Hawaii
Energy Policy Forum > Summit > Background Materials
> Hydrocarbons
Summary:
Hawaii Hydrocarbon Outlook
Fereidun Fesharaki and Jeff Brown, et al., FACTS, Inc.
This study examines the important global, regional, and
local trends that will affect Hawaii’s energy horizon
over the next several decades. Its main focus is to examine
the potential for expanding the use of alternative hydrocarbon
fuels, such as coal or natural gas, in an effort to diversify
away from oil.
Numerous topics are discussed, including: the outlook for
petroleum, coal, and natural gas at the global, regional,
and local level; the future of hydrocarbons in power generation;
the future viability of the refining business in Hawaii; the
impact of new technology in the transport sector; Hawaii’s
fuel tax structure; and energy security issues of particular
importance to Hawaii. The observations and suggestions are
wide-ranging, but the key points include:
· In comparison to other states, Hawaii is heavily
oil-dependent—it relies on oil for almost 90 percent
of its primary energy. If the utilities’ current plans
are followed, the State’s reliance on oil looks set
to continue through at least 2020.
· The Middle East will increasingly dominate the oil
export market, and prices are likely to remain volatile, but
most analysts project that the average price will remain in
the $20-30/bbl range over the next several decades. Sustained
higher prices bring massive supplies of unconventional oil
into play, which effectively acts as a ceiling on oil prices.
· Partly due to proximity and partly because of Hawaii’s
need for low sulfur crudes to produce low sulfur fuel oil
for power generation, the State is heavily dependent on Asian
crude imports (which tend to be low in sulfur). Hawaii also
relies on crude from the Alaska North Slope. Unfortunately,
production of these crudes is generally stagnant or in decline
at the same time that the Asia-Pacific region’s thirst
for crude continues to grow. As a consequence, Hawaii’s
refineries will most likely have to pay a growing premium
for the State’s crude imports.
· In the past, liquefied natural gas (LNG) was considered
to be a relatively expensive energy source, but technological
advances and the entry of several key suppliers into the market
in the 1990s has driven prices down—it is now clearly
a buyer’s market.
· Hawaii is in a good position because there is a
great deal of interest in bringing LNG from Asia into the
U.S. West Coast—Hawaii could be part of a larger scheme
to import LNG. However, a possible concern is that introducing
LNG would disrupt the current energy balance and weaken the
position of Hawaii’s refineries.
· Looking forward, LNG is a relatively clean burning
fuel source that could enable Hawaii to reduce its dependence
on oil while at the same time serving as a bridge to alternative
fuel technologies, such as fuel cells. It can also be sourced
from relatively stable countries, such as Australia and Malaysia,
which could help enhance energy security.
To see the full report go to the Hawaii Energy Policy Forum’s
website at:
<http://hawaiienergypolicy.hawaii.edu/papers/FACTS.pdf>
|
