Power companies ready for LNG conversion

Mark Titus, Business Reporter

Jamaica's plan to add liquefied natural gas to the energy mix remains a work in progress, but two power providers say they are ready for the transition and are only awaiting follow-through on the regasification and distribution terminal.

The Jamaica Public Service Company Limited (JPS), whose electricity is generated from expensive oil, said it has already begun preparations for LNG, a cheaper alternative.

"We have been contemplating and preparing for the transition for many years now, and in planning our major expansions, we have taken into consideration the possibility that we will need to transition to natural gas," Winsome Callum, corporate communication manager at JPS, told Financial Gleaner on Wednesday.

"So our combined-cycle plant at Bogue was actually built to allow for conversion to LNG. We have not put in any major expansion since then, but we have taken into consideration the absolute necessity to convert to natural gas."

The upgraded Bogue plant in Montego Bay was commissioned last year.

LNG will not fully replace oil as the fuel source for electricity generation, but the project under contemplation is for enough gas supplies to produce 300-400 megawatts for the national grid.

Jamaica Energy Partners (JEP), the largest of three independent power providers that generate and sell power to JPS under contract, says it, too, is ready for the switch.

"For us, it is simple; all it will take is some modification to our system, but we are ready, providing the commodity gets here," said JEP Chief Executive Officer Wayne McKenzie.

JEP produces 125MW of power for the national grid through two locations but is in expansion mode, having won the bid to build, own and operate another 66MW power-generation plant being financed by a loan from International Finance Corporation. The plant is ahead of schedule and could be com-missioned in 2011, instead of 2012, McKenzie said.

Currently seeking to establish an LNG floating storage and regasi-fication unit at Port Esquivel by December 2012, preferred bidder, the Exmar consortium, must tie down deals with off takers - including the power providers and the bauxite/alumina sector - in order to make a proposal to its financiers to back the US$600-million project.

Government procurement rules also require energy projects above 15MW to go to tender, creating uncertainty in the energy market about whether the Exmar deal could unravel, at worst, or be delayed, at best.

"Since 2004, the addition of new generation is dependent on a bid, so JPS is no longer a monopoly when it comes to electricity generation," said Callum. "So when new generation is to be added, the OUR (Office of Utilities Regulation) has to open a tender process. Even the new renewable-energy projects that JPS is now adding came out of a tender process that the OUR actually manages," she said.

"We had to submit our proposal for the wind farm, and also the hydro plant, so it is not an automatic right."

JPS, however, is still a monopoly distributor of power.

mark.titus@gleanerjm.com