted.
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Observer Monday Exchange guests (from left) Alando Terrelonge, partner at Bailey Terrelonge Allen; Edison Galbraith, general manager, loan origination, Development Bank of Jamaica (DBJ); Christopher Brown, energy project co-ordinator, DBJ; and Owen Gunning, certified energy manager, certified energy auditor and president of the Jamaica Society of Energy Engineers, continue the discussion on energy efficiency following the end of the Exchange yesterday at the newspaper
Zacca
WITH ENERGY Minister Phillip Paulwell scheduled to address the House of Representatives today, the Private Sector Organisation of Jamaica (PSOJ) says it wants him to provide clarity on the way forward for the implementation of liquefied natural gas (LNG). “We are looking for transparency and we are looking for some certainty because we feel this issue has got to be addressed in a way that the wider society buys into it and in particular, my constituency, the business sector needs to get that confidence booster out of it,” Chris Zacca, head of the PSOJ, told participants in a Gleaner Editors’ Forum at the the newspaper’s central Kingston head offices yesterday. There have been jitters in the society ever since
Winston Hay, energy consultant and former director general of OUR. – Ian Allen/Photographer
Avia Collinder, Business Writer Energy consultant Winston Hay says that while plans for use of LNG for power generation in Jamaica are in principle sound, the uncertainty around the cost of that fuel should not be ignored. LNG is now selling at record prices in Asia where Japan as a top consumption market reportedly pays the highest price. Hay, who was once the head of the Office of Utilities Regulation (OUR), said that application of relatively new technology – fracking – in the United States has led to greater extraction of “shale gas” at greater depths than had previously been exploited. And it has dramatically decreased the price of natural gas in that country. But the stability of those prices is uncertain and the Henry Hub price reports have already begun to show a significant upward trend, he said. Production doesn’t affect price Importantly, he adds, the price of LNG does not vary directly with natural gas production costs. Flammable gasses trapped in the earth and consisting primarily of methane are found in many areas of the world – the Middle East, Russia, Nigeria, Australia, Nigeria and North America, for instance. LNG has been used for decades as a source of heat for industrial processes, cooking, household heating, and other uses, but only in relatively small quantities for electricity generation until about the late 1960s, with development of the combined-cycle technology. “The aggregate costs of delivering the gas to the liquefaction facility, the liquefaction process itself, transport by specially constructed vessels to the FSRU, operational costs of the FSRU and Jamaica Gas Trust, delivery by pipeline (yet to be constructed) to the end-users, etc, will all increase the price of gas from LNG significantly above that of the gas extracted from the earth,” Hay said. Further, he notes, commodity prices are not necessarily determined by production costs. “The demand-supply ratio is often more significant. The indications are that the demand for LNG internationally will steadily increase and therefore apply upward pressure on the prices of that commodity,” he said. Several worldwide developments, he said, are likely to push LNG prices higher:
Kelly Tomblin, president of Jamaica Public Service Company. – Ian Allen / Photographer
Power distributor Jamaica Public Service Company (JPS) remains committed to using liquefied natural gas (LNG) for its planned 360-megawatt power plant despite Government’s expected plan to scrap the supply of gas for the project, according to the utility’s boss. The private sector can assume the role of supplying the gas, if allowed by Government, JPS Chief Executive Officer Kelly Tomblin said Tuesday. The company will meet with Government this week to determine its next step. “The private sector could secure LNG if Government permits it,” Tomblin told
Kelly Tomblin, president of Jamaica Public Service Company. – Ian Allen / Photographer
Power distributor Jamaica Public Service Company (JPS) remains committed to using liquefied natural gas (LNG) for its planned 360-megawatt power plant despite Government’s expected plan to scrap the supply of gas for the project, according to the utility’s boss. The private sector can assume the role of supplying the gas, if allowed by Government, JPS Chief Executive Officer Kelly Tomblin said Tuesday. The company will meet with Government this week to determine its next step. “The private sector could secure LNG if Government permits it,” Tomblin told
Opposition Spokesman for Industry, Commerce and Energy, Gregory Mair says he’s seriously concerned with reports that the government has abandoned plans to introduce Liquefied Natural Gas. In a statement today, Mr. Mair said Energy Minister, Phillip Paulwell needs to address the country forthwith on what he calls a disturbing development and state clearly the government
