Retail Energy Buyer

Subscribe to the free weekly newsletter written just for retail energy buyers

Hawaii, US Territories Aim to Increase Fuel Diversity

August 20, 2014 By Karen Henry

consumption-by-fuel-energy-manageAmerica’s islands—the state of Hawaii and the territories of Guam, the Northern Mariana Islands and American Samoa in the Pacific, and Puerto Rico and the US Virgin Islands in the Caribbean—have depended primarily on imported petroleum products to meet their energy needs, largely due to lack of fossil fuel resources and because petroleum products are easier to transport to these isolated islands than other fossil fuels. Given relatively high crude oil prices in recent years, residential electricity prices on the islands have been three to five times higher, on average, than electricity in the lower 48 states.

According to the US Energy Information Administration (EIA), the development of standardized cryogenic shipping containers may allow these islands to diversify their energy sources to include imported liquefied natural gas (LNG). The containers allow small amounts of LNG to be trucked, railed and shipped like other containerized cargo. Once received by ship, the LNG is connected to portable regasification units adjacent to electric power plants or industrial facilities. The containers are typically filled on the mainland at utility peak-shaving units or, more recently, at small-scale liquefaction plants built to serve transportation, industrial, and marine uses.

Utilities in Hawaii and industry in Puerto Rico are testing the economics of small-scale LNG imports. Hawaii’s first shipment using a standardized cryogenic container was completed in April, taking approximately 7,100 gallons of LNG from a liquefaction plant in Boron, Calif., through the port of Los Angeles to Honolulu, where it was regasified and injected into the Hawaii Gas distribution system. This LNG was the first nonsynthetic gas ever put into the system. Hawaii Gas typically makes a synthetic gas from a naphtha feedstock produced in one of Hawaii’s two crude oil refineries.

Earlier this year, Hawaiian Electric took bids on having LNG delivered in similar standardized containers to eight generating plants on Hawaii’s five main islands, requesting 800,000 metric tons annually. The utility is evaluating whether LNG prices are sufficiently favorable to justify switching away from diesel and residual fuel oils currently used at some of its generating capacity.

In Puerto Rico this fall, two privately owned bottling plants in the island’s industrial north will begin receiving containerized LNG shipments. The LNG will be procured through third-party suppliers from southeastern US peak-shaving plants and shipped from Jacksonville, Florida.

Leave a reply