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New Climate Deal A Signal To Private Sector

December 16, 2015 Webmaster

Khan … I would say to the private sector, look at investing in renewable energy and energy efficiency.

The new global climate deal, reached after two weeks of intense negotiations, is a signal to the private sector, local and international, of the need to reassess current investment flows.

Jamaican negotiator Dr Orville Grey said the private sector will be critical, given the stated goal of the new deal of “holding the increase in the global average temperature to well below 28C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.58C above pre-industrial levels, recognising that this would significantly reduce the risks and impacts of climate change”.

“The private sector will at some point have to take the lead because the technologies that are likely to take us to carbon neutrality will likely come from the private sector and not the public sector, at least as it relates to technology,” Grey, coordinator for adaptation for the Alliance of Small Island States during the negotiations, told The Gleaner.

If the world is to meet the ‘well-below-two’ target, it will require a significant shift in the current high levels of consumption of fossil fuels, including coal and oil, towards renewables such as solar and wind.

Colonel Oral Khan, chief technical director in the Ministry of Water, Land, Environment, and Climate Change and himself a member of the Jamaica delegation to the talks, was in full agreement.

“The private sector is encouraged under this agreement to support the mobilisation of finance to support adaptation and mitigation,” he said.

On Jamaica’s private sector, Khan said: “The State has submitted its intended nationally determined contribution commitment to [reducing greenhouse gas emissions] to the UNFCCC (United Nations Framework Convention on Climate Change) Secretariat. Our commitment is consistent with the goal of our National Energy Policy. I would say to the private sector, look at investing in renewable energy and energy efficiency. In time, I hope that we will see more entities entering into public-private partnerships.”

A Historic Turning Point

Neither Grey nor Khan is alone in their thinking; international leaders in business have echoed their sentiments.

“The business case for eliminating greenhouse gases by 2050 is irrefutable. Indeed, solving climate change presents the greatest economic and social development opportunity of our time,” said Sir Richard Branson, founder of the Virgin Group, in a release to the media on Saturday.

“The new climate agreement is a historic turning point. Now business can and must innovate to lead the transition to a clean economy. Together, it is our duty as human beings, responsible citizens and business leaders to protect the environment. A transition to a clean and green economy will lift millions out of poverty, and ensure the planet’s health for generations to come,” he added.

Arianna Huffington, president and editor-in-chief of the Huffington Post, mirrored his comments.

“This is truly a turning point in human history. We now have the chance to advance the well-being of people everywhere, while creating millions of new jobs and ending our reliance on fossil fuels,” she said in the same release.

“This will help us build a safer, more peaceful world for all. This is exactly what business needs in order to thrive in the long run,” added Huffington.

The Gleaner

Crude Oil News Oil

No problem with PetroCaribe agreement after Venezuelan election results, says Petroleum Corporation of Jamaica boss

December 9, 2015 Webmaster

No worries for Ja over electoral change in Venezuela — PCJ

Up to November, Venezuelan president Nicolas Maduro had been promising more under the PetroCaribe programme to Caribbean countries, announcing more resources for the eastern Caribbean.

Now, following the parliamentary victory by Democratic Unity Roundtable (MUD) some expect that changes may be in the offing.

The PetroCaribe programme is an agreement between Venezuela and some Caribbean territories to purchase oil on preferential terms. It allows the Government of Jamaica (GOJ) to convert 40 per cent of payments annually to a loan repayable over 25 years.

The funds flowing from the arrangement are managed by the PetroCaribe Development Fund (PDF).

Despite the debt buy-back executed this year, Jamaica is still heavily reliant on PetroCaribe funds for low-cost budget support.

In July, Venezuela allowed the GOJ, based on the net present value of the debt outstanding at December 2014, to purchase the PetroCaribe debt totalling US$3.2 billion for US$1.5 billion.

But the Ministry of Finance and Planning still remains the fund’s largest borrower.

