LNG in Florida
Port Dolphin offers an attractively placed new supply of natural gas for the Florida end-user market. The import terminal has received its essential federal permits, including the approval under the Deepwater Port Act and the approval of the Federal Energy Regulatory Commission. Höegh LNG is the sole owner and sponsor of the project through its 100-percent-owned subsidiary Port Dolphin Energy LLC.
Port Dolphin will deliver regasified LNG into the Florida gas grid where the density of gas-fired power generation is high and where a large share of growth in new generating capacity is expected to be met by gas-fired power stations. Under current projections, planned additions in the power sector will exceed the capacity of the pipelines serving the Florida market.
LNG has been part of international energy commerce for more than 50 years, during which time it has grown in absolute terms and as a percentage of internationally traded gas. LNG accounted for some 28 percent of cross border gas transactions in 2008. The rise of LNG as an energy source has been spurred by several developments. The following graph demonstrates the dramatic growth in LNG capacity from 1995 to 2015.
Source: Fearnley LNG
As can be seen, a considerable amount of new LNG capacity will come onstream in the next two to three years. The majority of this will be produced in the Middle East and, thanks to the use of new, large LNG carriers, significant volumes of this will likely be transported to the United States. In 2009, approximately 1.2 billion cubic feet per day (bcfd) of LNG was imported. In contrast, industry observers predict that in 2010 imports could reach as much as 5 bcfd over the year.
The overall trend is for LNG to be imported into countries as a supplement either to imported pipeline gas or as a complement to indigenous gas supply. This is the model that Port Dolphin is proposing to help meet Florida’s growing gas needs.
In fact, Florida is already using regasified LNG. The Cypress pipeline from the Elba Island import facility in Savannah, Ga., brings approximately 336 MMcfd into FGT to serve power load mainly in the Jacksonville area. LNG is supplied to Elba Island under a long-term LNG contract between Point Fortin LNG Exports Inc. and BG Group. These supplies have been arriving on a regular basis at the Elba facility since 2005 under long-term contracts that extend to 2026.
Peninsular Florida is dependent on pipeline capacity to supply the natural gas it needs. From 2001-2008, the volume of natural gas delivered to Florida customers grew by an average annual growth rate of 7.3 percent, the vast majority of which used for power generation. As such, Port Dolphin represents an alternative source to the traditional natural gas sources typically utilized by Florida gas consumers. Projections indicate that natural gas generation will supply 46.7 percent of the state’s energy generation by 2018.
The three pipeline operators that do business in the state -- Gulfstream, Florida Gas Transmission and SNG (Cypress) -- together provide a total transportation capacity of 4.634 bcfd into Florida. With the current and permitted pipeline capacity for natural gas into Florida and the forecast demand from the current and planned power generation based on natural gas, there is a growing shortfall of capacity in the future. This gap needs to be filled, and this is where Port Dolphin fits into the supply picture in Florida.