State regulators approved Hawaii Gas’ plans to import more liquefied natural gas, which the company said will save customers millions of dollars over the next two decades.
The Public Utilities Commission said Monday that Hawaii Gas can spend $12.8 million to convert 30 percent of its current supply of synthetic natural gas to liquefied natural gas.
“We are very pleased that we received this approval and that the commission can recognize the importance of fuel supply reliability,” said Alicia Moy, CEO of Hawaii Gas. “It gives us the ability to move forward displacing the SNG, which we use today that is based off of dirty oil, with a much cleaner product.”
When it applied for the increase in LNG in October 2014, Hawaii Gas said its 28,000 Oahu customers using synthetic natural gas would save approximately $6 million per year and almost $90 million over the next 20 years. But that was based on the much higher oil prices in 2014. Savings now would be lower.
Hawaii Gas did not provide the updated savings customers would see with the project. “We haven’t refreshed our numbers yet,” Moy said. “It’s really dependent on the oil forecast.”
Currently, Hawaii Gas manufactures synthetic natural gas from an oil derivative for customers connected to the company’s pipeline on Oahu. LNG would take the place of some of the synthetic natural gas. Propane customers would not be affected by added LNG use.
“Because the project will increase fuel supply diversity, and may provide customer savings, the commission finds and concludes that the project is reasonable and in the public interest,” the PUC said in the order.
Moy said that she expects the project will be complete within the year.
“Now that we have the approval, we have to firm up our supply contracts with our two fuel suppliers,” Moy said. “We are expecting we can have all of this in place and be in operation well within 12 months.”
Moy said Hawaii Gas is looking into full conversion of the company’s synthetic natural gas plant at Campbell Industrial Park in Kapolei to LNG and renewable natural gas, such as methane from landfills.
Clean-energy and environmental groups have opposed the use of natural gas because hydraulic fracturing, or fracking, a process used to extract the gas, can lead to contamination of drinking water.
Marti Townsend, executive director of the Sierra Club of Hawaii, said the approval was a step in the wrong direction.
“The environmental impacts of fracked gas are so extreme and immense,” Townsend said. “I fear, for Hawaii residents, it is an out-of-sight, out-of-mind situation because we don’t have experience of gas being mined in our communities. That means that you are facilitating the contamination of drinking water in Pennsylvania. … You’re destroying other people’s lives in order to heat your water and cook your food.”
Moy said it is a challenge to understand or have control over the source of that gas on the mainland when it is a small quality.
“It’s difficult to determine where the source of that gas is coming from,” Moy said. “As a responsible party in the energy environment here, we are very concerned about the environment and our footprint. Wherever we can minimize our impact to the environment, we want to make sure we take those measures. As we procure larger volumes of natural gas, we will have more control to where those sources are coming from.”
Separately, the gas utility is looking to be a bulk supplier of LNG for the state.
The utility announced in January it has an agreement with a supplier of liquefied natural gas to build the facilities needed to import bulk LNG into the state for $200 million. The bulk supply could meet all of Hawaii Gas’ customer needs and some electric generation, the company said.
Hawaii Gas is hoping to be the main supplier of LNG in the state if regulators decide to make the switch from low-sulfur fuel oil and coal now burned in Hawaii power plants. Hawaii Gas has said LNG would be cleaner than coal and oil and could be a “bridge fuel” as Hawaii moves toward its goal of 100 percent renewable electric generation by 2045.
Using LNG instead of oil to fire Hawaii power plants would have saved ratepayers $132 million in fuel costs last year, Hawaii Gas said.