Some analysts have posited that the escalating budget constraint faced by the Venezuelan government could trigger a drastic amendment of the PetroCaribe arrangement.

However, chairman of the Petroleum Corporation of Jamaica (PCJ) and advisor to the Ministry of Science Technology Energy and Mining (MSTEM) Christopher Cargill says he expects to see business as usual.

“The election was a parliamentary victory. It was not the national election which is due in 2019. No change can be executed to PetroCaribe before the national elections,” Cargill explained.

He said that in retrospect, Jamaicans should show appreciation for the decade-old arrangement.

“I think Jamaicans really need to be grateful for the benefits received over the years,” he stated, citing the avoided pressure on foreign exchange resources.

Others, including US-based analysts, have projected changes in the offing based upon the effect in Venezuela of declining oil revenues where increasing socio-economic chaos has become evident.

Oil accounts for roughly 96 per cent of export earnings, about 40 per cent of government revenues.

Forecasts have placed oil prices to stay at US$60 per barrel on average due through to 2020 owing to levels of supply from OPEC members and the rapid increase in natural gas and shale oil production.

However, Cargill is convinced that the next three years will hold nothing new for PetroCaribe and its client countries.

He anticipates that a subsidiary of PetrÃ³leos de Venezuela (PDVSA) will move ahead to honour its promises to upgrade the Petrojam refinery which it partially owns, a move expected to make the company more competitive regionally.

Jamaica, in 2006, signed an agreement with Venezuela through PDV Caribe, a subsidiary of PDVSA for a 49 per cent stake in Petrojam with a subsidiary agreement to move production from an average of 30,000 to 50,000 barrels of petroleum products per day through expansion.

At last report, PVDSA was reviewing proposals received for the upgrade of the petroleum refinery from two Chinese sources.

The refinery currently supplies about 80 per cent of the local non-bauxite market and 70 per cent of the national market.

A 2008 estimate put the project cost for expansion at US$758 million, funds that Jamaica lacked and which Venezuela has been unable to deliver to date.

Jamaica Observer

Crude Oil News Oil

Oil prices linger near seven-year lows

December 9, 2015 Webmaster

SINGAPORE, Singapore (AFP) — Oil prices hovered near their lowest in almost seven years in Asia yesterday, ahead of the release of US crude inventories and expectations of an increase in US interest rates.

The decision by the (OPEC) oil producers grouping last week to maintain its lofty production levels continues to weigh on a market already awash with supplies as traders fix their sights on other developments that could influence prices.

US benchmark West Texas Intermediate (WTI) for January delivery was up 16 cents at US$37.81 and Brent crude for January was trading 26 cents higher at US$40.99.

WTI fell 5.8 per cent to US$37.65 in New York and Brent tumbled 5.3 per cent to US$40.73 in London yesterday, their lowest levels since February 2009.

Analysts said yesterday’s slight rebound reflected some bargain-hunting ahead of the release on Wednesday of US commercial crude stockpiles, which will help gauge demand in the world’s top oil consumer.

A Bloomberg News survey estimated inventories probably rose for an 11th week, indicating softer demand.

Traders are also closely watching a meeting of the US central bank’s Federal Open Market Committee (FOMC) next week amid expectations members will announce the first interest-rate hike in over nine years.

An interest-rate increase typically boosts the dollar, which would make dollar-priced oil more expensive to holders of weaker currencies. That usually leads to lower demand and softer prices.

“We expect the FOMC to begin the process of adjusting rates at its meeting… but we think only a gradual and limited adjustment of short-term interest rates will be needed to meet the FOMC’s macroeconomic objectives,” Nomura Securities said in a market commentary.

Oil prices have plunged from peaks above US$100 a barrel in June last year, largely due to the supply glut.

OPEC countries are currently producing an estimated 32 million barrels per day, above the group’s prior 30 million barrel target.

Jamaica Observer

Crude Oil News Oil

Oil Falls Below US$38

December 8, 2015 Webmaster

United States stocks continued falling into afternoon trading Monday as investors dumped energy companies.

