Is Liquefied Natural Gas (LNG) the Messiah?

Former managing director of the Jamaica Public Service Company (JPS) and energy consultant, Winston Hay, is a liquefied natural gas (LNG) atheist. That is, he really does not seem to believe that LNG will be the savior of our high-JPS-bills-paying worlds in the way the government is suggesting.

by loswl

In a Guest Column to the Gleaner on Sunday January 29, 2012 Hay writes:

Goingforward, Government has identified liquefied natural gas (LNG) as the preferred substitute for oil as the primary fuel for generating electricity, but expectations that this will substantially reduce fuel costs may be misguided. In the meantime, consumers can take conservation measures to lower their electricity bills.

Energy is one of out top issues

Energy has been an issue that we are keen on here at MoneyMax101 and in the past we have highlighted the basics of Jamaica’s Energy Crisis. Dennis Morrison stated in an article we highlighted that “the choice of natural gas has been based on its high efficiency, lower capital costs, shorter implementation period, and environmental considerations.”

However coal was also presented as a solution. If you recall, he stated

Coal, on the other hand, has advantages of lower price, less market uncertainty and volatility; and there is also the vital factor of abundant supply in proximity to the island. The issue of the environmental impact of burning coal is a disadvantage and control measures would have cost implications. But overall, the advantages still make it an attractive fuel choice for Jamaica.

At the end of the day, Jamaica needs to decide and implement an alternative quickly.

Why LNG may not be better after all

Despite the proposed benefits of LNG, the cost of creation, conversion, transportation, and distribution seem to make it much more costly than oil! That’s right, your bills may end up higher, if the government DOES go through with this ‘alternative’. Winston Hay writes,

The problem is that natural gas must first be taken from its source, liquefied by being supercooled to a temperature of -260 degrees Fahrenheit, transported by specialised ocean vessels to Jamaica as LNG, then regasified and pumped from the regasification terminal to the point of usage.

However, JPS’s calculations, and those undertaken by competent independent agencies, indicate that the price of the natural gas delivered to the power stations would be so high that the cost of electricity would be higher than that achieved using coal. Consequently, Jamaicans expecting substantially lower fuel costs by way of LNG may be misguided.

If you have been reflecting on the state of your bill – perhaps you should check out the rest of what he has to say.