Friday, July 24, 2009

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Making the case again for LNG Reports out of Jamaica say that Prime Minister Bruce Golding's government has decided that liquefied natural gas (LNG) will be the fuel of choice for energy generation in Jamaica. "Over time, therefore, natural gas will replace oil at power plants," The Jamaica Gleaner reported in a recent editorial. "Natural gas is cheaper, more efficient and, critically, environmentally cleaner than oil." Actually, Jamaica was headed in this direction before the Golding government came to power. According to a Reuters News Agency, Trinidad and Tobago "signed an agreement in 2004 to supply Jamaica with 1.1 million tons of LNG per year for 20 years, beginning in 2009, for use by the Jamalco refinery and the Jamaica Public Service Company's electric power plants." What is significant about this time frame is that this was around the same period that Tractebel North America and Virginia-based energy giant AES had active proposals being considered by The Bahamas Government for permission to originate an LNG pipeline from The Bahamas to Florida. As we have noted in previous editorials, during the Free National Movement's first tenure as the government, it granted approval in principle for energy giant Enron to construct a pipeline originating in Freeport; however, the FNM was defeated by the Progressive Liberal Party (PLP) in the May 2002 general election. Enron subsequently filed for bankruptcy, and during the bankruptcy process, Tractebel North America bought the assets of the proposed LNG Calypso project that had already been approved by the Grand Bahama Port Authority (GBPA). Yet, although it had approval in principle from the FNM government, rather than seek to move ahead on the basis of that agreement when the PLP came to power, Tractebel decided to submit a new Environmental Impact Assessment (EIA) report to the new PLP government, headed by Prime Minister Perry Christie. The PLP government, however, ignored the Tractebel proposal, but indicated that it would approve the proposal of AES, which planned to construct a pipeline from Ocean Cay, a man-made island off Bimini. The final go-ahead, however, was not given to AES prior to the PLP's defeat in the 2007 general elections. Had Tractebel's proposal been approved in 2004, it was projected that the LNG facility would have been completed by 2007. What this means is that The Bahamas not only by now would be receiving millions in revenue from LNG, but would also be in a good position to determine whether the move being made by Jamaica to make LNG its choice for energy generation is something The Bahamas should consider doing. Frankly, it is really mind-boggling that neither the PLP government nor the current FNM government has been more progressive in approving one of the proposals for an LNG project, given the tremendous benefits the country can gain from such a business venture. Trinidad has been in the LNG business since 1995 when its Atlantic LNG company was formed. Today, the total capacity of Atlantic LNG's four trains is around 14.8 million metric tons per annum. Considering that it has agreed to supply Jamaica with 1.1 million tons per year, this gives an indication of just how big a player Trinidad is in the LNG business. Meanwhile, The Bahamas continues to procrastinate on giving approval for the origination of an LNG plant from Grand Bahama or Ocean Cay. Given the fact that during its first tenure as the government it had given approval for the LNG project, why hasn't the current FNM administration seen the wisdom of renewing that commitment? In these tough economic times, that certainly seems like a sensible thing to do. Friday, June 26, 2009