Benchmark US crude is trading at its lowest level in nearly seven years following a decision by OPEC last week not to cut oil production. Airline stocks rose on the prospect of lower fuel costs.

The Dow Jones industrial average gave up 123 points, or 0.7 per cent, to 17,724 as of 2:08 p.m. Eastern time. The Standard & Poor’s 500 index fell 16 points, or 0.8 per cent, to 2,075. The Nasdaq composite dropped 38 points, or 0.7 per cent, to 5,104.

Oil drillers and other energy companies fell sharply as benchmark US crude continued its one-and-a-half year tumble.

US crude fell $2.17, or 5.4 per cent, to US$37.80 a barrel on the New York Mercantile Exchange at mid-afternoon, its lowest price since February 2009. Natural gas prices also fell.

“No one in the energy patch is willing to support the price (of oil) and, if they aren’t willing, the price will keep dropping,” said Mizuho Securities chief economist Steven Ricchiuto. “The whole world is facing excess supply as the global economy slows.”

– AP

The Gleaner

Alternative Energy Climate Change Electricity Energy Saving Government JPS News Oil

Coalition urges action to phase out fossil fuel subsidies

December 7, 2015 Webmaster

Members of the Jamaican delegation to COP21 at the Wider Caribbean Pavilion (from left) Ambassador Sheila Sealy Monteith, under secretary for the Multilateral Affairs Division at the Ministry of Foreign Affairs and Foreign Trade; Vilma McNeish, ambassador to the Kingdom of Belgium and the European Union; Senator Arnold J Nicholson, minister of foreign affairs and foreign trade; Dr Orville Grey, senior technical officer in the Ministry of Water, Land, Environment and Climate Change; and Jeffrey Spooner, head of the Meteorological Service of Jamaica.

PARIS, France — An unprecedented coalition of close to 40 governments, hundreds of businesses and influential international organisations have called for accelerated action to phase out fossil fuel subsidies, a move that would help bridge the gap to keep global temperature rise below 2°C and perhaps close to the 1.5°C for which Caricom and other Small Island Developing States are advocating.

On the opening day of the UN Conference on Climate Change (COP21) last week, New Zealand Prime Minister John Key formally presented the Fossil Fuel Subsidy Reform Communiqué to Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change (UNFCCC), on behalf of the Friends of Fossil Fuel Subsidy Reform, The Prince of Wales Corporate Leaders Group and other supporters of the communiqué.

The communiqué calls on the international community to increase efforts to phase out perverse subsidies to fossil fuels by promoting policy transparency, ambitious reform and targeted support for the poorest.

Governments spend over $500 billion of public resources a year to keep domestic prices for oil, gas and coal artificially low. Removing fossil fuel subsidies would reduce greenhouse gas emission by 10 per cent by 2050. It would also free up resources to invest in social and physical capital like education, healthcare and infrastructure, while levelling the playing field for renewable energy.

“Fossil fuel subsidy reform is the missing piece of the climate change puzzle,” Prime Minister Key said. “It’s estimated that more than a third of global carbon emissions, between 1980 and 2010, were driven by fossil fuel subsidies. Their elimination would represent one-seventh of the effort needed to achieve our target of ensuring global temperatures do not rise by more than 2°C. As with any subsidy reform, change will take courage and strong political will, but with oil prices at record lows and the global focus on a low carbon future, the timing for this reform has never been better.”

In accepting the communiqué, Figueres said: “These subsidies contribute to the inefficient use of fossil fuels, undermine the development of energy efficient technologies, act as a drag on clean, green energy deployment and in many developing countries do little to assist the poorest of the poor in the first place.

“The huge sums involved globally could be better spent on schools, health care, renewable energies and building resilient societies. The current, very low oil prices are a good opportunity to really get going on this issue.”

Chair of The Prince of Wales Corporate Leaders Group (CLG) and former president of Alstom Power, Philippe Joubert, also spoke last Monday.

