Foreign Affairs Minister Anthony Hylton says LNG floating barge plan would take 18 months to execute. - File

Jamaica is hoping to establish a floating LNG barge like this one found on the website of the U.S. Federal Energy Regulatory Commission, posted courtesy of www.lngoneworld.com.

Jamaica is exploring the possibility of using a floating LNG storage and regasification plant as a medium-term strategy to meet a 2009 deadline for the expansion of the Alcoa alumina refinery and the conversion of local electricity providers from oil to gas-powered generators.

But according to Anthony Hylton, the Foreign Minister, who also has special responsibility for the LNG project, this plan does not mean that the Government is shelving the proposal for a land-based facility for which a front-end engineering and design (FEED) study is near completion.

New development

"This is not a cancellation of the land-based plan," Hylton told Wednesday Business. "It is a new development in terms of the timetable."

"We are looking at the concept of a floating facility that would take about 18 months to deliver once you start," he said.

Nearly four years ago when he was Energy Minister, Hylton began to develop the proposal for converting Jamaica's major industries from the use of oil to gas as their major energy source.

Pointman

When he lost his parliamentary and Cabinet seats in the 2002 General Election, former Prime Minister P.J. Patterson asked Hylton to continue as pointman on the project, a role he maintained when he was brought back to the Cabinet in March by Patterson's successor, Portia Simpson Miller.

The conversion to gas-powered generation, based on Hylton's plan to establish a 1.15 million-tonne-a-year LNG facility, is seen as critical to Alcoa's plan to spend US$1.2 billion to more than double the size of 1.3 million tonnes a year alumina refinery in the south-central parish of Clarendon that it owns 50:50 with the Jamaican Government. (See related story on Page C2).

Major work on the expansion, once there is the greenlight, is to begin next year and completed in 2009 - similar to the time Government had projected for conversion from oil by the island's major power suppliers.

However, a land-based plant, projected to cost about US$300 million, would take upwards of three years to build. With design only being completed, and the expected time lag to put in place all the partnerships and to raise financing, it is expected that such a facility could not be up and running before 2010 or 2011.

"Using the ship would be a medium-term option," explained Hylton. "And you would be doing much of the work for the land-based facility."

For example, even for a land-based facility, planned for Port Esquivel in St Catherine, berthing facilities would required to accommodated the LNG carriers that would transport the gas. The same ones would be used by the floating storage and regasification plant. Additionally, the pipelines that would run from a land-based LNG gasfication facility to a powerhouse would be the same ones that transport natural gas from the float plant Ñ in much the same fashion that electricity is transferred from floating power barges to the national grid.

But critically, too, Hylton pointed out, time issues apart, the start-up cost would be substantially cheaper. The ship would be leased.

Jamaica had initially expected Trinidad and Tobago to be its main supplier of LNG and Port of Spain and Kingston have signed at least two MoUs for a joint development of the project, in which the Trinidadian pledged to take a minority stake.

Over, initially there were disagreements over how Port of Spain should price LNG - Jamaica had insisted that costs should be the same as in Trinidad and Tobago's domestic market in keeping with the CARICOM Single Market and Economy - until there was a compromise with the Trinidadians offering preferential rates. These rates were never disclosed.

However, Hylton suggested that Port of Spain, until it develops new offshore gas fields, could have supply problems in meeting Jamaica's full demand if the island converted most of major industries to gas. This would mean a demand of about two million tonnes of LNG a year.

"The Trinidadian remain committed to the project," Hylton said. But until Port of Spain resolved its supply issue, Jamaica was also looking at other sources to supplement any LNG bought from its CARICOM partner.

business@gleanerjm.com