lng for hawai'i
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Alaska LNG Summit 20121
LNG FOR HAWAI’IALASKA LNG SUMMIT 2012
September 14, 2012
Alaska LNG Summit 20122
THE PROBLEM
Hawaii is too
dependent on oil
THE SOLUTION
Conservation and
renewables ASAP
+ LNG to displace other
oil needs
THE PROBLEM AND TGC’s SOLUTION
THE HAWAI’I GAS ALTERNATIVE
• Start with facilities we have
• Start with existing customers• Start smaller
• Start today
THE PROBLEM WITH THE SOLUTION
Massive upfront LNG investments
Long lead times
BUT…
September 14, 2012
Alaska LNG Summit 20123
HAWAII IS BY FAR THE MOSTOIL-DEPENDENT STATE IN THE US
Nearly 90% of Hawaii’s total energy demand is met by oil.
In 2012, Hawaii’s oil bill is projected to reach $6.2 billion.
About 9% of State GDP will be spent on oil.
Oil costs are probably heading up, not down.
86%
38%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Hawaii US Mainland
Oil as Percent of Total Energy Consumption
September 14, 2012
Alaska LNG Summit 20124
THE REST OF THE COUNTRY HAS MOVED AWAY FROM OIL FOR ELECTRICITY
U.S. Mainland reliance on oil for electricity is now less than 1% of the total
Coal, 48.4%
Oil, 0.8%Other, 1.6%
Wind, 2.3%
Hydro, 6.4%
Gas, 19.1%
Nuclear, 21.4%
US Mainland: Fuel Mix in Power Sector
Oil, 77.5%
Geothermal, 1.8%
Other Renewables,
5.9%
Coal, 14.8%
Hawaii: Fuel Mix in Power Sector
(EIA data for 2010)
Hawaii’s reliance is over 77%
September 14, 2012
Alaska LNG Summit 20125
UNLIKE THE MAINLAND, HAWAII IS EXPOSED TO THE STEEP INCREASES IN OIL PRICES
• Hawaii’s non-fuel costs are typical, but fuel costs are much higher—because of oil.
• Hawaii’s 2012 electricity price is more than 3 times the US average.
• Hawaii’s prices are twice the cost of the second-highest state.
• Post-Fukushima, Hawaii is in competition with Japan for scarce low-sulfur crude oil. -
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35
Average,Low-CostStates*
USAverage
Average,High-Cost
States*
Hawaii
cent
s/kW
h
Electricity Rates, Jan-Apr 2012
* Low-Cost: 33 states below US average; High-Cost: 16 states (exc.HI) above US average.
September 14, 2012
Alaska LNG Summit 20126
THE HAWAII CLEAN ENERGY INITIATIVE (HCEI) HAS AGGRESSIVE GOALS
70% clean energy by 2030: 30% from efficiency and 40% from renewable sources.
In 2010, 9.5% of generation was from renewable sources.
Despite the ambitious goals, the plan will still leave Hawaii exposed to the high cost of foreign oil.
0%
5%
10%
15%
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25%
30%
35%
40%
45%
2010 2015 2020 2030
Perc
ent o
f pow
er fr
om re
new
able
sou
rces
September 14, 2012
Alaska LNG Summit 20127
PRICES ARE ONLY ONE REASON IT IS URGENT TO SWITCH AWAY FROM OIL
New federal emissions standards will require eliminating most fuel oil or installing expensive emissions controls.
Increased use of wind and solar will require load-following generation rather than large baseload power plants.
Possible closures of Hawaiian refineries could disrupt existing supply arrangements.
*gas converted at crude heat parity (5.8 mmBtu/b)
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$140
LS Fuel Oil,Oahu
WTI Crude Oil,Cushing
Natural Gas,Henry Hub*
Prices, 1st Q 2012: $/b*
September 14, 2012
Alaska LNG Summit 20128
LNG OFFERS HAWAII HUGE COST SAVINGS
LNG delivered in Hawaii could offer major price discounts over fuel oil—even if current gas prices double.
Price advantage is 35%-50% over recent Hawaii LSFO prices
This is $44-$64 savings per barrel oil equivalent (boe).
*Henry Hub and California gas prices have been tightly linked since 2005. On average, California prices have been 5% lower.
This analysis assumes EIA’s forecast of Henry Hub gas in 2015 at $25/bbl (4.27/mmBTU). 2012 YTD prices are much lower ($14/bbl).
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LNG--LowCost
LNG--HighCost
Low-SulfurFuel Oil
$/m
mBT
U
$/ba
rrel
oil
equi
vale
nt,
deliv
ered
to
Oah
u
115% Henry Hub* Liquefaction CostShipping to Hawaii RegasificationLSFO, Honolulu
$64.49
$44.19
September 14, 2012
Alaska LNG Summit 20129
GAS IS FAR MORE EFFICIENT THAN HAWAII’S FUEL OIL PLANTS
Gas is 35-50% cheaper than fuel oil.
Gas in a CCGT uses only about 55% as much energy to generate electricity as fuel oil requires.
Cheaper fuel plus higher efficiency cuts electricity fuel costs by 60-70%.
Gas is also cleaner—and compliant with new federal emissions standards. -
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LNG--LowCost
LNG--HighCost
Low-SulfurFuel Oil
Fuel
Cos
t, ce
nts/
kWh 70%
60%
September 14, 2012
Alaska LNG Summit 201210
HAWAI’I GAS HAS AN ALTERNATIVE TO THE USUAL “THINK-BIG” APPROACH TO LNG…
Massive Infrastructure Investments - Dedicated terminal and pipelines
Conversion of Existing Equipment - Powerplant conversions
Minimum Economic Scale - 1 million tonnes
Long Lead Times - Begin imports in 2020 or later
The LNG “Hurdles” HAWAI’I GAS Strategy
Begin with existing gas facilities
Supply existing turbine plants first
Start with ISO LNG containers - 8,000 gallons per tank
Start TODAY
September 14, 2012
Alaska LNG Summit 201211
HAWAI’IGAS ADVANTAGES
Local presence and 100+ year history
Infrastructure, statewide operation and utility status
Customer base and baseload demand to immediately shift to LNG
Ability to phase development , without need for prior electric utility commitment
A detailed plan for execution and the commitment for required capital
The Gas Company is positioned to bring LNG to Hawaii in a phased approach – lowering costs and reducing risk
September 14, 2012
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