Bogue set for blast off in August – Theoc

BY AVIA COLLINDER Business reporter

Thursday, May 26, 2016

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Dan Theoc, chief financial officer for the Jamaica Public Service Company limited (JPS), said yesterday that the company expects to have its dual-fuel plant in Bogue running on natural gas by August, a factor which will reduce local dependence on heavy fuel oil by 10 per cent.

Theoc said the company’s LNG supplier, New Fortress Energy, is advanced in its construction of storage units in Montego Bay, which will number seven in total.

Construction of a 1.6-km supply line is also underway and slated for completion in less than three months.

Permits for land lease for the storage units and easements for the supply line have also been secured, he said.

He noted that the retrofitting work on the plant at Bogue was already completed, and that it was running on diesel while awaiting switch over to LNG.

Currently, 95 per cent of fuel used to generate electricity in the island is oil fired. JPS, working along with the Government’s programme for energy diversity, intends to bring this down to 50 per cent by 2019.

Two wind and one solar project which all should be online by year end will add three per cent in generating capacity.

LNG, considered to be a more stable fuel price-wise, is expected to provide 20 per cent of new capacity from plants in Bogue and Old Harbour.

"With oil prices trending back up, we believe it is still prudent for Jamaica to press ahead with fuel diversification," Theoc told the
Jamaica Observer yesterday, noting that the planned 190-MW gas-fired plant in Old Harbour Bay should see another 10 per cent addition in LNG-based capacity.

All permits for Old Harbour are expected to be in hand by July 31, which will permit signing of loan documents in the next month Theoc said. The plant is slated for completion by 2018.

Admitting that the savings from LNG use are uncertain, given that oil prices have fallen by 50 per cent over the last 12 months, Theoc stated, "Fuel diversity is absolutely essential in order to ensure price stability, energy security and sustainability. We believe that now is actually the best time to make the switch to natural gas, when we can afford it, to protect ourselves from oil price volatility."

Oil prices tipped over the $50-per-barrel mark on Thursday May 26 as production outages prevailed. Global benchmark Brent crude oil went down 16 cents to US$49.48, having earlier risen as high as $50.51 in intraday trading.

Theoc said that for the first time in years, Jamaicans are paying less than US 20 cents per kWh for electricity. JPS’s Residential customers are paying on average US 19 cents per kWh, while large industrial customers are paying US 14 cents per kWh for electricity.

Most of this, he admitted, issued from the fall in oil prices, but noted as well that customers are also benefiting from generating units which are using less fuel to produce each megawatt of electricity following the company’s investment of J$3.6 billion in power plant maintenance in 2015.

The upgrade, Theoc said, resulted, "in the best plant efficiency in the company’s history."

At Old Harbour, he noted, the retirement of 45-year-old oil-burning plants and replacement with more efficient machinery is expected to result in 40 per cent less fuel usage at the site.

Old Harbour is a US$550-million project, of which capital cost of about US$300 will be spent by JPS and the remainder by its LNG supplier, New Fortress Energy.

The agreement signed calls for the company to build a terminal and supply the JPS with 200,000 metric tonnes of LNG per annum.

New Fortress is also picking up the tab for most of the gasification infrastructure at Bogue, where the total project costs US$150 million. Of that sum the cost to JPS is US$22 million.

The LNG supplier will recover its costs under the 20-year gas supply agreement for both plants. The agreement for Bogue will begin running in August this year.

Theoc said the introduction of natural gas will further allow for the more efficient integration of renewables on the grid, "which is an important component of our plan to provide Jamaica with cleaner energy".

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