Last November MDN brought you the exciting news that New Fortress Energy is planning to build an LNG (liquefied natural gas) liquefaction EXPORT plant in landlocked Wyalusing (Bradford County), PA (see Big News! Marcellus LNG Export Plant Coming to Landlocked NEPA). What’s happening with the $800 million project? Anything?
Yeah, a LOT is happening. It is full speed ahead on the project.
The proposed plant will supercool and liquefy locally extracted Marcellus Shale gas (supplied by Chesapeake Energy) and ship it first by truck, eventually by rail, to “customers in the U.S. as well as abroad.” Meaning exports. How cool is that? It seems that LNG liquefaction plants no longer have to be located along a shoreline to engage in exports.
In fact, we have more information below about the international customers that will buy the LNG coming from the Wyalusing plant. The gas will get shipped to Jamaica, Puerto Rico, California (which we consider a foreign country), and Ireland.
So what’s happened since the last time we last checked in on this project? For one thing, it didn’t take long for Wyalusing Township Supervisors to approve two conditional use permits. That happened lickety-split at the end of November:
On Thursday, Nov. 29, the Wyalusing Township Supervisors approved two conditional use permits that New Fortress Energy, LLC needs to construct its proposed $800 million plant in Browntown, which would convert locally-produced natural gas to liquefied natural gas (LNG).
“It was a pretty impressive presentation that they (New Fortress Energy) made” on why the company ought to be awarded the permits, township Supervisor Chairman Marvin Meteer said following a three-hour public hearing on the company’s proposal to construct the plant. “What we’re doing here is to see that they (New Fortress Energy) went through (and met) all the requirements in the zoning ordinance. Their presentation achieved, in my opinion, what they were supposed to do (in making their case for the permits).”
The hearing took place in the Wyalusing Township Municipal Building, just before the supervisors voted unanimously to grant the permits.
Purpose of the Plant
The plant will process locally produced natural gas that is taken off the Liberty Gathering System, which is owned by Williams, a company in the natural gas industry that owns pipelines, [New Fortress Energy Chief Development Officer Brannen] McElmurray said during New Fortress Energy’s presentation on its proposed plant, which was part of the public hearing.
The gas will arrive via pipeline at the plant.
The processing at the plant involves removing the heavier hydrocarbons from the gas, such as ethane, propane and butane, McElmurray said. The plant will also remove certain other impurities from the gas.
The gas will then be cooled so that it forms a liquid (LNG), which has 1/600th the volume of the gas, he said. Converting the gas to LNG will allow it to be transported by truck or rail.
The hydrocarbons removed from the gas will not be stored on-site, but will be used as fuel in the combustion turbines at the plant itself, McElmurray said.
While all of the LNG will initially be transported from the plant by truck, New Fortress Energy is “vigorously” pursuing a plan to eventually have some of the LNG transported from the plant by rail, he said.
The plant will produce up to four million gallons of LNG a day, and will have on-site storage for six million gallons of LNG.
The plant will have three access drives off Route 6, one for employees and two for trucks. The amount of truck traffic entering and exiting the plant will be “not that significant,” McElmurray said.
The truck traffic to and from the plant will be on Route 6 east of the plant, and will not travel through the signalized intersection of U.S. Route 6 and state Route 2010 in Wyalusing, he added.
New Fortress Energy, which is involved in producing and shipping LNG, has “a terrific track record of reliability and safety,” McElmurray said.
The Browntown plant would be the company’s second plant that would convert natural gas to LNG.
The company’s first such plant, which became operational in 2016 and is located in Miami, Florida, has “a terrific track record for safety,” McElmurray said.
LNG itself is not flammable and is not toxic, he said. If you put a lit cigarette into a beaker of LNG, “the cigarette would go out and nothing would happen,” he said.
However, when LNG, which is extremely cold, comes in contact with warmer air, it turns into a vapor that rises, he said. “This vapor is only flammable under certain conditions,” said Jake Suski, a spokesman for New Fortress Energy.
From a safety standpoint, in a worst-case scenario, any fire or other incident would not extend beyond the Browntown plant’s property line, McElmurray said.
