Hawaii Gas Gets Green Light From Feds To Begin LNG Shipments
Hawaii Gas does not need the approval of federal energy regulators to bring moderate amounts of liquefied natural gas to Hawaii to serve existing gas customers.
The state鈥檚 only gas company filed an application with the Federal Energy Regulatory Commission in August to bring LNG to Hawaii on container ships. But the commission dismissed the application Thursday, saying it was unnecessary.
The “proposed project does not constitute an LNG terminal as envisioned under (the Natural Gas Act) and does not require any other authorization from the Commission,” FERC said in a written decision.
Hawaii Gas has said it hopes to start LNG shipments in about two months.
The ruling could potentially ease the way for larger imports of LNG to Hawaii that could replace a portion of oil used for electricity generation, ground transportation and shipping fuel. It鈥檚 part of a three-phased plan by Hawaii Gas that would eventually lead to large-scale distribution, storage and regasification facilities in Hawaii.
Gov. Neil Abercrombie‘s administration also supports bringing in LNG as a way to provide electricity while the state continues to move toward renewable energy projects.
Jeff Kissel, CEO of Hawaii Gas, was delighted by the decision.
鈥淎s I read the ruling, it looked to me like they are going to treat us like any other jurisdiction in the continental U.S.,鈥 he said.
There was some ambiguity as to whether FERC approvals were necessary under the Natural Gas Act鈥檚 provisions for overseas shipping.
It’s not clear if FERC’s ruling this week will be applied to the additional phases of Hawaii Gas’ application for LNG imports. But Kissel said that the ruling was a good sign. Still, Hawaii Gas is going to continue to go through the FERC process.
“We just don’t want to misstep,” he said. “We don’t want to spend a lot of money and then not be able to use (LNG).”
Blue Planet Foundation and the Sierra Club intervened in the FERC proceedings to try to block the approval.
The Sierra Club argued that Hawaii Gas should not be able to break its plans for LNG into three phases. The group argued that full environmental reviews needed to be conducted for the entire project, including an evaluation of the environmental impacts of increased drilling on the mainland that could result from imports of LNG to Hawaii.
The Sierra Club nationally wants to stop the export of natural gas from the mainland because it’s concerned about the environmental impacts of fracking technology.
FERC鈥檚 approval this week applies to 20 containers, each with a 12,000-gallon capacity, to be filled on the mainland and brought to Hawaii on container ships.
Currently, Hawaii Gas relies on the Tesoro refinery in Kapolei for the synthetic natural gas it supplies to some 100,000 customers via pipelines and propane deliveries. The natural gas is made from a petroleum byproduct at Tesoro鈥檚 refinery.
But Tesoro announced last week that it is shutting its refinery in April. Importing LNG is part of Hawaii Gas鈥 backup plan, said Kissel.
The gas imports are also expected to be cheaper 鈥 between 15 percent to 20 percent less than current prices, he said.
Kissel said that the company hopes to begin importing LNG in about two months, once it gets approval from the Hawaii Public Utilities Commission and other regulators, including the Coast Guard.
You can read the ruling here:
