Hawaii’s governor opposes LNG import plans

OREANDA-NEWS. August 26, 2015. Hawaii Governor David Ige will "actively oppose" construction of LNG import facilities in the state, partly because falling oil prices have wiped out the potential economic benefits of replacing oil-fired generation with gas-fired generation.

"LNG will no longer save us any money," he said yesterday at the Asia Pacific Resilience Innovation Summits & Expo in Honolulu, according to a transcript provided today to Argus by his office.

"So I have reached the conclusion that Hawaii does not need or want LNG in our future," Ige added. "It is time to focus all of our efforts on renewable energy and my administration will actively oppose the building of LNG facilities in Hawaii."

In addition to reducing electricity costs, Hawaii is considering importing LNG to meet US federal air emissions regulations. Ige said Hawaii can comply with such standards in other ways without great cost.

Spending money on expensive LNG infrastructure will take away funds that could be spent helping the state achieve its goal of sourcing 100pc of its energy from renewables, he said.

Ige, who became governor in December, said he originally was willing to support LNG as a transitional fuel from oil to renewables because of the expected cost savings. He said he is willing to take the chance of being questioned if oil prices rise significantly in the coming years, but he does not want to subject Hawaiian communities to permitting battles over LNG import facilities.

Regulated utilities Hawaiian Electric and Hawai'i Gas have been jointly working on a plan to import LNG into the archipelago state.

Hawaiian Electric in March 2014 issued a request for proposals for up to 800,000 t/yr of LNG, equivalent to 107mn cf/d (3mn m?/d) of gas, to be delivered in ISO containers beginning sometime from late 2016 to mid-2017. But in June it delayed the proposal until at least until 2019 because of falling oil prices.

Hawaii's estimated total demand for LNG for power generation and transportation is 1mn-2mn t/yr. Petroleum now accounts for 71.6pc of the state's power generation and 97.8pc of transport fuel.

Hawaii this summer paid about \\$13/mmBtu for fuel oil, compared with about \\$22/mmBtu before oil prices fell last summer, Joseph Boivin, Hawai'i Gas' senior vice president of business development and corporate affairs, told Argus.

Argus today assessed the delivered price of spot LNG to northeast Asia in the first half of October at \\$7.84/mmBtu, but it is unlikely that such low prices can be maintained if oil prices start to rise. Most long-term Asian LNG contracts are linked to oil pries.

It is unclear to what extent Ige could influence the state's LNG import plans. The state's Public Utilities Commission would have jurisdiction over such projects and any facilities likely would need permits from various state agencies.

Hawaiian Electric told Argus today that it agrees with Ige's 100pc renewables goal and that installing LNG infrastructure should not impede that goal.

But the utility is still evaluating the feasibility of importing LNG in ISO containers as a transitional fuel, which would require minimal infrastructure.

"As we add more intermittent renewables like solar and wind during this transition to 100pc renewable energy, LNG can provide a cost-effective, cleaner alternative to oil to maintain reliability for customers," Hawaiian Electric said.

Hawai'i Gas now imports about one ISO container a month of LNG from Clean Energy in California as a back-up fuel for synthetic natural gas produced on the island. An ISO container holds 10,000 USG, equivalent to 17 tonnes of LNG, or 843,000 cf (24,000m?) of gas.