The production of LNG is a relatively simple process, and the plants that produce LNG are heavily regulated, which are two of the reasons why the safety record of the LNG production industry is so good, he said.
New Fortress Energy recently opened an operations center in Miami that has staff that “watches all our sites” remotely, and they will be monitoring things at the Browntown plant that the plant’s employees will also be monitoring, he said. This redundancy is being built in because incidents that are a safety issue in the LNG industry “are almost all human-related,” as opposed to, for example, a problem with equipment, McElmurray said.
If the Browntown plant is successful, New Fortress Energy will look at starting similar LNG production plants elsewhere, including in Pennsylvania, he added.
Before its Browntown plant can be constructed, New Fortress Energy will need a number of additional permits, including permits from the Department of Environmental Protection, and a Highway Occupancy Permit from the state Department of Transportation. In addition, the Wyalusing Valley Volunteer Fire Department would need to sign off on an emergency response plan for the plant.
Besides the conditional use permits, the company already has in hand an erosion and sediment control permit from the Bradford County Conservation District. (1)
New Fortress Energy recently went public and began trading shares of stock on the Nasdaq stock exchange. The initial public offering (IPO) raised nearly $300 million for the company:
New Fortress Energy LLC (NASDAQ: NFE) (“New Fortress” or the “Company”) announced today the pricing of its initial public offering of 20,000,000 Class A shares representing limited liability company interests in New Fortress (the “Class A shares”) at $14.00 per share. The Class A shares are expected to begin trading on the Nasdaq Global Select Market under the ticker symbol “NFE” on January 31, 2019. In addition, New Fortress granted the underwriters a 30-day option to purchase up to an additional 3,000,000 Class A shares at the initial public offering price, less underwriting discounts and commissions. The offering is expected to close on February 4, 2019, subject to customary closing conditions.
New Fortress expects to receive approximately $257.6 million of proceeds from the offering, or $297.2 million if the underwriters exercise their option to purchase additional Class A shares in full, in each case net of underwriting discounts and offering expenses. New Fortress intends to contribute the net proceeds of the offering it receives to New Fortress Intermediate LLC (“NFI”), its subsidiary, in exchange for limited liability company units in NFI (the “NFI LLC Units”). NFI intends to use such net proceeds in connection with the construction of its terminals and liquefaction facilities, as well as for working capital and general corporate purposes, including the development of future projects. If the underwriters exercise their option to purchase additional Class A shares, the Company will contribute the net proceeds from the exercise of such option to NFI in exchange for NFI’s issuance to the Company of additional NFI LLC Units. (2)
The day after announcing the IPO, the company began trading on the Nasdaq:
New Fortress Energy LLC (Nasdaq: NFE), an integrated gas-to-power company, rang the Nasdaq MarketSite bell in Times Square today in celebration of its initial public offering (IPO) on The Nasdaq Stock Market.
New Fortress Energy is a New York City based company that seeks to use ‘stranded’ natural gas to satisfy the world’s large and growing power needs. Their mission is to provide modern infrastructure solutions to create cleaner, reliable energy while generating a positive economic impact worldwide.
“We founded New Fortress Energy to meet the growing demand for affordable, clean and reliable energy around the world,” said Wes Edens, Founder and CEO of New Fortress Energy. “Today’s listing on Nasdaq will support the growth of our fully integrated LNG infrastructure and logistics network. With the support of new and existing shareholders, we look forward to continuing our efforts to improve people’s lives and make a positive economic and environmental impact.”
“New Fortress Energy is disrupting the liquefied natural gas space while reducing energy costs and diversifying resources. They have a unique, integrated business model spanning the entire production and delivery chain,” said Nelson Griggs, President of the Nasdaq Stock Exchange. “We couldn’t be more proud to welcome them to the Nasdaq family as the first energy company to list on a U.S. exchange in 2019.” (3)
Our point in telling you about the IPO and going public is to illustrate this company has forward momentum. They have places to go and things to do and building the plant in Wyalusing is at the top of the agenda.
