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Hawaii Gas is about four weeks away from receiving bids from 30 of the world's largest and most experienced natural gas companies to supply the state's only natural gas utility with bulk shipments of liquefied natural gas for a project that could cost up to $300 million to develop.
In a meeting with PBN this week, Hawaii Gas executives said they hope to begin LNG bulk shipments to the state by 2019 if they receive regulatory approval. They estimate that the use of LNG could save about $110 million annually compared to the cost of oil.
"We're listening, and think we have come up with a credible plan that people will want to hear more about," Alicia Moy, president and CEO of Hawaii Gas, told PBN.
Their plan involves having a tanker ship carrying liquefied natural gas cooled to minus 260 degrees Fahrenheit moored off the coast of Oahu, either near Kalaeloa or Pearl Harbor. The gas would be transferred, as a gas, through a pipeline to the Hawaii Gas plant in West Oahu and then sent through the company's 1,000 miles of pipeline to customers.
Hawaii Gas officials estimate the cost of the project at between $150 million and $300 million.
The tanker would be owned and operated by another company and would be refilled by supply ships.
Joe Boivin, senior vice president of business development and corporate affairs for Hawaii Gas, said the development cost will require a conversation with stakeholders, including the state.
Hawaii Gas contends that LNG makes sense for Hawaii for several reasons, including being cleaner and less expensive than oil. It is, however, a fossil fuel and is not considered a "renewable" energy source.
"We will supply the entire state and all sectors for all users," Boivin said. "We want to have a flexible approach for the increase of renewables [by the state]." Possible LNG providers are expected to come from various places around the world, including Canada, Australia, the Gulf Coast, West Coast, Alaska and Singapore. Hawaii Gas expects to enter into a 15-year contract with a company or companies to own and operate the vessel, as well as a firm or firms to supply LNG. "We've had 30 companies say they were going to bid," Boivin said. "In March, we will be assessing bids and come up with a short list. Then we will be seeking binding bids in April from the best of all of the responses. After that, the approach is to talk with the state and other stakeholders to share the results with them." Hawaii Gas already is investing $13 million in an expansion plan to replace up to 30 percent of its current fuel supply with LNG. While Hawaii Gas moves forward with its bulk delivery strategy, it continues to manufacture synthetic natural gas at its West Oahu plant and has begun to ship LNG to Hawaii in large containers. It applied to the Hawaii Public Utilities Commission last October to increase the volume of LNG shipments for its synthetic natural gas pipeline. Regular deliveries of containerized LNG are expected to begin by late 2015. Currently, the utility is using the LNG as a backup fuel for its synthetic natural gas operations. The first shipment of LNG, which totaled about 7,000 gallons, was shipped in a 40-foot container to a Hawaii Gas facility at Pier 38 in Honolulu where it was converted to gas using a mobile vaporizer and injected into the company's system.Hawaiian Electric Co., which also plans to ship LNG to Hawaii, has selected finalistsfor a project to supply and deliver hundreds of tons of the fuel to be used as a replacement for power generation across Hawaii.
Hawaiian Electric and Hawaii Gas have signed a memorandum of understanding on the state's LNG initiative, although the two companies have separate plans.
"We have shared our plans with them," Moy said. "Without HECO, we could still go to our smaller option."
That would involve supplying the utility's 70,000 customers and Kalaeloa Partners in West Oahu.