Opposition Spokesman for Industry, Commerce and Energy, Gregory Mair says he’s seriously concerned with reports that the government has abandoned plans to introduce Liquefied Natural Gas. In a statement today, Mr. Mair said Energy Minister, Phillip Paulwell needs to address the country forthwith on what he calls a disturbing development and state clearly the government
There’s a warning that Jamaica could suffer some fallout in the international investment community arising from the Government’s decision to change plans for the implementation of the multi-billion dollar liquefied natural gas, LNG project. According to Opposition Spokesman on Energy, Gregory Mair, the country’s image will be tarnished in light of the fact that an international company had been selected for the project. In July, Korean conglomerate Samsung Corporation was declared the preferred bidder for the development and operation of
It is high time the Simpson Miller administration end the pussyfooting and come clean on the liquefied natural gas (LNG) project. For its policy-by-dribble is both confusing and confidence-draining and risks doing grave damage to the Jamaican economy. First, let us place things into perspective. It is our view that alongside credible fiscal policies – which, hopefully, are being sorted out in current negotiations with the International Monetary Fund (IMF) – energy is the potential economic game-changer for Jamaica. With the domestic price of electricity at upwards of US$0.41 per kilowatt-hour, Jamaican firms are difficultly placed to effectively compete with hemispheric and global manufacturers and service providers. Indeed, the higher price of energy has been a significant contributor to this country’s long period of anaemic advance in GDP. A substantial part of our problem, of course, is that the bulk of our electricity is generated by old, inefficient power plants that burn expensive oil. Changing the fuel mix, therefore, is a critical component towards reducing the cost of domestic energy. Settled on natural gas For more than a decade, Jamaican administrations have deliberated on the issue and appeared, in the end, to settle on natural gas as the fuel of choice. It is largely against this backdrop that the former Jamaica Labour Party administration, after a badly compromised initial tender process that it was forced to overturn, called for new bids for an LNG storage and regasification facility to begin to give effect to the fuel-conversion programme. Months ago, it was announced that Samsung was the preferred bidder for that facility. Previously, the Jamaica Public Service Company, an electricity generator and monopoly distributor of power, won the bid to establish a natural gas-burning, 480-megawatt power plant. The expectation was that with natural gas and enhanced efficiency, this facility would drive down the cost of power by a third – not sufficient, but a start. This newspaper has always felt, and argued, that coal, and other fuels, ought to be part of the energy mix. Our primary concern is for the delivery of the cheapest power to afford the economy a fighting chance at competitiveness. At the same time, we want to be assured of a predictability of supply, starting with the fuel. Project could be sidelined Unfortunately, the Government‘s poor communications strategy is injecting grave uncertainty and potential partisan rancour into the discourse. Dr Carlton Davis, the highly respected public servant who heads the Government’s energy task force, had hinted that the LNG project could be sidelined if the Samsung bid did not meet specific price points for the delivery of electricity. It has for weeks been leaking out that those price points, whatever they were, have not been met and that LNG might be abandoned. What, precisely, this means remains unclear. We would, for instance, wish to be told frankly whether Jamaica can find no supplier of LNG – the price of which has risen on the back of demand in Asia despite the collapse of the price of natural gas in North America – at a cost that makes sense. Or whether it is other elements of the pricing of the project that don’t compute, and which party they relate to. Or, perhaps there is another approach to the project, including a mix with other fuels. Uncertainty, ultimately, breeds apathy. The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published. Read more:
Concern is mounting about the medium-term effects of a reported decision by the Government to change plans for the implementation of the multi-billion dollar liquefied natural gas, LNG, project. Some members of the small business sector feel their operations will crumble if they continue to depend exclusively on the Jamaica Public Service Company, JPS, for electricity. Chairman of the Energy Committee of the Medium Small and Micro -sized Enterprises, MSME, Alliance, Anthony Morgan, states that his members are in a state of limbo based on the report, and need clarification from the Government. He explains that changes need to come soon or many jobs will be lost. Read more: |