Two weeks ago the Wyalusing Chamber of Commerce held a dinner and New Fortress’ Brannen McElmurray was the main speaker. From his talk and the Q&A that followed, we learn a great deal more of the background of New Fortress, and about their plans for the future with the Wyalusing facility.
One interesting tidbit: Maybe this facility can help bail out floundering Westchester County, NY. Consolidated Edison is placing a moratorium on new natural gas customers beginning March 15. Apparently Con Ed is interested in the Wyalusing facility as a source of natgas for their system in Westchester County. Maybe this facility will help Cuomo salvage his damaged reputation with his fellow Westchestereners.
Liquefied Natural Gas (LNG) produced at the proposed LNG plant in Wyalusing Township (Browntown) could serve as a bridge while renewable energy sources like wind and solar are brought into the mainstream.
That was the word from Brannen McElmurray, Head of Development for New Fortress Energy, the company that intends to build a state-of-the-art liquefication plant at Browntown.
“I have the view that using natural gas as a way to get to a more sustainable future is exactly what we should be doing,” McElmurray told a group of about 85 people at a dinner meeting hosted last Thursday evening, Feb. 7, by the Greater Wyalusing Chamber of Commerce (GWCC) at the Tuscarora Wayne Community Room on Main Street.
“Outside of the U.S, they get this,” McElmurray continued. “They are just as environmentally sensitive as anyone in the U.S., and what they want to do is use natural gas as a bridge to get to something better. Without natural gas, we can’t have renewable.”
GWCC President Jeff Homer welcomed everyone to the event, introduced McElmurray and members of the GWCC board of directors.
About six years ago, McElmurray and New Fortress Energy co-founder Wesley Edens purchased the Florida East Coast railway formerly owned by renowned Florida developer Henry Flaggler. The Florida East Coast Railway is a class-two regional railway that owns the mainline track from Jacksonville to Miami. It is the exclusive rail provider for Port Miami, Port Everglades and Port of Palm Beach. The train was converted from diesel to LNG produced at a plant New Fortress constructed in Florida. “It’s the only train powered by LNG in the lower 48 states, and it was a tremendous savings in fuel and maintenance costs,” McElmurray said.
Billon Dollar Investment
The proposed Browntown plant is a billion-dollar investment and will likely take about two and a half years to complete, McElmurray said. Once it’s up and running, it will provide about 55 permanent jobs, but during construction hundreds of people will be employed. Natural gas will arrive at the plant via pipelines and LNG shipped out on trucks and trains. The LNG would be sold to customers in the U.S. and abroad.
McElmurray told the audience that he grew up in the small town of Johnson, SC, where his grandfather owned a clothing store and was a peach grower. He said Johnson is smaller than Wyalusing. “We didn’t exactly have a traffic light,” he joked. “He was very involved in his church, very involved in the Lions Club and in his community,” McElmurray said of his grandfather. “What I took away from that was the importance of civic engagement, of a business being integrated in the community,” he continued. “We’ve tried to bring that philosophy into the developments that we do. We typically try to come in and be a part of the community, to be transparent about what we’re going to do and to be good listeners in terms of things we need to do and improve.
“There is no end to the things we can do together to make this something that you’re proud of and a tremendous uplift to your community,” McElmurray said of the proposed LNG plant. “That’s the reputation that we want, and I think that we’ll get there. We are definitely not perfect. We will make mistakes, but I think if you have a good relationship going into this, we can work through it.”
A 1995 graduate of the U.S. Naval Academy, McElmurray went on after his military service to earn a law degree at Stanford University, which was where he met his future wife. They now live in New York City with their three children, ages seven, five and three.
McElmurray and Edens started New Fortress Energy from scratch, meeting in a sandwich shop in Texas. “We felt something interesting and exciting would happen, so we decided to try it,” he said. Today New Fortress employs 200 people and by this time next year, McElmurray expects to have 400 employees.
