- 2014 - January - 13th -

T. Boone Pickens company, JEA may go head-to-head in LNG business

By David Chapman, Staff Writer

When Clean Energy Fuels Corp.announced in late October it was going to build a large liquefied natural gas terminal in North Jacksonville, the proposal was met with great excitement.

The plan brought billionaire T. Boone Pickens — and his high profile — to Jacksonville. The terminal would supply up to 300,000 gallons per day of the alternative fuel to ship owners and business. The facility, housed along Zoo Parkway, would be the first of its kind for the East Coast, though Clean Energy already had similar plants in Texas and California.

What wasn't public then was there was already a competitor in the wings.

Days before the Clean Energy announcement, JEA had become partners with a California-based company to explore several natural gas initiatives, including with liquefied natural gas, also known as LNG.

The two could soon be joined in the natural gas chase by another company, Atlanta-based AGL Resources. A company official said the business realized the importance of expanding the alternative fuels market and is "certainly keeping our options open."

The emerging market attracting businesses to Northeast Florida from across the U.S. and the influx could help prices — or it could bring market saturation that might hinder plans altogether.

Emerging competition

Clean Energy's announcement was met with optimism from those in the logistics and maritime industry. Weeks before, Jacksonville Port Authority CEO Brian Taylor told members of the Logistics Advisory Group about Sea Star Line's need for LNG to power ships that would be delivered by the end of 2015.

A month later, Crowley Maritime Corp. announced it was building LNG ships, a growing trend in the maritime industry.

Taylor told the group that the port had partnered with JEA to develop possible plans to accommodate its customers. At that point, still to be determined was what company supplies the fuel, where a facility is located and how the fuel will be transported.

When Clean Energy made its announcement, Taylor said he was "happy someone stepped up to do it," although the company would not directly be working with the port.

Clean Energy's goal is to supply as much as 300,000 gallons of the fuel to ship owners and businesses. Plants like the one proposed receive the gas from a pipeline, chill it to a liquefied state and store it at low pressure for delivery.

JEA also could be in that market.

The utility signed an agreement with Sempra U.S. Gas & Power to explore four possible initiatives: new natural gas pipeline infrastructure for the increased use of the fuel; the siting of an LNG plant on JEA property to provide it as a fuel; compressed natural gas; and other energy infrastructure projects on which the two mutually agree.

The publicly owned utility is the largest consumer of natural gas in the region, said Melissa Dykes, JEA chief financial officer, and the first priority is to increase the infrastructure capacity for the fuel.

The utility currently pipes in its natural gas for electricity generation and there are shortfalls in pipeline capacity that can be addressed, Dykes said.

The partnership also can potentially help JEA make a transition to a cheaper and more environmentally friendly fuel at a time when the federal government is enforcing stricter carbon regulations.

Dykes said that from a customer perspective, expansion into more natural gas can help keep rates low by mitigating those risks of regulations.

If it were to provide the fuel to businesses, it could also generate revenue.

"There is competition … and that's only going to be a good thing for local customers," Dykes said. "We think competition is good."

Greg Roche, Clean Energy's vice president for national accounts, agreed with the idea about the companies vying for market share.

"There is always competition with whatever we do, wherever we go," he said. "There is a market with what we are doing."

Like Dykes, Roche said that "competition is good."

Asked how the Northeast Florida market competition might shape up with a public utility involved, Roche said that depended on what advantages JEA might have. He would not elaborate.

"We have worked with them and competed," Roche said of public utilities in the natural gas marketplace.

Another entry?

The two companies may have another competitor interested in the market. Atlanta-based AGL Resources refers to itself as "the largest natural gas-only distribution company" in the U.S. and has distribution, retail, wholesale, midstream and cargo shipping operations, according to its website.

Pivotal LNG is a wholly owned subsidiary of AGL Resources that specializes in LNG.

"Given our more than four decades of experience in LNG production, delivery and transportation, we recognize the importance of expanding the alternative fuels markets in areas like Jacksonville, and are certainly keeping our options open," Steve Cittadine , AGL Resources president of storage and fuels, said in a statement.

The future

Plans are still on track for the Clean Energy facility to break ground in the second quarter of this year and be complete by the end of 2015, Roche said. Roche said numbers for capital investment and jobs weren't yet available.

In addition, the company's first natural gas fueling station for trucks is now open at 460 Lane Ave. S., with a ribbon-cutting ceremony planned for Wednesday.

Dykes said that JEA is in its due diligence stage of planning for any potential site of an LNG plant, but the company does own several parcels around the port where it could be located.

"LNG has the potential to put Jacksonville on the map," she said.

George Gabel for some time has advocated for such a terminal to help the Jacksonville port.

The logistics advisory group founder has advocated for Jacksonville to be the first to have such facilities that would help secure contracts for ships that are making the switch to the alternative fuel.

"There's not another one in Florida," said Gabel, a partner with Holland and Knight. "We want to be first … that's when long-term contracts will be made, with whoever is first."

Gabel said Friday that competition in Northeast Florida for the service is "great" and lowers prices for consumers, but hoped the companies could work together in certain areas to share expenses.

"It's a hotbed because the demand is already here," he said, referring to liners making the switch.

What he doesn't want to happen is that the competition hinders each other to the point that "we might end up with nothing or no terminal at all."

The discussion about the push for the alternative fuel and other components of the marketplace likely will only intensify.

The logistics group who heard about the need for the fuel from Taylor will be a part of that continued discussion this month.

Roche and JEA CEO Paul McElroy are scheduled Jan. 21 to provide information to the group about their planned LNG terminals.



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