“The CLG’s long-standing efforts to put a price on carbon, including most recently working with the World Bank through the Carbon Pricing Leadership Coalition, will soon deliver results. It doesn’t make sense that, at the same time, governments artificially deflate the cost of coal, oil and gas, the primary cause of GHG emissions. Fossil fuel subsidies must be ended to stop this contradiction and enhance a real transition to low carbon energy,” he said.

For the OECD’s part, Secretary-General Angel Gurría commented that countries need to demonstrate their seriousness about combating climate change with concrete actions and policies.

“Reforming harmful fossil-fuel support is a good place to start,” Gurría stressed.

Close to 40 countries have endorsed the Fossil Fuel Subsidy Reform Communiqué, including Canada, Chile, France, Germany, Italy, Malaysia, Mexico, Morocco, Peru, The Netherlands, The Philippines, Samoa, the United Kingdom, the United States, Uganda, and Uruguay.

The communiqué is supported by The Prince of Wales’s Corporate Leaders Group (23 global companies employing two million people worldwide with combined revenues exceeding US$170 billion) and other business organisations working with thousands of corporations and investors, including The B Team, the World Business Council for Sustainable Development and the We Mean Business coalition.

The communiqué has also been endorsed by influential international organisations, including the International Energy Agency, the OECD and the World Bank.

Eliminating fossil fuel subsidies can accelerate the economic shift needed to tackle climate change and remove one of the obstacles to delivering the low-carbon future for which COP21 is aiming.

“History will prove fossil fuel to be a dead end,” Stefan Löfven, prime minister of Sweden, said. “Sweden will be amongst the first fossil-free welfare nations of the world. And eliminating fossil fuel subsidies is an important step on this path.”

Hakima El Haite, Morocco’s environment minister and candidate for the presidency of COP22, added: “Not only do fossil fuel subsidies put a strain on government coffers but they also don’t help the poorest of society.”

COP21 began on November 30 and will run until Friday, December 11.

Jamaica Observer

Alternative Energy Government LNG News Oil Uncategorized

Financially Speaking | Jamaica’s Spectacular LNG Record

December 7, 2015 Webmaster

Lest we forget, Jamaica has been trying to strike deals to migrate to liquefied natural gas (LNG), and failing at it spectacularly, for well over a decade.

It all began four prime ministers ago, when Percival James Patterson was in charge and sought to broker a deal with his counterpart, Patrick Manning, in Trinidad in 2001. And we knew Patterson was serious about the issue, because that time he did not form a committee around it.

Still, it didn’t end well. Trinidad began to waffle – after all, it could get better prices for its fossil elsewhere. Jamaica wanted concessionary pricing for a yearly 1.1 million tonnes of natural gas as a family member in Caricom, but Trinidad was in favour of the hub. Business, after all, is business.

Patterson even put a dedicated man in charge of the LNG programme. That didn’t help. And since then, almost every effort at adding gas to the energy mix has coagulated. You know you have a problem when international headlines pop up asking, ‘Is Jamaica’s Energy Cursed?’

To recap, the actors in Jamaica’s LNG serialised melodrama have included Anthony Hylton, James Robertson, Clive Mullings, Christopher Zacca, Phillip Paulwell, Kelly Tomblin, Exmar, Caribbean LNG, Azurest, Energy World International, Jamaica Public Service Company and now Abengoa SA. Perhaps the only clairvoyant in the mix was Mullings, who, back in 2008, began touting coal as a more practical choice for diluting the viscosity of oil on Jamaica’s balance of payments, given the vagaries of supply in the LNG market.

Not everyone loved the idea. The thought of coal was a bit dirty, and risky, but it wasn’t entirely dismissed. Fracking has now changed that dynamic somewhat.

In 2014, some 13 years since the Patterson-Manning bro-pact and a decade after the more formalised LNG heads of agreement, ESET emerged as the latest reset when current Prime Minister Portia Simpson Miller reached out to an old and trusted ally of Patterson’s – Dr Vincent ‘Head of Kitchen Cabinet’ Lawrence – to bring an end to the confusion that had become Jamaica’s energy policy.

