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LNG imports help diversify energy sources of US islands

August 20, 2014
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Imports of liquefied natural gas (LNG) may soon allow island states and territories of the United States to diversify their energy sources and benefit from lower fuel prices.

At present, unlike in the rest of the United States, energy consumption in U.S. islands is almost entirely petroleum-based. But a new report from the U.S. Energy Information Administration (EIA) says that relatively low natural gas prices and new shipping technology could allow these islands to import LNG.

The islands -- which include the state of Hawaii and the territories of Guam, the Northern Mariana Islands and American Samoa in the Pacific and Puerto Rico and the U.S. Virgin Islands in the Caribbean -- face energy challenges that stem from their physical isolation and lack of fossil fuel resources. In order to meet their energy needs, including generation of electricity, they have long depended on imported petroleum products because they are easier to transport than other fossil fuels, the EIA said.

Because of relatively high crude oil prices in recent years, residential electricity prices on the islands have been three to five times higher than on the mainland.

This has already led to some diversification, including coal plants in Hawaii and Puerto Rico and power plants in Puerto Rico that run on natural gas. But LNG is typically shipped in bulk carriers in huge quantities and it also requires expensive regasification and distribution infrastructure.

Now, however, with relatively low natural gas prices and the development of standardized refrigerated shipping containers, small amounts of LNG can be transported like other containerized cargo. At the receiving end, the LNG is connected to portable regasification units adjacent to electric power plants or industrial facilities.

The viability of small-scale LNG imports is being tested this year by utilities in Hawaii and privately owned companies in Puerto Rico.

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