LNG

New Fortress Energy, the US integrated LNG and power company that owns, operates or provides natural gas to 30 facilities in five countries has been awarded a new gas supply contract in Puerto Rico.

NFE said the Puerto Rico gas contract more than doubles the volumes of gas it currently provides to power plants in the US territory in the Caribbean.

The New York-based company additionally sold two operating power plants to the Puerto Rico Electric Power Authority (PREPA).

NFE explained that it sold the emergency power plants it constructed on behalf of the US Army Corps of Engineers in San Juan and Palo Seco in Puerto Rico to PREPA for $373 million in cash, subject to certain items and conditions.

Power security

“These plants were developed by the company in 2023 in rapid response to a competitive bid by the US Army Corps of Engineers to provide emergency power in order to stabilize the power grid in Puerto Rico,” explained NFE.

“They have become a cornerstone of Puerto Rico's energy portfolio, delivering critical baseload power to stabilize the grid in the aftermath of recent natural disasters, and as contemplated, their ownership has been transferred to PREPA,” NFE added.

Following a competitive bid process, NFE was awarded and has entered into a new island-wide gas supply contract with PREPA, ensuring continued gas supply to these power plants for up to four years.

“The expanded volumes under the contract will enable conversion of other plants on the island from diesel to gas, providing lower cost, cleaner energy to Puerto Rico,” NFE stated.

As a result of the early termination of the contracts that have governed the construction, operations and associated costs of the two power plants, NFE said that it expected to negotiate a mutually beneficial settlement of all outstanding obligations in the near future.

“We entered the Puerto Rico market in 2017 based on the island’s emergency need for natural gas and power,” said Wes Edens, Chairman and Chief Executive of NFE.

“The transactions mark a significant milestone in our continued commitment to Puerto Rico's energy security and cost reduction efforts while significantly increasing our business in the region,” Edens added.

LNG projects

In its most recently earnings, NFE reported net income for 2023 of $547.88M, an almost three-fold increase from the $194.48M achieved in 2022.

After the end of the financial year NFE noted that in February 2024 it completed the Brazilian Barcarena and Santa Catarina LNG import terminals and placed them into service.

In NFE’s “Fast LNG” operation whereby it produces LNG from feed gas, it placed into service its first unit offshore the Gulf of Mexico and is now expecting first LNG in March and the first cargo in April 2024.

The US Government has issued a waiver of Jones Act shipping rules to help the US territory of Puerto Rico attract LNG shipments amid a tight market and high prices after the recent hurricane damage affected power supplies and energy stocks.

New Fortress Energy, the LNG-for-power developer in Latin America and in the South American nation of Brazil, has asked a US Federal Appeals Court to review a decision of the US Federal Energy Regulatory Commission to force the New York-based firm to seek a permit for an LNG import terminal in Puerto Rico already on line.

New Fortress Energy, the New York-based developer of LNG facilities for gas-fired power in the Caribbean and Latin America, is making steady progress with plans to export Marcellus Basin shale gas produced at plant in Pennsylvania through a port in New Jersey.

Naturgy, the Spanish utility and buyer of both Russian and US liquefied natural gas volumes, has agreed to extend its long-term LNG supply contract with the Puerto Rico Electric Power Authority.

New Fortress Energy, the owner of LNG facilities in Florida and in Jamaica and projects in Puerto Rico and the US northeast, posted a third-quarter rise in revenues while its net losses widened to $54.4 million amid continuing start-up costs and other venture expenses.

The Federal Energy Regulatory Commission has issued an order formerly ending the proposed expansion of liquefied natural gas import facilities in the US territory of Puerto Rico in the Caribbean amid continued problems in the utility sector.

“Aguirre Offshore GasPort requests that FERC vacate its 2015 order authorizing the construction and operation of LNG import terminal facilities along the southern shore of the Commonwealth of Puerto Rico near the municipality of Salinas,” said the FERC.

“In its request to vacate, Aguirre stated that it no longer intends to proceed with the project, that no construction has been undertaken, and that no facilities are in service,” added the regulator.

The Aguirre project company filed its last status report in June 2018 to the FERC to keep its permit process up to date, though then informed the regulator in November that the venture was not proceeding.

The FERC notice pulls the curtain down for now on plans for LNG expansion in Puerto Rico.

Excelerate Energy, the US specialist in LNG terminals, had previously agreed to provide a floating storage and regasification unit for the Aguirre project in 2019, though was forced to cancel its contract with the bankrupt Puerto Rico Electric Power Authority.

The FSRU was to have been deployed offshore Salinas and would also have had a 6.4 kilometres pipeline to provide regasified LNG to the Aguirre power station.

Puerto Rico’s existing EcoElectrica onshore LNG regasification facility at the town of Penuelas is located about 35 miles east of the Aguirre power plant.

Analysts note that Puerto Rico’s power sector has been struggling because of financial problems, exacerbated by Hurricanes Irma and Maria in 2017.

The situation has presented challenges for developing new LNG and energy infrastructure, complicated by the poor credit record of the local power authorities and questions over its suitability as a counterparty for any LNG-to-power projects.

A US legal report on Puerto Rico said that in the absence of legal reforms, the energy and LNG sectors appear unlikely to grow in the near future.

“Puerto Rico needs well-designed legal reforms to address the problems with its power sector, before it is likely to see growth in its LNG industry,” said the report.

The Aguirre LNG import project company in Puerto Rico, said it was continuing to monitor the bankruptcy proceedings of the Puerto Rico Electric Power Authority and is hopeful of the US territory completing a second import facility in the future.

Crowley Fuels, a subsidiary of Crowley Maritime Corp. operating from Florida, and US company PowerSecure have formed a partnership to develop micro-grids using LNG and renewables to provide more reliability to power users in the Caribbean and Central America.

The US Department of Homeland Security issued a waiver for the Jones Act on ships headed for the US territory of Puerto Rico to ease restrictions on shipments of post-hurricane relief supplies as well as possible liquefied natural gas cargoes for the island’s two main gas-fired power plants.