LNG

New Fortress Energy Inc. the US developer of floating LNG production and import terminal and power projects, has signed agreements to provide gas-fired power and natural gas to the US Caribbean territory of Puerto Rico.

NFE said its Puerto Rican subsidiaries, NFE Power PR and NFEnergia, had entered into agreements with the US-based industrial and energy company, Weston Solutions, for the installation and operation of 150 megawatts of additional power generation at the Palo Seco Power Plant in Puerto Rico as well as the supply of natural gas.

“Weston has won a task order to supply the temporary power generation to support the overall mission of the island’s grid stabilization at the Palo Seco Power Plant under its US Army Corps of Engineers Omaha Rapid Disaster Infrastructure contract,” explained NFE.

“The 150 MW of dual-fuel generators are expected to enable maintenance and repair work of Puerto Rico’s power system and grid,” added the New York-based company.

Wes Edens, the Chairman and Chief Executive NFE, said he was pleased to partner with Weston and support this “critical mission” to improve grid stability in Puerto Rico.

Federal help

“The Federal Government is providing much-needed resources to Puerto Rico’s recovery and this project will help enable the transition to a cleaner, more affordable and reliable energy system,” stated Edens.

NFE on March 7 had reported increased annual revenues and net profits as its array of projects advanced.

The total annual revenues of NFE jumped almost 80 percent to $2.36 billion, up from $1.32Bln in 2021.

NFE’s annual net profits amounted to $185M compared with $93M in 2021.

The company also completed the Barcarena LNG import terminal in Brazil and expects to deliver first gas to the industrial customer, Norsk Hydro, later in 2023.

NFE said construction of its Fast LNG production units was progressing rapidly with the first FLNG unit expected to achieve mechanical completion in the Spring of 2023 and commence operations by mid-2023, explained NFE.

Ship venture

NFE also closed a $2Bln transaction to form a joint venture called Energos Infrastructure with US equity fund Apollo Asset Management in which NFE holds long-term charters for 10 LNG vessels.

Then in response to the European energy crisis, the Eems Energy Terminal in The Netherlands commenced operations in September 2022 utilizing NFE's “Energos Igloo” FSRU.

The company also finalized its partnership terms with state-backed energy company Petróleos Mexicanos (Pemex) to jointly develop the Lakach deepwater natural gas field in the Gulf of Mexico and to deploy a “Fast LNG” unit to that location.

The Netherlands said production at the Groningen natural gas field would be lowered to the minimal amount needed to keep wells operational in the coming 12 months and the field is still scheduled to be shut down in 2024 even amid gas shortages, while floating LNG terminals have begun operating offshore the Dutch province.

The Government said in a statement that the Groningen field, formerly the largest supplier to the Netherlands and which sent some volumes to Germany, will be capped at 2.8 billion cubic metres from the start of October 2022, down from 4.5 Bcm.

The Groningen field is operated by a joint venture comprising Shell and ExxonMobil and still holds huge reserves of natural gas.

Production at Groningen has gradually been reduced over the past 10 years because of complaints about earth tremors.

The Government said that all 11 production locations in the Groningen region would remain operational until at least April 2023 to enable an increase in production in case of an emergency.

More claims

The authorities added that more than 100 claims for structural damage had been filed since two earthquakes, the largest measuring 2.7 on the Richter scale, hit Groningen province on Saturday, September 24.

Most of the 1,000 tremors reported in Groningen since 1986 have been measured at 2.7 on the Richter scale or less.

Analysts note that such small tremors can be felt by some people though are unlikely to cause damage.

An investigation published by the Dutch financial newspaper, “Het Financieele Dagblad”, said that the Dutch Government had earned more than €360 billion ($349Bln) in revenues from the Groningen gas field since it came on stream.

“Total revenues from the gas region amounted to €428Bln when adjusted for inflation, of which €363.7Bln went to the government while €64.7Bln was split between Shell and ExxonMobil,” said the report.

Surge in costs

The report noted that Groningen production costs started to rise rapidly from less than €500 million a year in 2013 to a peak of €2.9Bln in 2018, as the government started to compensate people in Groningen who said their homes had been damaged by tremors.

A further €8.36Bln has been set aside by the Dutch Government for further compensation payments for Groningen residents.

The Dutch floating LNG facilities are sited at Eemshaven on the waterway between Eemshaven port in the province of Groningen and the North Sea. Analysts added that LNG imports would likely be less costly in the long run than the controversial Groningen gas field with its soaring compensation claims.

Eemshaven LNG comprises two floating storage and regasification units (FSRUs), the “Golar Igloo” vessel and a regasification barge provided by Belgian shipping company Exmar.

The FSRUs supply the Dutch system and most regasification capacity at Eemshaven has been reserved for the Dutch operations of Shell and the French utility and energy group Engie, while the main utility of the Czech Republic is also importing shipments. 

Golar LNG Partners, the US affiliate of the Bermuda-based fleet owner, swung to a first-quarter loss as it commissioned the “Golar Freeze” offshore Jamaica to serve as an import facility amid a drop of day-rate prices because of high volumes and low season demand.