Being a glutton for punishment, Jamaica held on to its LNG ambitions, but also opened up to proposals for coal, compressed gas, and natural liquid gases such as ethane and propane.

Blame it on the cosmos

But even the doc, despite the heavenly moniker that had been bestowed on him in the past, has been no match for the supremacy of Murphy’s law, or whatever it is in the cosmos that appears to want Jamaica to stay wedded to crude. First, the American Ethane/UC Rusal arrangement fell apart – which Lawrence insisted would not derail the 2018 schedule to begin cutting electricity prices – and now there is Abengoa.

Right about now, JPS boss Kelly Tomblin likely has fingers crossed, hoping that New Fortress Energy won’t throw up any surprises; that the arrangement with the American company to supply gas to JPS’ Montego Bay plant will – please, oh please – go right.

General Electric is currently retrofitting Bogue for LNG – a US$22.54-million project that seems to escaped the curse – and Fortress Energy is to start delivering gas by mid-2016. The final terms of the Fortress engagement are now being negotiated.

Before the LNG project was revised from a 360MW single project and split into bite-size pieces under ESET, JPS itself had tried to take on the task under a US$600-million plan that went nowhere. The power utility was said to have a financing revolver lined up but could not secure the gas supplies at the right price.

Under the reset, JPS has two projects to execute – the 120MW Bogue project in Montego Bay for which it has contracted New Fortress, and the 190MW project in Old Harbour Bay. For the latter, JPS reportedly got several bids but chose Abengoa SA, which just days later filed for bankruptcy protection to restructure billions of debt.

Somebody hadn’t done their homework. One would have thought that JPS’s foreign parents Korea East West Power Company and Marubeni – both of which operate in the energy field – would have the temperature of another big energy player. But it appears that they, and the JPS consultants, did not.

Still, Tomblin and team appear to have other options were Abengoa to falter. The Spanish company has four months to right the ship, a timetable that collides with JPS’, which wants to start site prep for the Old Harbour plant by March in order to keep its 2018 commitment. Right about now, JPS is probably reinvestigating the other bidders, hopefully using a different set of consultants than the ones who delivered up the embarrassment of Abengoa.

Old Harbour is an important project for Tomblin, who wants her legacy at the Jamaican utility to be one of transformation. She got a Jamaican power generator and distributor to run, but she wants to leave it as a ‘gas and electric utility’ with a role in developing a regional gas supply hub for the Caribbean market. Old Harbour would be the fulcrum, assuming it gets built.

With Bogue and Old Harbour in play, around a third of base load capacity would be fired by gas, a cleaner and, as important, cheaper fuel source that will allow JPS to produce and supply electricity to the grid at a price below 13 US cents per kilowatt-hour, and knock 1.2 million barrels of oil off the country’s annual orders of crude.

Still, Murphy’s law is tenacious, which means that all Jamaica can do is pray that the stars will finally align in its favour and that the energy gods are in affinity with Vin.

The Gleaner

Electricity Government JPS News Oil

OPEC Keeps Oil Production At Current High Level

December 7, 2015 Webmaster

Nigeria’s Minister of State for petroleum resources and President of the OPEC conference Emmanuel Ibe Kachikwu (left), and OPEC’s secretary general Abdalla Salem El-Badri of Libya attend a news conference after a meeting of the Organisation of the Petroleum Exporting Countries, OPEC, at their headquarters in Vienna, Austria, Friday, December 4, 2015.

OPEC nations decided on Friday to keep producing oil at their current high levels, effectively acknowledging their inability to push up crude prices.

An attempt to nudge the cost of oil higher would have involved lowering output. Instead, the organisation’s endorsement of present output, which is more than 1.5 million barrels a day above the formal ceiling of 30 million barrels, is likely to push the price of oil down further.