New Fortress made its IPO (Initial Public Offering) Stock Market launch about a week ago. “The next step is growing the business,” McElmurray said. “Our goal is to have a much bigger business next year, to have a much bigger business five years from now and to continue to build infrastructure and put the pieces together that we believe actually will improve people’s lives. It still feels like a small company, but I think the business has a chance to make a tremendous impact, and the folks in this room are all very much a part of that. This is just a piece of a larger thing that’s happening with the U.S. and how we have energy and how we will use it. You are at the epicenter of all this and that makes it very exciting.”
After outlining plans for the Browntown Plant, McElmurray fielded questions from the audience.
Trucks and Trains
Local businessman Rick Sherman asked about rail and truck transportation and noted Route 6 is not in the best of shape. “Is there a plan there?” Sherman asked.
McElmurray answered saying that shipping by rail from Browntown “is definitely our long-term plan.” He said New Fortress’s Florida facility is smaller than the proposed local plant, but it has both rail and truck. “We are the only company in the lower 48 states that has the permission of the federal government to put LNG on the railroad and to use it for fuel on the railroad,” he said. New Fortress has run its railroad for three years, and the federal government has used it as “sort of an experiment. It’s worked better than people thought, and it allowed equipment manufacturers to experiment as well,” McElmurray said, adding that he will be meeting with the Department of Transportation this week in Washington regarding the permitting process to move LNG by rail from Browntown. As for the timing of the permit, he said dealings with the federal government are difficult to predict. However, he noted, “we’ve had a permit before and have been very successful. We’ve shown that we are a good operator, so I’m very optimistic to think that they will allow us to do it.” New Fortress is currently in discussions with the Lehigh Railroad and Norfolk Southern about how it would actually work. “I’m 100 percent confident that technically we can do it,” McElmurray said. “The regulatory process is the thing we’ve got to work through.”
As for the trucking, McElmurray said New Fortress has owned a trucking company previously that moved LNG and has a lot of experience in that. “What we decided to do with this one is partner with a very large trucking company, because we want to make sure that policies, procedures, driver recruitment, safety and all those kind of things are professionalized with a big company that has all of those things in place. So, our plan is to recruit drivers toward the end of the year and build new trucks and equipment.” He said New Fortress will also work out details with the community and PennDOT to make sure “we have turning lanes, to make sure we have the right speed limits, safety regulations, weather restrictions and all the things you would want to make sure we are operating in a way that is safe.”
Who Will Use LNG?
In answer to a question about where the LNG would be shipped, McElmurray said, “We know for sure that it’s going to a couple facilities along the Delaware River. We expect to supply LNG to utilities such as Con ED that are having difficulties getting gas because of restrictions on building pipelines. They are very interested in this type of facility.” He also said that utility companies in the U.S. and industrial users not connected to pipelines would be potential customers. “Once you can move it by rail, it opens up a lot of possibilities.”
Welders, Welders, Welders
Laceyville business owner and Borough Council President Randy Brigham asked about the impacts the construction phase would have on the community. “Is it 24-hour construction phase? How do we interact?”
McElmurray said that during the peak construction phase, about 500 workers would be onsite, and there could be as many as 1,000, with the average being about 300 workers. “There will be a phasing in of workers,” he said. “We will try to recruit locally first. We will need a lot of welders and demand may exceed the number of qualified local welders, which would open up welding jobs to workers from outside the area. People who come here to work will need places to live, places to eat and entertainment,” McElmurray said. “Next to the person who I work for, I run the rest of it,” he continued. “So, I want to make sure that you know that if there is a problem that needs to be solved, I can solve it. I’m looking for office space now, so people know we are here. My goal is to have our operations team really integrated with the community by the time the plant turns on. In a funny way, when we turn it on, it will be a non-event. People will feel like it’s been there for a while. By the time it’s turned on, you’ll be so tired of hearing about it, you’ll have moved on to something else.”
Wyalusing School Board President and attorney Chad Salsman asked if New Fortress would seek a tax waiver. “Once the plant is up and running, will you be paying taxes to the school district and county or will you be looking for some sort of a waiver?” Salsman asked.
“I don’t know how the waiver process works, so I’ve never even thought about that,” McElmurray said.
“Good,” Salsman replied quickly.
