New Fortress Energy is building an $800 million LNG export plant in rural northeastern Pennsylvania (see Big News! Marcellus LNG Export Plant Coming to Landlocked NEPA). The plant will send the LNG to the Philly area via truck (eventually rail) and then it onto ships somewhere along the Delaware River. The LNG (some of it) will then get shipped all the way to Puerto Rico where it will be used to power electric generating plants.
SEE IMPORTANT UPDATE AT END OF POST
New Fortress recently signed a deal with the Puerto Rico Electric Power Authority (see PA Marcellus Gas to Power Electric Plant in…Puerto Rico?!). PREPA operates a combined cycle electric generating plant in San Juan, Puerto Rico. They are converting two of the units in that plant to burn natural gas–our natural gas, from northeastern PA.
New Fortress not only owns the LNG export plant in northeastern PA, they also own the import facility in Puerto Rico that will accept and truck the LNG to the electric plant and to other customers (“microgrids”). New Fortress recently held a ground-breaking ceremony in San Juan at the import facility now under construction:
New York City-based New Fortress Energy (NFE) has held a groundbreaking ceremony for a micro fuel-handling facility in San Juan.
The micro fuel-handling facility, which has been under development for more than a year, will provide natural gas to the San Juan power plant.
The facility will also conduct truck loading operations that will deliver LNG to industrial companies and microgrids, New Fortress Energy said in a brief statement through its social media.
To remind, New Fortress Energy’s Puerto Rico unit NFEnergía signed a deal with the Puerto Rico Electric Power Authority (PREPA) for the supply of natural gas and conversion of Units 5 and 6 of the San Juan power plant earlier this month.
PREPA estimates that the conversion of these units from diesel to natural gas will generate an estimated $750 million in fuel cost savings over five years for PREPA and significantly reduce emissions.
The conversion of San Juan Units 5 and 6 and the development of the micro fuel handling facility are anticipated to be complete by mid-2019. (1)
We also found a press release from the PR government announcing work has already begun on converting the first electric generating plant.
The press release gives us the first solid insight into the timing of when all of the pieces must fit together. It is a FAST schedule!
According to the release, “NF Energía [New Fortress Energy] will ensure compliance with the work schedule to have the units converted and gasified between the July and August 2019 period.” Yikes! In 4-5 months from now the electric generating plants will be converted in PR, and should be using natural gas as their power source. Meaning (a) the Wyalusing, PA plant will need to be built and online at that point, (b) the U.S. export facility (not yet identified) where the ships will sail from will need to be online and functioning by that point, and (c) the PR import facility will need to be built and functioning by that point. That is a LOT of moving parts, a lot to accomplish in the next few months.
Governor Ricardo Rosselló Nevares participated in the beginning of the work directed to the construction of docks A, B and C; as well as the conversion to natural gas of units 5 and 6 of the Central San Juan, as a first step for the energy transformation of Puerto Rico.
After the conversion, customers will see a 1.3 cents reduction in cost per kilowatt hour in their bills.
“The work that begins today is fundamental for the Energy Reform that we have as a government project for the island, which seeks to transform the energy system to a resilient, cost-effective and environmentally friendly”, said the chief executive.
Rosselló Nevares added that “the conversion process will start with unit 6 and then with unit 5, to always maintain one of the units in service, construction and conversion should be completed during this summer.”
The contract with New Fortress Energy, LLC (NF Energía) -company selected in the auction process (RFP 81412) – was signed on March 5, 2019 for a term of 5 years and renewable to three terms of the same amount of years.
This will allow, by means of an association with the private company, to replace the diesel fuel with the natural gas, which projects savings in the production of electric energy for about $ 150 million.
For its part, the chief executive officer of the Electric Power Authority (AEE), José Ortiz Vázquez, stressed that “in purchasing fuel, according to comparisons between the cost of natural gas versus diesel, savings of about $ 150 million would be produced. This will have a direct impact on the monthly bill of all customers who are, after all, the main beneficiaries of this transformation. ”
In conjunction with a management team of the PREPA, NF Energía will ensure compliance with the work schedule to have the units converted and gasified between the July and August 2019 period.
The announcement was made in the vicinity of the AB and C docks of the Ports Authority in which NF Energy will carry out the works through a lease contract with the Ports Authority for a term of 20 years.
The old structure was demolished as it contained asbestos and lead. NF Energía assumed all expenses related to the demolition and removal of debris.
An initial investment of $ 90 million is estimated and the capital investment of NF Energía is expected to be approximately $ 125 million during the term of the contract.
This investment includes the purchase and installation of equipment, machinery, demolition of the old structure, construction of new facilities and improvements to the docks.
The executive director of the Authority of the Ports, Anthony Maceira Zayas, maintained that “we are taking an important step towards the conversion and diversification of the sources of electricity production in the Island”.
The Secretary of Public Affairs also added that “through the agreement with NF Energía we promote the use of alternate sources, which are 60 percent cleaner and eco-friendly, which will make it easier for us to achieve the goal of producing 100 percent of renewable energy production. for 2050. ”
Meanwhile, the founder and chief executive officer (CEO) of NF Energy, Wes Edens, said that “New Fortress is proud to bring clean, affordable and reliable energy to Puerto Rico.”
Edens added that “our installation will accelerate the transition from local industries and from the generation of energy to natural gas and renewable energies, which will result in environmental savings and benefits for the benefit of all Puerto Ricans.” We are excited to join the business community of Puerto Rico. and to make a significant investment for its energy transformation and economic growth “.
This project links the different strategic projects that PREPA pursues within its vision of infrastructure in compliance with the Integrated Resources Plan and the Certified Fiscal Plan, whose objective is to transform the energy sector of the Island.
The works are developed in compliance with the proposals for the transformation of the Puerto Rico electrical system, contained in the provisions of Law 57 of 2014, better known as the Law of Transformation and Energy Relief. (2)
(1) LNG World News (Mar 26, 2019) – New Fortress Energy breaks ground for San Juan micro fuel-handling facility
(2) BNamericas (Mar 18, 2019) – Puerto Rico begins the conversion to natural gas of units 5 and 6 of the Central San Juan
We thought, as we were writing the above, that something is “off” about the timing. You just can’t build an $800 million liquefaction plant in a few months. We received a note from someone in the know who says New Fortress is on track to build that plant, in northeastern PA, by 2021. NOT by this summer! We connected dots you can’t connect–that the PR electric plants will be running on gas this summer, ergo the LNG plant will be up and running by then. Ain’t gonna happen. More likely New Fortress will find an alternative source for the gas going to PR initially, until the PA plant is up and running.
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