The ministers of the Organis-ation of the Petroleum Exporting Countries appeared to have little choice. Major producing nations in the cartel were opposed to reducing output. Instead, OPEC is poised to produce more oil.

Iran, which once pumped around four million barrels a day and is now down to about half that, is preparing to come back fully on line once it sheds nuclear-related sanctions in a few months.

Senior oil official Amir Hossein Zamaninia said last week Iran hopes to bring an extra 500,000 barrels on the market by early next year. He said he hopes the extra output will be accommodated within OPEC’s formal ceiling of 30 million barrels a day.

Arriving for Friday’s meeting, Iranian oil minister Bijan Namdar Zanganeh said Iran is ready to discuss a ceiling for its production but only after his country makes a “full return to the market.”

Iraq is also resurgent. The country has seen the fastest rise in crude production in the world this year. It was pumping more than 4 million barrels a day last month and was responsible for last month’s biggest monthly rise in output among all OPEC countries.

And the ministers agreed to readmit past member Indonesia, to expand their ranks to 13. While that country’s production goes mostly for domestic consumption, that move could also add some to the total amount of OPEC barrels on sale.

A final statement on the meeting was unusual in not mentioning any decision on production ceilings. But conference president Emmanuel Ibe Kachikwu told reporters that there was agreement to maintain “current actual production”, which is well above the formal ceiling set at 30 million barrels a day.

Friday’s news pushed oil prices down, with the US benchmark rate sliding 2.7 per cent on the day to US$39.99.

The decision effectively leaves it up to individual members how much crude to pump and was a strong signal of OPEC’s eroding ability to act as a group in efforts to influence supply, demand and prices.

Kachikwu acknowledged as much, telling reporters asking about Iran’s return: “At the end of the day every country has a sovereign right to bring to the marketplace its resources.”

“The logic is simple,” he said, of OPEC’s present clout in a market where non-members such as Russia and U.S. shale producers play an increasingly large role. “We are only 35 per cent of the producers and there are still 65 per cent out there.”

Some OPEC members are producing at their limit and like at previous meetings, the pressure was on swing-producer Saudi Arabia, which accounts for about a third of OPEC’s output, to cut back. But the desert kingdom remained opposed.

The Saudis already resisted cutbacks a year ago, a strategy calculated to put higher-cost outside competitors like United States shale oil producers out of business. The hope was that would eventually lead to a drop in supply and a rebound in prices.

That plan clearly hasn’t worked, with benchmark US crude’s value falling by more than 40 per cent over the past year and now hovering around the US$40 mark per barrel.

Cushioned by past profits on oil, the Saudis can hold out, even if production costs exceed sale revenues. Not so much some others.

Kachikwu, the conference president who also represented Nigeria at the meeting, acknowledged that continued low prices will hurt his country.

“There will be pain,” he said.

The Gleaner

Electricity JPS News Oil

JPS Stands To Lose $400m Yearly From Prepaid Meters

December 7, 2015 Webmaster

Jamaica Public Service Company (JPS) claims that switching all its low-consuming users to prepaid meters would increase the risk profile of the utility provider, and secondly, cost it hundreds of millions in lost non-fuel revenue annually – an ironic twist given that the meters are meant to curtail losses.

JPS currently offers prepaid meters in select inner-city areas under a pilot programme, but its admission of the cost puts the timeline for its larger role in question.

“If all customers consuming less than 100 kilowatt hours switched to the prepaid service, JPS stands to lose J$399 million in non-fuel revenues per annum,” the power utility said in its annual tariff application documentation published late last month by its regulator, the Office of Utilities Regulation (OUR).

“By any measure, this exposure is significant and further increases the risk profile of the company, especially given the challenges in meeting certain financial covenants.”

JPS holds US$324 million in long-term loans, and its financial covenants require a minimum undisclosed debt to earnings before interest tax depreciation and amortisation. The company was fully compliant with all its loan obligations as at September 2015.

