Despite the move, expected since last December, the $350 million project slated to play an important role in the Puerto Rico Electric Power Authority (Prepa) plan to transform its power production to natural gas from dirtier and more costly oil still faces financial hurdles.
“Construction and operation of the project would result in mostly temporary and short-term environmental impacts; however, some long-term and permanent environmental impacts would occur. The FERC staff concluded that approval of the proposed project, with the mitigation measures recommended in the EIS, would result in limited adverse environmental impacts,” FERC concluded.
The final EIS comes months after a draft EIS was published that was subjected to a public comment period.
Since that draft, the U.S. Department of Transportation (DOT)’s Pipeline and Hazardous Materials Safety Administration (PHMSA) said that a portion of the pipeline running through Jobos Bay didn’t comply with federal regulations requiring “burial below natural grade sea bottom or an alternative equivalent protection system from hazards.”
Texas-based developer Excelerate Energy, which is developing the project, modified the design to meet federal standards, according to FERC. The new plan will bury the offshore pipeline “to at least below natural bottom in some locations and to 3 feet to the top of the pipeline in other locations, with the exception of approximately 1,700 feet through the area across the Boca del Infierno pass,” where developers proposed a direct lay over the coral reef with protective concrete mats placed over the pipeline, according to FERC.
Daniel Hanson, an analyst at Height Securities in Washington, D.C., said that PHMSA, the Army Corps of Engineers and the U.S. Coast Guard may have some lingering concerns about the engineering rigor around the pipeline's proposed construction and believes Excelerate is “under pressure to convince FERC's conferring agencies that their plan for the pipeline is sufficient to ensure the safety of gas delivery even in severe and extreme weather conditions.”
Noting that pipeline and financing concerns could still scuttle the project, Hanson said construction wouldn’t begin until after September and the plant would not be operational until at least next spring.
Financing may be the bigger threat, however, to this vital Prepa infrastructure project. The financially battered government power utility, which is amid restructuring negotiations with its creditors, is still studying financing alternatives for the project, which is called the Aguirre Offshore Gasport. Prepa officials have said those options include a local bond issue via the Government Development Bank (GDB) or a public-private partnership (P3), but the financial constraints of Prepa and the GDB, both of which carry junk-bond ratings, will make both options more difficult.
Prepa Executive Director Juan Alicea Flores said recently that the utility’s first option for the project is to get federal government backing in the form of funding or a warranty.
As part of several contracts signed with Excelerate last March, Prepa is responsible for arranging the financing for the project, estimated to cost a total $350 million.
Excelerate itself may also lack the financial firepower to build the facility, as it has been having problems converting investment pledges into cash commitments, according to analysts.
With oil prices collapsing by about 50%, the company has put on hold plans to build an eight million-ton-per-annum liquefied natural gas export plant moored at Lavaca Bay, Texas, according to filings with FERC. Excelerate said the steep oil-price decline has forced it to make a “strategic reconsideration of the economic value of the project.”
By : JOHN MARINO“Construction and operation of the project would result in mostly temporary and short-term environmental impacts; however, some long-term and permanent environmental impacts would occur. The FERC staff concluded that approval of the proposed project, with the mitigation measures recommended in the EIS, would result in limited adverse environmental impacts,” FERC concluded.
The final EIS comes months after a draft EIS was published that was subjected to a public comment period.
Since that draft, the U.S. Department of Transportation (DOT)’s Pipeline and Hazardous Materials Safety Administration (PHMSA) said that a portion of the pipeline running through Jobos Bay didn’t comply with federal regulations requiring “burial below natural grade sea bottom or an alternative equivalent protection system from hazards.”
Texas-based developer Excelerate Energy, which is developing the project, modified the design to meet federal standards, according to FERC. The new plan will bury the offshore pipeline “to at least below natural bottom in some locations and to 3 feet to the top of the pipeline in other locations, with the exception of approximately 1,700 feet through the area across the Boca del Infierno pass,” where developers proposed a direct lay over the coral reef with protective concrete mats placed over the pipeline, according to FERC.
Daniel Hanson, an analyst at Height Securities in Washington, D.C., said that PHMSA, the Army Corps of Engineers and the U.S. Coast Guard may have some lingering concerns about the engineering rigor around the pipeline's proposed construction and believes Excelerate is “under pressure to convince FERC's conferring agencies that their plan for the pipeline is sufficient to ensure the safety of gas delivery even in severe and extreme weather conditions.”
Noting that pipeline and financing concerns could still scuttle the project, Hanson said construction wouldn’t begin until after September and the plant would not be operational until at least next spring.
Financing may be the bigger threat, however, to this vital Prepa infrastructure project. The financially battered government power utility, which is amid restructuring negotiations with its creditors, is still studying financing alternatives for the project, which is called the Aguirre Offshore Gasport. Prepa officials have said those options include a local bond issue via the Government Development Bank (GDB) or a public-private partnership (P3), but the financial constraints of Prepa and the GDB, both of which carry junk-bond ratings, will make both options more difficult.
Prepa Executive Director Juan Alicea Flores said recently that the utility’s first option for the project is to get federal government backing in the form of funding or a warranty.
As part of several contracts signed with Excelerate last March, Prepa is responsible for arranging the financing for the project, estimated to cost a total $350 million.
Excelerate itself may also lack the financial firepower to build the facility, as it has been having problems converting investment pledges into cash commitments, according to analysts.
With oil prices collapsing by about 50%, the company has put on hold plans to build an eight million-ton-per-annum liquefied natural gas export plant moored at Lavaca Bay, Texas, according to filings with FERC. Excelerate said the steep oil-price decline has forced it to make a “strategic reconsideration of the economic value of the project.”
FERC publishes Aguirre Gasport EIS, but financing challenges remain
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