LNG

The Federal Energy Regulatory Commission has introduced reforms to ensure the US transmission grid can meet the nation’s growing demand for reliable electricity with a new rule that outlines how to plan and pay for facilities that regions of the country will need to keep the lights on and power the American economy through the 21st Century.

The US Federal Energy Regulatory Commission has announced a special meeting on May 13 to consider its long-awaited electricity transmission reform proposals that will affect energy markets across America.

The reforms have been considered since severe storms in states from North Dakota to Georgia struck in the Christmas of 2022. This followed an earlier major winter storm in Texas that caused power outages in the Southeast.

The Transmission Reform meeting begins at 11am on May 13 in the Commission Meeting Room at the FERC’s Washington, D.C. headquarters.

FERC has proposed a set of regulatory reforms to speed a much-needed expansion of the nation’s network of long-distance electric transmission lines.

FERC’s final rules, which are now set to be debated, are expected to substantially update the framework under which transmission lines are planned and paid for, and pave the way for the growth of clean energy.

Analysts noted that the FERC’s reforms come at a time when the future of the electric grid has become the focus of partisan debate and legal challenges to FERC’s proposed rules are expected.

Power demand surge

Electricity demand in the United States is expected to grow dramatically over coming decades, by some estimates tripling before 2050.

This is because under current US plans, from cars to home heating, there will be a move to the use of more electric power.

Accompanying this demand will be a fundamental shift in how electricity is produced, with renewable energy becoming an ever-larger portion of the generation mix.

Both of these trends to more and cleaner power will require simultaneous expansion of the network of long-distance transmission lines to reliably deliver power to consumers.

Yet despite clear need, relatively few miles of new transmission have been built in recent years.

At the core of the challenge are outdated frameworks for how the grid is planned and paid for.

In addition, the future of the electric grid has become the focus of political debate, turning what was once primarily an engineering challenge into a political one.

“One factor at play here is that the utility industry wants to make sure that the system is developed for its own needs, which don’t necessarily align with broader decarbonization goals or the interests of consumers in having low-cost power,” said one study filed with FERC.

New Fortress Energy, the US developer of floating LNG production and import terminal and power projects, reported higher first-quarter revenues as “Fast LNG” projects advance along with regasification and power ventures in Brazil and Ireland.

The New York-based firm’s revenues jumped to $579.1M from $505.1M in the same three months of 2022 and were also up from the $546.4M logged in the previous quarter.

However, NFE’s net income dropped to $151.6M from $241.2M in the same three months of 2022.

The company explained that the construction of its first “Fast LNG” unit was 90 percent complete and deployment to Altamira on the Gulf Coast of Mexico was expected in the months ahead. 

NFE’s “Fast LNG” pairs modular, midsize liquefaction technology with jack-up rigs or similar floating infrastructure to enable lower-cost and faster deployment schedules.

“We expect to complete commissioning of our first ‘Fast LNG’ unit in the shipyard and on-location at the Altamira site and continue to anticipate first gas in July 2023,” said NFE.

The company noted that its FLNG 2 and FLNG 3 were already under construction and all long-lead items have been procured.

Brazil projects

NFE has also completed the Barcarena import terminal in Brazil and expects first gas deliveries to industrial customer Norsk Hydro in late 2023.

“We remain on schedule and also in 2023 expect to commence operations at our Santa Catarina terminal in Brazil,” NFE added.

NFE explained that construction of the 630 megawatts power plant at Barcarena is underway pursuant to a fixed-price, date-certain engineering, procurement and construction contract with Mitsubishi and Toyo Setal of Japan.

Operations at the plant are expected to commence in July 2025 pursuant to 25-year power purchase agreement with Brazilian distribution companies.

NFE is also selling a power plant in Mexico and was finalizing the sale of the 135-MW La Paz facility to Mexico’s Comisión Federal de Electricidad for around $180M. The transaction was expected to close in the third quarter.

The US company has also been awarded a 353 MW of capacity contract with a 10-year duration from the Single Electricity Market Operator (SEMO), the operator of the Republic of Ireland's electric grid.

NFE is also expecting to finalize a permitting and construction contract for a 600 MW combined-cycle, gas-fired power plant beginning operations in 2026 and to be supplied by a proposed Shannon LNG terminal project in Ballylongford in County Kerry, southwest Ireland.

The Norwegian parliament, the Storting, has ordered the government to consider an alternative way to cut carbon emissions at Western Europe's largest liquefied natural gas export plant at Hammerfest and to consider the use of carbon capture instead of electrification.

South African President Cyril Ramaphosa has declared a national “state of disaster” over his country's power shortages and said the lack of energy security posed an existential threat to the economy and the social fabric of the country.

Switzerland's Axpo, the largest producer of renewable energy and an international leader in energy trading and marketing, has been granted a subordinated credit line of up to 4 billion Swiss francs ($4.07Bln) because of “unprecedented turmoil” on European power markets.

Royal Vopak, the Netherlands-based global storage company, and Japanese shipping line Mitsui OSK Lines have reached an agreement whereby Vopak will acquire a minority stake in the “MOL FSRU Challenger” whose name will change to “Bauhinia Spirit” before being deployed as a Hong Kong LNG import terminal.

The LNG importing nations of Europe and big pipeline natural gas users like Germany are at the centre of increasing carbon-pricing regimes that raised $53 billion in revenue last year as a form of taxation on greenhouse-gas emissions and with the European Union having the costliest system.

GRTgaz, the French natural gas network operator and owner of LNG import terminals, has issued a report on gas flows and imports and exports during the Covid-19 crisis and the evolution of consumption and demand as gas-fired power stations begin to restart.

The US is increasing its domestic natural gas demand for gas-fired power plants as the number of facilities has now overtaken coal-fired plants and the power industry competes with liquefied natural gas export projects for abundant feed-gas resources.