Customers that consume less than 100 kWh are classified as Rate 10 users. These users usually are low-income households but account for some 222,000 of the 594,000 JPS customers, according to OUR documentation.

Regular customers – Rate 20 – who consume less than 75,000 kWh per month would remain revenue neutral for the switch to prepaid meters.

JPS added that this level of loss is “unsustainable” and is only acceptable for the remainder of the prepaid pilot which offers prepaid meters to a relatively small number of customers. The power utility wants the OUR to increase the prepaid rates to Rate 10 customers in order to remove a large part of that shortfall.

“We would, however, like to state that the rate structure should aim for revenue neutrality as the prepaid programme evolves,” said JPS.

The company proposed an adjustment to non-fuel tariff rates for Rate 10 prepaid customers to $14.4311/kWh for the first 119kWh in a 30-day cycle; and $20.5719/kWh for every kWh above 119kWh in a 30-day cycle.

The OUR rejected that specific JPS proposal. It approved instead a Rate 10 prepaid rate of $13.19/kWh for the first 100kWh in a 30-day cycle and $20.85/kWh for every kWh thereafter for a 30-day cycle.

JPS made US$23.7 million net profit over nine-months ending September 2015 on revenues of US$583 million which nearly doubled the US$12.5 million in profit earned a year earlier.

There was no response to mailed queries and calls to JPS for comment on this story up to press time.

The Gleaner

Alternative Energy Electricity Jobs JPS LNG News Oil

Abengoa Says Old Harbour Project Will Employ Hundreds

December 2, 2015 Webmaster

The oil-fired JPS power plant in Old Harbour Bay, St Catherine is to be converted to LNG.

Spanish firm Abengoa SA has revealed the value of the upgrade and employment prospects for the 190MW power plant project amid pre-bankruptcy filings in its home market.

“The contract for the plant, which will be powered by natural gas and cooled by seawater, is worth more than US$200 million,” said Abengoa in a release.

The engineering and renewable energy firm was selected as preferred bidder by Jamaica Public Service Company (JPS), and the parties are in the process of finalising the contract for the LNG-fired power plant. JPS has said the full project cost would be closer to US$300 million.

Abengoa has about four months in which to secure deals with its creditors and restructure its debts if it is to escape full bankruptcy. JPS has said it is not ready to give up on its preferred bidder just yet, but is monitoring the situation.

Abengoa said it will be responsible for the design, engineering and construction work of the plant that will replace an existing fuel-oil facility and is expected to “create between 300 and 500 jobs during the construction phase”.

JPS wants to decommission the existing fuel-oil plant and move to a natural gas facility to create a cleaner, efficient and more reliable source of power, added Abengoa.

The more than 40-year-old Old Harbour plant remains one of the least energy efficient in the island and its upgrade would form part of the Jamaican Government’s drive to increase cleaner forms of fuel. Jamaica aims to increase renewable energy reliance to 20 per cent of the energy output within the medium term.

SEAWATER COOLING SYSTEM

“The plant will use a seawater cooling system that returns the warm water without adversely impacting the environment. Abengoa’s design will use the existing infrastructure as much as possible, requiring less power and improving the overall output of the plant,” said the Spanish firm in late November, adding that the project would extend Abengoa’s experience in turnkey combined cycle projects to the Jamaican market.

The company informed that it filed for insolvency protection on November 25 before the Mercantile Courts of Seville. The company also indicated that it would continue negotiations with its creditors with the objective of reaching an agreement that ensures the company’s financial viability, “under the protection of Article 5 of the Spanish Insolvency Law”.

The company recorded a €194 million net loss attributable to its parent over nine months ending September 2015 on revenues of €4.87 billion. It holds €6.2 billion in total debt while its earnings before interest tax and amortisation totalled €1.3 billion or 4.5 times net leverage.

Abengoa’s other major combined-cycle projects include the 640MW plant in Centro Morelos, Mexico, and the 440MW combined cycle plant in Portland, Oregon, United States, currently under construction. More recently, Abengoa was awarded two combined cycle plants in Mexico – Nuevo Pemex 680MW, and Norte III, 924MW.

