Hawaiian Electric Co. is pursuing an interim plan to bring liquefied natural gas to Oahu in shipping containers, while pressing ahead with a longer-term strategy to import bulk supplies of LNG to replace the fuel oil it burns in many of its power plants, a top HECO official said.
Moving ahead with containerized LNG shipments would give HECO quicker access to a lower-cost fuel option while it waits for all the regulatory approvals that are required to bring in bulk shipments, HECO Chief Executive Officer Richard Rosenblum said in an interview Tuesday.
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 thought was maybe we could get it earlier — a lower volume at a slightly higher price (than bulk shipments) — but that would bring costs down earlier for customers." Rosenblum said.
Clearing all the necessary regulatory hurdles to bring bulk supplies of LNG to Hawaii in specialized ships is expected to take until 2020 at the earliest, Rosenblum said.
HECO’s LNG plan is in line with the Abercrombie administration’s position that LNG can be used as a "bridge" fuel while the state continues its transition to renewable energy sources, Rosenblum said.
The decision to explore the use of shipping containers for LNG was driven by the realization that "2020 is a long time to wait," Rosenblum said. "We thought, is there something to bring that time frame down — a bridge to a bridge?" he said.
Rosenblum said HECO officials were encouraged that the state’s gas utility, Hawaii Gas, received approval last week from the state Public Utilities Commission to bring LNG to Hawaii in shipping containers on a limited basis. Hawaii Gas is buying three LNG containers that each can hold about 10,000 gallons of the fuel. The company is also buying a mobile regasification unit to convert the LNG back to a gaseous state. Both the LNG containers and regasifier can be transported by tractor-trailer.
"Hawaii Gas got approval for containerized LNG on a small scale. We’ll pursue it on a larger scale at a price that makes sense and at a quantity that makes sense. We hope to do that pretty quickly," Rosenblum said.
Meanwhile, HECO and Hawaii Gas have formed a consortium to coordinate bulk shipments of LNG to Hawaii, Rosenblum said. Pearl Harbor has emerged as the leading location for an LNG import terminal, although no final decision has been made, according to HECO and Navy spokesmen.
The consortium will allow the two companies to buy LNG at a lower cost than if they were working separately, according to Rosenblum.
"It would be sort of a pooled purchasing in order to get a volume that is high enough and a consistency in demand that is high enough (that would enable us to) get good prices in the market."
Rosenblum also said he believes that a recently announced pilot project to test smart grid systems will demonstrate the value of the technology. The project, which will cover 5,200 homes, will feature wireless smart meters to provide the utility real-time data on customers’ electricity use and remote sensors to alert HECO more quickly to power outages.
"We believe there is a positive cost-benefit for our customers to a wide rollout of the plan," Rosenblum said.
Automating the meter-reading process will not result in any layoffs because those workers will be retrained for other jobs in the company, he added.
