LNG In Puerto Rico Could Turn Into A Disaster

New Fortress Energy's controversial LNG import facility is seen through trees in the nearby neighborhood of Cataño, Puerto Rico. “It really seems like Puerto Rico is being exploited by New Fortress,” said Cathy Kunkel, an energy researcher based in San Juan who works for the watchdog Institute for Energy Economics and Financial Analysis. Even with natural gas prices falling, “the capital cost for natural gas transportation infrastructure remains high,” the report found, warning that gas projects “benefit from economies of scale, suggesting the potential for greater returns from larger markets than from smaller ones.” “The costs and operational risks for LNG delivery” to San Juan, the study concluded, were “prohibitively high.” To New Fortress, however, Puerto Rico was a prime opportunity. “As the order makes clear, there is no ‘regulatory gap’ that needs to be filled, as this facility is already regulated by several federal and state agencies.” Asked whether FERC made the right call by allowing the facility to continue operating, Marisol Bonnet, the senior adviser on Puerto Rico issues at the U.S. Department of Energy, said her team’s research suggested the territory didn’t need more natural gas plants but that she had faith in the other agency. Selling PREPA the power stations, New Fortress said in an investor presentation, “ensures installed power remains part of Puerto Rico’s infrastructure” and “more than doubles” the company’s “gas supply opportunity on the island.” In its financial reports, New Fortress has repeatedly cited the risk that its import terminal in San Juan would not be able to meet FERC’s requirements, which could result in federal regulators shutting down the facility.