The Gleaner

Alternative Energy Electricity JPS LNG News Oil

JPS 190MW Plant A US$300m Project – LNG Facility Won’t Harm Health Or Fish Stock, Residents Assured

November 28, 2015 Webmaster

The JPS power plant in Old Harbour Bay, St Catherine. Ian Allen

Continuous tests as well as monitoring of the construction and commercial operation of the gas-fired 190-megawatt power plant to be developed by Jamaica Public Service Company (JPS) at Old Harbour Bay, St Catherine, have been promised, amid public concerns that the facility could eventually become a health hazzard.

Those health concerns were allayed by environmental consultant Carlton Campbell, who also assured the community in a consultation session Tuesday that they would have a mechanism for complaints for matters that arise when the project gets underway.

The public is weighing in on the environmental impact assessment report, which was done by Campbell’s company, CL Environmental Limited.

Such consultations are a precursor to final consideration and approval of a major project by the central authority, National Environment and Planning Agency (NEPA).

Site preparation for the liquefied natural gas plant is scheduled to begin by the first quarter of 2016 and construction by the second quarter. Commissioning of the plant is expected 22 months later, which would be close to mid-2018 if the current timetable holds.

JPS recently settled on Spanish engineering and renewable energy firm Abengoa to develop the plant, but that selection is now complicated by bankruptcy filings by the company on Wednesday, which is seeking protection in order to restructure its debt of about €9 billion. Spanish law gives it four months to strike deals with creditors under ‘pre-insolvency’ proceedings and avoid full bankruptcy.

The size of the contract to Abengoa was not disclosed, but previous reports say the project could cost around US$200 million to US$300 million. CL’s environmental impact report indicates that capital expenditure for construction of the plant is US$219.5 million, but last night JPS clarified that this figure related to equipment only. The utility said the full project cost would end up closer to US$300 million.

Deliver power supplies

The new plant will retire old capacity at Old Harbour, and is expected to deliver power supplies to the national electricity grid at less than 13 US cents per kilowatt-hour. The current plant is oil-fired.

Old Harbour residents were told to expect intermittent traffic disruptions and longer commutes, as well as increases in the cost of travel once the 190MW project enters the construction phase.

Campbell said the expected noise levels were compliant with the night and daytime standards of NEPA and the World Bank, and that water and air quality as well as drainage and wastewater systems would be monitored continuously.

“There is a perception that there will be health implications from this new plant,” said Campbell, while ticking off a list of reported concerns that included respiratory problems, increased noise levels, pollution, vibration and soot emissions.

However, he said, a health impact study was conducted which showed that residents would not be affected.

The environmental consultant also said the natural gas emissions and effluent released from the plant were not expected to harm the fish stock on which a lot of residents of the village depend for their livelihood.

The plant is expected to employ 400-450 during construction, and 45 persons permanently at commissioning.

The project was submitted to NEPA for approval on September 2, 2014, and after initial review, the agency requested that JPS produce an environmental impact report. The report was submitted at the end of October and is under review by various agencies.

Their feedback will eventually be communicated to JPS.

“The agencies will therefore refrain from making any comments or answering any questions in relation to the development at this time, as the application is currently the subject of review,” said NEPA official Ruth-Ann Lacey-Sherrard at Tuesday night’s public consultation.

The presence of the agencies at the event, she said, was merely to observe and take note of public comments that would inform the deliberations of the Natural Resources Conservation Authority (NRCA) which is a division of NEPA.

“Please note, carefully, that the final decision on the application is the sole responsibility of the NRCA,” Lacey-Sherrard said.

“The agencies’ review of the public presentation and consultation processes is extremely important in the decision-making process. These consultation processes provide an additional opportunity for stakeholders to air their concerns, make comments, provide opinions and views on the development project, and afford the applicant the opportunity to address these,” she said.

The Gleaner

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