US$4-million LNG flirt ends - Government looks to another form of gas as it pushes for cheaper electricity

Published: Sunday | January 13, 2013 Comments 0
A floating LNG barge found on the website of the US Federal Energy Regulatory Commission, posted courtesy of www.lngoneworld.com. - File
A floating LNG barge found on the website of the US Federal Energy Regulatory Commission, posted courtesy of www.lngoneworld.com. - File
Phillip Paulwell, Minister of Mining, Energy and ICT
Phillip Paulwell, Minister of Mining, Energy and ICT

Arthur Hall, Senior News Editor

After a decade of expensive flirting and the expenditure of some US$4 million, the Government has finally ended its attempt at introducing liquefied natural gas (LNG) as the solution to the country's high electricity prices.

Energy Minister Phillip Paulwell last week blamed the unavailability of the supply of LNG at reasonable prices as the reason for the reversal of a decision which had found favour with successive administrations over the past decade.

"Last year, in the middle of all that we were doing, I went to Angola to try to find gas. I recently went to Nigeria. I have been trying to find gas that makes sense," Paulwell told a Gleaner Editors' Forum as he noted that the original source for the gas, Trinidad and Tobago, has now officially been abandoned.

"2010 with Exmar would have been the best time to pursue an LNG deal. At that time, the market situation was right, Exmar had a number of projects going so they could benefit from the volume.

"Since then, the price of LNG has gone up, largely due to the demand out of Asia," said Paulwell as he noted that the price of LNG has more than doubled since the Exmar agreement was abandoned.

According to Paulwell, he always favoured coal over LNG and had made a recommendation to that effect to the Cabinet shortly before the People's National Party was voted out of power in 2006.

Mullings favoured coal

Clive Mullings, who replaced Paulwell as energy minister in the Jamaica Labour Party administration, also favoured coal and is believed to have lost his place in the Bruce Golding-led Cabinet because he bucked his colleagues who agreed that LNG was the way forward.

With Paulwell now done with LNG, coal will be in the fuel mix but gas remains highly favoured as the main alternative source of energy for the Jamaica Public Service Company (JPS).

"I am not going CLG (compressed liquid gas) and I'm not going LNG," Paulwell told the Gleaner editors even as he refused to say exactly what would be the option.

Instead, the energy minister said major discussions are slated for tomorrow which could determine how quickly Jamaican consumers will get cheaper electricity.

He said officials of the JPS, the major players in the bauxite industry, the Government and an international investor are to meet in Kingston in an attempt to iron out an agreement.

"If that agreement is reached, the natural gas project is on," said Paulwell as he refused to provide any further details on what he described as sensitive negotiations which have been taking place over the last two months.

Close to recommendation

Paulwell declared that after all the discussions and negotiations which took place last year, he is close to being in a position to recommend a firm position to the Cabinet.

He said if there is no agreement out of tomorrow's meeting, his backup plan will include the introduction of interim solutions of small generation facilities, including renewables while moving towards the introduction of coal.

"Coal won't come for about four years, even though the Chinese have said they could bring it in two years," said Paulwell who is adamant that the price of electricity to the Jamaican consumer must move to between 15 and 18 US cents per kilowatt-hour (c/kWh) instead of the present 40-41 US c/kWh

Paulwell had previously announced that the JPS would be introducing LNG at its soon-to-be constructed 360-megawatt plant in Old Harbour, St Catherine.

"The Government of Jamaica decided it was no longer going to be the procurer for gas and it put the ball back in the court of the company that received the licence but it did not mean we would be sitting ideally by, so we have been very engaged in the process," said Paulwell.

While admitting that it will not be his call if the JPS accepts the gas project now on the table, Paulwell said he would be urging the parties to find common ground when they meet tomorrow as this could lead to lower electricity prices at the earliest time.

  • Paulwell's 3-step plan for cheaper electricity

Energy Minister Phillip Paulwell is staking his political career on cutting the cost of electricity to Jamaicans by more than 50 per cent.

Last week, during a Gleaner forum, Paulwell listed the steps he plans to take to ensure that electricity from the Jamaica Public Service Company (JPS) becomes much cheaper over the next three to four years.

1. Fuel diversification

Plan: The introduction of a fuel source cheaper than oil should shave off between 35 and 40 per cent of electricity bills.

Status: Still up in the air with liquefied natural gas off the table, Paulwell is seeking an alternative gas or coal.

2. Competition

Plan: This does not mean the creation of a new grid but the introduction of factors such as net billing (selling excess privately generated energy to the JPS) and wheeling (generating electricity and using the JPS grid to transfer this to another facility).

Status: Net billing now introduced but only two takers so far. Wheeling should be before Parliament shortly.

3. Improving efficiency

Plan: Improving efficiency of the JPS grid: This means reducing the cost that Jamaicans pay for theft and losses through the transmission and distribution of electricity.

Status: Several efforts to reduce losses have been introduced but the gains have been negligible so far.

Enter our online discussion on whether you think Paulwell will achieve these goals anytime soon.

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