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JPS pursuing new LNG talks, preps Bogue for propane conversion

Published:Wednesday | October 22, 2014 | 12:00 AM
Corporate headquarters of the Jamaica Public Service Company Limited. File

Avia Collinder, Business Reporter

The Jamaica Public Service Company (JPS) disclosed that it is now in talks with prospective suppliers of liquid natural gas (LNG) for local use, but reiterated that its earliest use of gas will be propane for the Bogue plant in Montego Bay.

But whether that signals the end of a possible partnership with a consortium led by Fueling Tech Incorporated for compressed natural gas remains unanswered by JPS, whose response was vague when asked to clarify its intent.

"Negotiations are ongoing," said JPS senior vice-president of generation, John Kistle.

"JPS is bound by confidentiality and thus cannot provide further comment," he said.

Fueling Tech said in September that it had not moved on to the engineering design studies needed to convert the 120MW Bogue plant from diesel to gas, a project that should have kicked off in January, saying that JPS had not clearly indicated whether it planned to move ahead with their partnership.

The other members of the consortium that were named last July at the signing of the agreement were Virtual Solutions Inc of Dubai and Red Rock Power Partners out of the United States.

The power utility gave a similar response when asked about the prospective LNG suppliers, saying it was constrained by confidentiality while negotiations are ongoing.

"JPS is progressing to convert the Bogue project to employ gas fuel. The Electricity Sector Enterprise Team (ESET) and JPS believe that propane is the logical commercial choice for Jamaica's overall generation plan, but the valuation drivers can always change, which could subsequently support a case for LNG," the company said.

Referring to the long-term resource plan currently being developed by ESET, JPS said, "If the economic assumptions change to enable a short-term solution for LNG", it would consider immediate conversion.

LNG is also being considered for a 190MW plant to replace capacity at Old Harbour and Hunts Bay by mid-2017.

Viable prospect

JPS said that overall talks with LNG sellers were very preliminary, saying it was "consulting with the broader market engaged in the Caribbean region that can meet schedule and flexibility in supply" within the context of ESET's long-term resource plan.

Another power provider, Jamaica Energy Partners (JEP), which sells electricity to the JPS grid and hopes to convert its diesel-fired barges to natural gas, has said demand in Jamaica must exceed 500 tonnes among the various energy plants for conversation to be a viable prospect for any plant. JEP's demand is estimated at 200 tonnes of natural gas, JEP chief executive, Wayne McKenzie said earlier this month.

JPS aims to start operating on gas at Bogue in 2015. The plant now runs on diesel.

Some additional equipment is required for the conversion, the scope and cost of which are currently being negotiated, the power utility said.

In general, retrofitting and conversion will be pursued by JPS only at plants that demonstrate an economic benefit.

"This matter has not been fully defined as yet," said the company. "Bogue is the only immediate short-term option that provides sufficient benefit to the system".