“We just want to be treated fairly,” McElmurray continued. “I won’t say that we won’t negotiate it, but I’d just like to be fair about it. I have a huge preference for if you can give me a little relief on the taxes, we’ll take the same amount of money and give it exactly to the school.”
In answer to a question about the financial strength of New Fortress Energy, McElmurray said his company is owned largely by employees. “We IPO’d the company because of the very positive branding it brought,” he said, adding the company has a $3 billion market value. He said the reason for the IPO was not monetary. “I don’t think it’s as persuasive to stand up in front of a group like this and talk about a company that nobody’s ever heard of or can’t Google on the Internet. It’s transparent. You don’t have to wonder is it real or is it not real.”
McElmurray went on to say that he knows of no other business that is in New Fortress’s stage of development that is so well-resourced. “We have never started something that we haven’t finished on time and on budget. This is not something you should worry about,” he said in answer to a question about standby investors. We have lots of large standby investors who have significant resources. We have huge investors like T. Rowe Price.”
In response to a question from Rick Sherman about how New Fortress would fare if political leadership in America changes, McElmurray said: “ I believe that America has a strategic direction that’s pretty stable. There might be a lot of infighting, but it’s a great country with the same principles that it has always had and I don’t expect that to change.
“Energy is multifaceted in terms of the discussion around it,” McElmurray continued. “There’s the economic discussion, the environmental discussion, there’s the energy security aspect and then there’s the foreign policy aspect. Ignore the political noise on this. It is very important to the United States to have energy as a currency that it can use persuasively against the Chinese and the Russians who may try to gather influence in this and other hemispheres. The idea, in my view, that any politician is going to come in and have true traction on stopping the U.S. from exporting energy is likely zero. What could happen is the political climate could change on how easy it is to do that. The EPA could take a different viewpoint, for example, but directionally it’s going the same way. Politics and philosophy aside, everyone’s doing the same thing. They want natural gas to basically be their baseload power, while people invent and perfect new technologies that use less hydrocarbons, overall. They believe that natural gas is a 100-percent requirement to make all that happen. If you were asking about coal, I would feel very differently about it. If you’re talking about natural gas, it’s the fuel everyone wants to use. It’s going to be that way beyond my professional lifetime.”
Kevin Doughtery of C&N Bank asked a question about what other types of jobs might be created by the plant. “It depends on what already exists and what can grow,” McElmurray said. “We think the operating budget for this plant is about $45 million per year and that will be spent on all the things that people need such as housing, groceries, homes, cars, and movie theatres, along with contracting maintenance services. We will outsource as much as possible.” He said the plant would also provide about 200 high-paying jobs for truck drivers on dedicated routes.
Job Skills Required
In answer to a question about what sort of job skills would be needed at the plant, McElmurray said: “These would include people with administrative skills and people who have experience working in industrial facilities. If you’ve ever worked in a power plant, this facility won’t be that different. Other jobs would be suited for people who’ve worked in distribution centers. A lot of our folks are doing things they’ve never done before. Like any job, I’d say the most important thing you could have would be a willingness to work, a commitment to the overall mission and a willingness to learn.” McElmurray said he would be setting up a job fair relatively soon to meet prospective employees and explain what jobs and skills are needed.
Lauren Egleston of the Northern Tier Regional Planning & Development Commission said her agency would be conducting a job fair on April 3. “We would love that,” McElmurray said. “We are 100 percent asking for help. One of the things that makes a project like this successful is that typically there’s a lot of community engagement.”
In answer to a question from Bradford County Commissioner Ed Bustin about engaging local emergency services, McElmurray said New Fortress has met briefly with local fire officials. “What will happen over the next year is that it will ramp up,” McElmurray said. “We’ve done this enough that I’m pretty sure we’re close to being right. It’s a process not a destination. We need to make sure there’s a ladder truck within x-miles of our facility. If it doesn’t exist, then we have to provide it.” McElmurray said it’s pretty much the same thing with police and security. “Do we need to have our own security? What we don’t do is take a disproportionate share of a resource without making a corresponding contribution. It will be a win-win for the community.”
Here to Stay?
Responding to a question about whether New Fortress plans to build and sell or build and hold, McElmurray said: “When you build a great company, you don’t want to sell it. Our general view is if you build things that are needed, the result is valuable. I can tell you that I don’t think Jeff Bezos wakes up every day and says ‘Man, I really wish I could sell Amazon.’”
Byproducts for Sale?
In answer to a question regarding whether New Fortress would sell off byproducts such as propane, McElmurray said the plant would produce a relatively small amount of byproducts and those would be sold to a company that would come on-site and collect them.
Answering similar questions from Debbie Stethers and Mary Neiley about what attracted New Fortress to Wyalusing, McElmurray said it had a lot to do with the people they met in Wyalusing. “You can have the best site in the world, but if you don’t have people who are helping you, it won’t be very successful,” he said. “We had a number of sites that were technically better, less wetlands, flatter, but one of the reasons we decided to pick this spot is the community. If you have that, you can make everything else work, and truthfully everything else is secondary.”
Addressing Environmental Concerns
In response to people who have voiced critical concerns about the plant’s potential impact on the environment, McElmurray had this to say: “We have to figure out a way to be balanced about this. My biggest criticism against people who claim to be environmentalists is there’s no sense of levity or there’s no sense of solution-making in their rhetoric. It’s so extreme in terms of outcome and leaves no room for anything that would actually make sense from a common sense perspective. There’s very little about this where people can’t figure out a solution. If you look at our facility, it’s going to be designed to the highest standard; we’ve got a terrific track record from an industrial development perspective. So, if you hate industry, if you hate development, if you hate natural gas, just because you hate it, I can’t help you. But if you actually want to have a reasonable conversation about it, there are lots of ways we can talk it through. And if you have a political philosophy masking as an environmental concern, I also can’t help you there.” (4)
Finally, we spotted this tidbit about who the customers will be, at least initially, for the exported LNG coming from Wyalusing. The gas will get transported to Philadelphia and from there loaded onto ships bound for other countries, including the country of California:
But what I, personally, find more interesting about this LNG plant is where these three to four million gallons of LNG per day are going.
The natural assumption would be New York and New England with their exceptionally high natural gas prices due to lack of pipeline capacity, forcing cold winters to be pretty expensive for consumers.
However, according to the documents filed with the SEC, that’s not where this gas is going.
Specifically, this Marcellus Shale gas is going to terminals in Montego Bay and Old Harbour in Jamaica, and will also be shipped to San Juan, Puerto Rico; La Paz in Baja California; and Shannon, Ireland – once terminals currently planned in those three locations are constructed.
Once shipped to those locations, the gas will be used in natural gas power plants to provide electricity to the regions.
The savings to these countries like Jamaica should be fairly impressive, as Jamaica has dealt with high energy prices due to its seclusion from energy sources. For example, the average cost of energy is about 22 cents per kilowatt hour. For reference, New England power prices were nearly 13 cents per kilowatt hour during the first cold snap of this winter, which is high by American energy price standards.
So, the fact that American natural gas is being exported to another country, bringing at least some stability to an even more volatile market than ours while also benefiting the American economy is just a win all around. Well, except up in New York and further north. Thanks, Governor Cuomo. (5)
Look for good things to come in 2019 with this facility in Wyalusing.
(1) Wyalusing (PA) Rocket-Courier (Dec 6, 2018) – Wyalusing Twp. Supervisors Approve $800M LNG Plant
(2) New Fortress Energy (Jan 30, 2019) – New Fortress Energy LLC Prices Initial Public Offering
(3) Nasdaq (Jan 31, 2019) – Nasdaq Welcomes New Fortress Energy LLC (Nasdaq: NFE) to the Nasdaq Stock Market
(4) Wyalusing (PA) Rocket-Courier (Feb 14, 2019) – Wyalusing LNG Plant Could Help Fuel Green Revolution
(5) Natural Gas Now/Johnny Williams (Feb 12, 2019) – New Fortress Energy LNG Plant Demonstrates New York Insanity
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