Hawaiian Electric Co. is in talks with the Navy about a plan to build the state’s first liquefied natural gas import terminal at Pearl Harbor as part of the utility’s effort to find a cheaper source of fuel for power generation.
HECO has been seriously considering LNG as a potential fuel source since at least mid-2012 when Gov. Neil Abercrombie asked utility officials to investigate the feasibility of using natural gas as a replacement for fuel oil during the utility’s transition to renewable energy.
Preliminary plans call for a near-shore floating terminal at Joint Base Pearl Harbor-Hickam where LNG would be unloaded from ships and converted from a liquid back into a gas and transported through a pipeline to HECO power plants, according to the Navy and HECO.
Natural gas has the potential to significantly reduce the cost of generating electricity in Hawaii when compared with oil, according to a 2012 study commissioned by the Hawaii Natural Energy Institute. The study by Facts Global Energy projected that LNG could provide fuel savings in the Oahu power sector of 40 to 50 percent through 2030 when compared with oil.
Natural gas also burns cleaner than the oil that accounts for about 75 percent of HECO’s electricity production.
Hawaii is the only state in the nation that does not use natural gas for electricity generation.
Navy spokesman Bill Doughty emphasized that the LNG proposal is in the early stages, adding that "extensive technical and environmental studies are required before any decision is made on locating a terminal at Pearl Harbor."
The proposal has the support of the commander of the U.S. Pacific Fleet, who authorized moving forward with an environmental impact statement for the project, Doughty said.
"We are aware that such a project could yield significant potential benefits for the Navy and for Hawaii energy security, electricity cost savings and environmental stewardship," Doughty said in an email.
"Both Navy Region Hawaii and HECO consider the development of the LNG terminal to be a long-term project that would take several years to compete," Doughty said.
Hawaiian Electric Co. officials said it would be "relatively straightforward" to add natural gas to the fuel mix at its Waiau and Kahe power stations. Replacing oil with natural gas does not mean the utility is backing away from its commitment to generate 40 percent of its electricity production with renewable energy sources by 2030, the HECO officials added.
"Since LNG is a cleaner-burning and less expensive fuel, it would be advantageous as a bridge fuel to displace as much of the remaining oil as possible," HECO spokesman Darren Pai said.
Meanwhile, the state’s only gas utility is pressing ahead with its own plan to begin shipping LNG to Hawaii. Officials of Hawaii Gas said they hope to receive approval soon from the state Public Utilities Commission for the first phase of the project, which involves bringing in limited quantities of LNG in specialized shipping containers.
The shipments in Phase I would be used to supplement the supply of natural gas Hawaii Gas provides to its commercial customers, which include restaurants, hotels, manufacturers and laundry companies that use gas mainly for heat energy. Later phases of the plan would include larger shipments of LNG that could be used for electricity generation, according to Hawaii Gas.
Hawaii Gas is involved in discussions with officials from HECO and the state Department of Business, Economic Development and Tourism about its role in the future of natural gas in Hawaii, said Tom Young, the company’s executive vice president of strategic initiatives and supply.
"This is an opportunity for both parties to work with the state government to put our heads together and work this out. Hopefully we can collectively develop a solution to bringing in LNG," Young said.
"Our approach has been to make sure that when developing LNG infrastructure to take into consideration not only how to serve Oahu, but the entire state."
The Kauai Island Utility Cooperative, which has expressed an interest in using natural gas to replace some of the diesel it burns in its generators, could be a potential Hawaii Gas customer as well. "We will look at all the different markets as they develop," Young said.
Natural gas prices have dropped sharply in recent years as a result of a boom in production of the commodity on the mainland. Vast caches of natural gas trapped in deeply buried rock have been made accessible by advances in two controversial technologies: horizontal drilling and hydraulic fracturing. Many environmental groups oppose the practices, saying they have resulted in the contamination of groundwater. Opponents of fracking also cite the damage done to the ozone from methane that escapes during the drilling process.
The Honolulu-based Blue Planet Foundation and the Sierra Club are opposing plans to bring liquified natural gas to Hawaii. Among the concerns expressed by the two groups in documents filed with the Federal Energy Regulatory Commission is that bringing in LNG runs contrary to the state’s push to reduce its dependence on fossil fuel.
When natural gas is shipped it is converted to a liquid state by cooling it to minus 260 degrees Fahrenheit. LNG takes up about one-six hundredth the volume of natural gas in its gaseous state, making it easier to transport over long distances.
When LNG arrives at its destination, it can be stored in its liquid state or converted back into natural gas through a "re-gasification" process. Such a re-gasification unit would be part of the near-shore terminal.
Pearl Harbor offers several advantages over Honolulu Harbor and Kalaeloa Barbers Point Harbor as a site for the proposed LNG terminal, according to HECO’s Pai.
"Pearl Harbor is protected, has calm waters and good water depths, and is closer to power generating stations," he said.
Honolulu Harbor, by contrast, is limited in size, is crowded and is close to the runways at Honolulu Airport, he said. Kalaeloa offers a protected site, but it is also relatively small and has limited water depths, Pai added.
If an LNG terminal is built at Pearl Harbor, it would not be the first privately run commercial enterprise to be located on a military base in Hawaii, the Navy’s Doughty said. He cited the Moanalua Shopping Center built on Navy land by a private developer in exchange for the developer building a Navy personnel services center.
