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JPS inks new gas deal with American company, Fortress Energy

Published:Friday | June 19, 2015 | 12:00 AM
File JPS president Kelly Tomblin.

Jamaica Public Service Company Limited (JPS) has inked a deal with US-based New Fortress Energy to provide a long-term natural gas solution for its power plants, starting with Bogue.

However, the power supplier is not yet saying which gas it has selected as fuel and the price at which it will be supplied.

JPS itself has formerly floated the idea of propane initially and a future migration to natural gas.

The power utility has also not disclosed which entity will be responsible for retrofitting the plant at Bogue, which currently uses diesel fuel but has the infrastructure that allows it to transform to gas fuel.

As indicated to the Electricity Sector Enterprise Team last year, JPS is to convert the 115MW gas turbine plant at Bogue in Montego Bay from automotive diesel oil initially to propane by the fourth quarter of this year. The conversion, it projected, would result in an approximate 40 per cent fuel-price reduction.

The current plant consists of three individual units: two combustion turbine generating units with a total capacity of 80MW; and one 40MW steam-generating unit. The two combustion turbines operate on diesel fuel but are capable of converting to natural gas.

JPS said in a February update posted on its website that an independent engineer had been retained for the project and that construction was expected to begin by the second quarter of 2015 and that the plant should begin operating on gas fuel by the first quarter of 2016.

The company said this week that the gas-supply agreement with Fortress would pave the way for work to begin on the infrastructure needed for the delivery of gas to Bogue by early 2016.

The parties are firming up their agreement, which they expect to finalise by the end of this month.

Government approval

Kelly Tomblin, JPS' president and CEO, said that the company had received the final sign-off from the Government, through the Electricity Sector Enterprise Team, for the project.

"JPS understands the importance of gas to long-term sustainable energy prices and is proud to be able to finally bring gas to Jamaica," she said in a company-issued statement.

JPS said New Fortress Energy was selected from a list of eight bidders who had responded to JPS' request for proposals earlier this year.

Wesley Edens, founder and co-chairman of the board of Fortress Investment Group, said his company was quoted as saying that his company planned to "help make Jamaica an energy hub for the Caribbean and Latin America".

New Fortress Energy is part of the Fortress Investment Group, a diversified global-asset firm with approximately US$70 billion of assets under management.

Investment vehicles managed by affiliates of Fortress own one of the largest crude oil terminals in the United States, as well as the first liquefaction facility in Florida, from which the gas will be supplied to Jamaica.

JPS has already submitted its proposal for Bogue to the Office of Utilities Regulation. The power utility previously telegraphed that the Bogue project may cost about US$80 million.

JPS senior vice-president for generation and project development John Kistle said in February that the converted installation was likely to include new pipelines and storage facilities constructed by fuel suppliers who would want to recover their costs. The new infrastructure is also likely to require new terminal facilities for off-take and supply of gas.

Request for additional comment on the new Fortress partnership were unanswered up to press time.