To evaluate the impacts of cost inflation, Eagle LNG Partners LLC has asked FERC to extend the in-service deadline for a small-scale natural gas export project planned for Jacksonville, FL.
The Federal Energy Regulatory Commission granted Houston-based Eagle approval in 2019 to build the roughly 1 million metric ton/year (mmty) capacity liquefied natural gas facility.
The deadline to complete the facility was mid-September. However, the company told FERC staff that it needed an additional five years to complete the greenfield project. The extension is necessary because of lingering impacts from the Covid-19 pandemic, as well as turbulent commodity markets and storms.
The company estimated it could take 24-36 months to commission the facility once it reaches a final investment decision. However, before the project is sanctioned, Eagle epresentatives told FERC that a cost-savings study is underway after the engineering contractor delivered an updated cost estimate that “was substantially greater” than anticipated.
“Moreover, Eagle LNG has found it difficult to secure the services of a contractor that will devote time to the Jacksonville project; many construction companies are focused on larger scale projects, and those willing to take on a more modestly sized project are finding it virtually impossible to hire skilled tradesmen…,” Eagle counsel wrote in the request.
The Jacksonville project is intended to mostly serve power companies in the Caribbean, which currently rely on heavy fuel oil (HFO) for a large portion of electricity generation. One of the main sources of HFO to the Caribbean is Venezuela, making an alternative fuel source from the United States an added value for the national interest.
While U.S. and Venezuelan relations had been on somewhat of an upswing, allowing for a deal that could boost LNG production in Trinidad and Tobago, tensions have risen. Clashes with neighboring Guyana over claims to prolific production areas in the Stabroek block and the latest contested election could test the progress U.S. policymakers apparentlly made with President Nicolás Maduro’s administration.
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Eagle counsel said the company is still working to turn tentative supply agreements into binding deals with several founding customers. It has signed heads of agreements with power generators Aqualectra NV in Curaçao, Antigua Power Co. Ltd., St. Kitts Electricity Co. Ltd. and a sale and purchase agreement with Water en Energiebedrijf Aruba NV.
“Eagle LNG continues to negotiate with the governments of Caribbean nations to supply LNG from the Jacksonville project to replace diesel and HFO in power production,” counsel wrote. “Eagle LNG is hopeful that these negotiations will progress to additional executed offtake agreements.”
The company has also been building an integrated portfolio in the Caribbean, funding power projects and building an LNG carrier fleet. Eagle took control of its first LNG carrier last October, a 10,000 cubic meter vessel.
Antigua Power, which produces around 80% of the country’s electricity, and Eagle created the Caribbean LNG joint venture to develop an integrated LNG terminal and a 46 MW power plant that uses both light fuel oil and natural gas.
LNG imports in the Caribbean grew exponentially in 2023 after year/year gains in volumes were briefly stymied following the Covid-19 pandemic. More than 6 mmt landed in six island nations in the region last year, compared with 4 mmt in 2022 and 4.1 mmt in 2019, according to Kpler data.
So far this year, more than 4.4 mmt of LNG has landed in the Caribbean. The majority, 1.18 mmt, was imported by AES Corp. for power generation in the Dominican Republic.
