Hawaii
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Summary:
Evaluating Liquefied Natural Gas (LNG) Options for the State
of Hawaii
Fereidun Fesharaki and Jeff Brown, et al., FACTS, Inc.
The objective of this study is to enhance the general level
of understanding about the global LNG market and to clearly
identify the strengths and limitations of LNG as a future
fuel source for Hawaii. LNG would provide clear benefits for
the State in terms of energy diversification and the environment,
as well as serving as a possible bridge to a hydrogen economy,
but it could be disruptive to the current energy balance.
The topics discussed include: recent developments in LNG markets,
such as trends in pricing and contract terms and the growth
of short term trading; the outlook for small markets (similar
to Hawaii’s); technological developments, environmental
and safety concerns, and the possibility that LNG could serve
as a bridge to a hydrogen economy. The study concludes with
an examination of the possible impact of LNG on the State’s
energy sector as well as the overall economy.
This study is currently in progress, but some key findings
include:
· The global and regional LNG markets have undergone
a dramatic transformation in recent years. Technological developments
and a number of new supply sources have transformed into a
buyer’s market, and prices have dropped considerably
versus the 1990s. LNG prices would likely be competitive with
fuel oil, which is currently primary fuel used in power generation
in Hawaii.
· In contrast to popular perception, LNG is a relatively
low risk fuel which has an exemplary safety record.
· LNG may be sourced from relatively stable countries,
including Australia and Malaysia, and as such it provides
a means to relatively quickly reduce the State’s dependence
on oil. In the long term LNG could serve as a bridge to a
hydrogen economy.
· LNG has clear environmental benefits in terms of
reducing localized and global pollution.
· The downside of LNG is that it may disrupt the State’s
existing energy balance—there is a possibility that
the displacement of fuel oil in power generation could lead
to the closure of one of the State’s refineries. The
study explores the economic impact of such a closure.
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