Hawaii Gas pursues natural gas for state

LIHUE — Hawaii Gas is continuing with plans to bring liquefied natural gas in bulk to Hawaii.

Joseph J. Boivin Jr., senior vice president, said LNG will be the premier energy source going forward in Hawaii. It’s cleaner than petroleum products, cheaper, environmentally friendly and there’s plenty of it.

“We want to bring larger scale natural gas to the islands,” he said during a recent visit to Kauai.

Today, Hawaii Gas brings propane to Kauai via a 5 million gallon tanker that docks at Nawiliwili Harbor once a month. It off-loads through a pipeline to a bulk propane storage facility and serves about 9,000 residential and commercial customers. But there’s a better way, Boivin said.

“As we move forward in Hawaii with our renewal energy programs, we need to have firm power,” he said. “We will have natural disasters. We need to have a mixture of fuel sources because that’s how a community is probably the safest.”

Hawaii Gas recently sought proposals for the supply of LNG in bulk to support the delivery of natural gas to Hawaii, and the provision of an “LNG Floating Storage and Regasification Unit (FSRU) and associated services to receive, store and regasify the LNG for distribution.”

The project planned for Oahu is basically, Boivin said, “a ship and a pipeline.”

“That’s the extent of the system,” he said. “A ship and a pipeline and some land-based pipeline extensions.”

Hawaii Gas is the only government-franchised, full-service gas company manufacturing and distributing gas in Hawaii. The company’s market includes Hawaii’s 1.4 million residents and nearly 8 million visitors.

Hawaii Gas manufactures synthetic natural gas, or SNG, for its utility customers on Oahu, and distributes liquefied petroleum gas, or LPG (propane), to utility, tank and bottled gas customers throughout the state’s six primary islands.

In April 2014, Hawaii Gas became the first company to bring liquefied natural gas to the state when it received Public Utility Commission approval to import LNG in containers for use as a backup fuel for its synthetic natural gas operations.

But the problem with that, Boivin said, is “you can only get the price so low with this kind of logistics model.”

To get the cost of energy lower in Hawaii, you need to buy in bulk, he said.

And the way Hawaii Gas is proposing to do that is like this: The LNG would arrive via vessel, and be transported to a facility on Oahu via a pipeline that would be built under the ocean floor.

By using LNG instead of oil to provide power, the savings over 15 years would be several billion dollars, which would benefit consumers who could see their energy bills drop significantly, perhaps 20 percent.

“We know that LNG is a cheaper alternative to oil,” Boivin said.

The project is years away, perhaps 2020, if all goes well.

There must still be PUC approval, and an environmental impact statement must be completed regarding the pipeline that would run about a mile from ship to land. Hawaii Gas still must enter into a fuel supply agreement, 10 to 15 years, with someone to bring the natural gas to Oahu. Infrastructure improvements, which would take about a year, to accommodate the LNG would be around $200 million and another $120 million to convert the Oahu plant to natural gas.

Bringing LNG to Kauai is a long ways off.

“We just figured out how to get it to Oahu,” Boivin said. “Now we have to figure out how to get it to Kauai and figure how much it’s going to cost and figure out if it’s the right thing to do on this island. That’s the next step. Is it right for Kauai?”

Boivin said there are no drawbacks to LNG. In every category, it addresses Hawaii’s energy environment and future goals, he said. And it’s safe and produces less emission than oil. And natural gas, unlike petroleum, dissipates quickly if there is a problem, he said.

“The supply agreements that we are seeking will be flexible to accommodate changes in LNG demand over time as Hawaii’s energy efficiency and renewable energy use increase,” Boivin said. “The plan will leverage our existing infrastructure as the state’s only regulated gas utility.”

At the end of the contract, if it’s decided to discontinue the program, the ship goes away, the line is capped and the system to secure the pipeline underground is removed, leaving little evidence they were there, Boivin said.

“The risk of it would be, we did this and oil fell to $10 a barrel,” he said. “But if stay on oil, we won’t reduce our greenhouse gas emissions.”

The U.S., he said, is the largest producer of natural gas. It’s being used in locomotives, and shipping companies are building natural gas vessels. UPS will eventually have the largest fleet in the nation of natural gas delivery trucks.

“In another decade, it will be the premier fuel used in all these things,” he said. “Hands down, natural gas is your winning fuel. It just is.”

Gov. David Ige recently said he is opposed to Hawaiian Electric Co. using liquefied natural gas as an energy source because it distracted from investment in renewable energy resources.

In June, Ige enacted a law setting a goal for the state to get to 100 percent renewable energy by 2045.

HECO’s power supply improvement plan filed in August 2014 included LNG as a bridge fuel that would be used to transition HECO’s use of imported oil to renewable energy resources.

Ige said that he is not opposed to the state’s gas utility, Hawaii Gas, using LNG.

Alicia Moy, president and CEO of Hawaii Gas, said the utility is committed to exploring and securing a bulk supply of LNG at the lowest possible cost.

“We believe a bulk LNG solution will provide substantial savings while serving as a transitional fuel as Hawaii moves away from oil to renewable resources,” she said.

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