Electricity Sector Enterprise Team Archives

LNG can be sourced from anywhere – ESET

July 7, 2016 Webmaster

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

Electricity Energy Saving JPS LNG

LNG Suppliers Selected – Power Plant In Operation By 2018

November 13, 2015 Webmaster

Head of the Electricity Sector Enterprise Team (ESET) Dr Vin Lawrence says there was a vast number of credible bids that were put forward for the supply of natural gas to the new power plant to be built by Jamaica Public Service Company (JPS).

New Fortress Energy, the same entity which won the bid to supply gas to the Bogue power plant in Montego Bay, has been selected as the entity to supply LNG to the new plant, on which construction is expected to begin by the second quarter of next year. The arrangement will see New Fortress installing the facilities to receive, store and re-gas the fuel for use at the new 190-megawatt gas-fired plant at Old Harbour.

“Six entities submitted 16 variations of proposals and we were quite delighted at this because we have gone through 15-20 years of attempting to get LNG to Jamaica without much success, and on this RFP, we have had six credible entities submitting 16 variations of supply proposals,” Lawrence said.

The ESET chair, who was addressing a Jamaica House press briefing at the Office of the Prime Minister yesterday, also announced that the JPS has selected Spanish firm Abengoa to construct the new plant.

Lawrence said the agreement is for New Fortress Energy to build a terminal and supply the JPS with 200,000 metric tonnes of LNG per annum. New Fortress Energy will build, own and operate the plant which Lawrence said must be expandable.

In Ja’s Best Interest

The company will spend more than $200 million on the terminal, which is expected to be constructed at Rocky Point, Clarendon.

“We have been trying for 20 years to bring natural gas to Jamaica, and so, we believe it is also in our interest that we have a terminal facility that can expand and grow,” he said.

The gas plant is due to be finished by the fourth quarter of 2017 and the power plant is due to be ready at the beginning of 2018.

With Jamalco indicating that it is reviewing its decision on whether it will go ahead with the building of a coal plant or switch its plans to using natural gas, Lawrence said the demand for LNG could be about 500,000 metric tonnes per year.

Schedule Not Affected

Lawrence said the bauxite-producing company is being allowed another two to three weeks to “have discussions with the possible gas supplier for a final decision to be taken”.

“This period will not affect the scheduling that we had proposed for Jamalco. If they shift to gas, we would have a two-year rather than a three-year construction period and the capital cost would be significantly less,” Lawrence added.

The new building of the JPS power plant represents part of an effort to lower electricity costs on the island. The plant will replace 292 megawatts of heavy fuel oil power plant at Old Harbour in St Catherine, and will be combined with energy from renewable sources and cogeneration facilities from Pan-Caribbean Sugar Company and bauxite companies.

The final electricity price to the grid will be less than US$0.13 cents per kWh, the ESET head said, which would mean at least a 30 per cent cut in light bills.

Lawrence said Jamaica has been looking at getting one million metric tonnes per year, and that New Fortress Energy is expected to construct a terminal that can supply the 200,000 metric tonnes that the JPS requires.

He said the demand for LNG from other sources would determine how quickly the facility is expanded.

Technical assistance was provided by the Galway Group and Hatch Mott McDonald, two reputable international firms.

Critical issues such as the security of supply, capability of delivering the project, ability to expand the terminal, ability to meet the power plant schedule, and a commitment to achieve a timely financial close were considered in selecting New Fortress Energy as the preferred bidder.

The Gleaner

Electricity Government News

Full Speed Ahead – JPS Shrugs Off OUR Shocker, Given Green Light To Build Power Plant

February 6, 2015 Webmaster

Despite recent hurdles, the Kelly Tomblin-led Jamaica Public Service (JPS) is indicating that it is determined to increase its contribution to the burdened national grid and help stave off threats of power outages in the years ahead.

The light and power company has shrugged off the shock of the Office of Utilities Regulation’s (OUR) disapproval of its request for a rate hike and is moving ahead with plans to erect a 190-megawatt (MW) power plant.

Shedding light on the work of the Electricity Sector Enterprise Team (ESET), chairman Dr Vincent Lawrence told journalists yesterday that his group has its eyes firmly set on the addition of 380MW to the national grid by 2017.

Addressing a press conference at the Office of the Prime Minister, Lawrence revealed that Cabinet on Monday approved the construction of the 190MW power plant along with two others to increase generating capacity to the island by 380MW.

“The JPS has exercised its right of first refusal to replace obsolete generating capacity by the construction and installation of a 190MW gas-fired, co-generation power plant at Old Harbour,” said Lawrence.

He said the JPS had agreed to a power tariff of not more than US12.89 cents to facilitate the construction.

“ESET has recommended and Cabinet has given approval for a letter to the JPS authorising the development of 190MW of generating capacity and the construction of a terminal in Old Harbour,” said Lawrence.

He disclosed that Cabinet also approved the construction of a 140MW gas-fired, co-generation plant by Alpart Venture and another 50MW for Jamalco Venture.

Presenting an update to journalists during a press conference after the submissions were made to Cabinet yesterday, Lawrence said the JPS would also be forging ahead with the upgrading of its Bogue plant, which generates 50MW, which is not factored into the added generating capacity.

For Bogue, Lawrence said the proposal is to convert the feed stock to gas, making the retrofitted power plant a 115MW gas turbine co-generation power plant.

US$15 MILLION REQUIREMENT

Lawrence pointed out that the JPS requires capital expenditure of US$15 million for the conversion of the Bogue power plant to be completed by the end of 2015.

He disclosed that ESET had been forced to delay its due diligence on the Jamalco project because the new majority partner, the Noble Group, is finalising its own analysis of the project in order to decide whether it will be making amendments.

Lawrence said Cabinet also agreed with ESET to subject the existing co-generation proposal on the 50MW of coal-fired generation at Jamalco to further analysis before it provides more definite recommendations on the project.

The new principals of Jamalco have promised that their position will be forthcoming by the end of the month.

Lawrence said ESET has continued with a number of stakeholder consultation meetings and discussions with key players in the electricity market.

These comprise the JPS; the OUR; the bauxite alumina sector (Jamalco and Alpart); the Ministry of Science, Technology, Energy, and Mining; the Inter-American Development Bank; and Independent Power Producers (IPPS).

Lawrence said ESET continued to receive assistance from the World Bank, which has provided expertise in analysing technical and financial submissions from JPS, Alpart, and Jamalco, which are planning to build, own, and operate the proposed power plants.

He said ESET had also conducted assessments of the gas market, including trends, costs, shipping size, among other variables, and has conducted comparative studies of electricity policy and framework across the region.

Among other recommendations approved by Cabinet are the review of the Amended and Restated All-Island Electricity Licence (2014), with the goal of facilitating viability, reliability, and investment in the electricity sector.

gary.spaulding@gleanerjm.com

Jamaica Gleaner