BIPCo considers LNG to create energyLiquefied natural gas could save customers money
Block Island Power Company (BIPCo) is considering using liquefied natural gas (LNG) to produce energy, and is in talks with another company to do so.
BIPCo currently uses diesel to power its generators on-island. But the company is considering a switch so that 50 percent of its energy production will be created by LNG. The other 50 percent will remain diesel.
The move could save ratepayers money, according to the company that may supply the LNG to BIPCo.
According to Clear Energy Chief Operating Officer Evan Coleman, switching to LNG would be 20 percent to 30 percent less expensive for the Block Island Power Company, or an estimated $300,000 to $500,000 savings per year.
These savings would be reflected directly in a BIPCo customer’s bill, according to BIPCo general manager Dave Milner. While these savings may not be as great as the estimated 40 percent overall savings (according to an Electric Utilities Task Group analysis) Deepwater Wind’s wind farm proposal may provide to the island, the LNG proposal could still provide some relief for ratepayers.
“As far as the company [BIPCo] is concerned, we’re going to make zero benefit. The benefit goes strictly to the ratepayers,” said Milner. “We think this is the right thing to do for the ratepayers.”
Clear Energy, based in Marlborough, Mass., plans to provide BIPCo with the gas starting in early 2014, for a three-year period. The two companies have a proposed contract in the works.
Clear Energy would transport the LNG to the island in trailer trucks that have 11,000 gallon capacity.
LNG is natural gas that has been cooled down to increase its density for easier storage and transport. It must be converted back into gaseous form and then burned at the power plant to produce energy. LNG is converted back into a gaseous form by flowing through a series of tubes called an ambient air vaporizer.
All equipment, including the trucks and vaporizer, would be provided and owned by Clear Energy.
“We’re covering all capital costs,” said Clear Energy COO Coleman, who said that as a result, BIPCo customers would not have any of the capital expenses for the LNG conversion reflected in their rates.
Coleman said that Clear Energy hopes to sign a three-year contract with BIPCo. BIPCo would be required to purchase at least 50,000 gallons of LNG per year.
But with Deepwater Wind’s proposal to build five wind turbines off the coast of Block Island and connect the island to the mainland power grid with a submarine electric cable, some seemed wary about the necessity of using LNG.
“Why would the company [Clear Energy] make this investment if it could be terminated in two to three years,” asked Electric Utilities Task Group (EUTG) member Bill Penn, referring to the possibility of Deepwater.
“If we can deliver to an island then we can deliver anywhere,” Coleman said. He also said that Clear Energy is getting “good margin” on the sale.
Also, if Deepwater Wind becomes operational during the contract period, the contract has an “out clause,” said Coleman.
Deepwater CEO Jeff Grybowski said BIPCo’s plans would not affect Deepwater’s plans. “We’re going to proceed with that project regardless of what BIPCo’s doing,” he said.
Island residents weighed in on the LNG project’s potential impact on Deepwater.
“For the small amount of savings it [the LNG] would potentially have, I don’t think it outweighs the environmental issues of transporting the fuel and the natural gas production,” said island resident Dorrie Napoleone. “It still doesn’t give us the long sought-after cable.”
Sven Risom agreed with Napoleone. “LNG will not get us the cable,” he said. However, he added that it could still help the island. “I think we have to find a way to lower our energy costs. It would be nice to have a safer, cleaner and cheaper core [energy source].”
“Off the cuff, one question is: how much less are we going to pay for energy — perhaps only three times as much than those on the mainland rather than five times,” said Jon Emsbo.
“In my mind, it’s [LNG] a better option in the meantime until Deepwater happens,” said Norris Pike. However, Pike said he would prefer compressed natural gas (CNG) over LNG.
Safety and environmental concerns
The stability and transport of LNG, especially while it would be in transport to and on the island, was also discussed at the EUTG meeting on Monday, May 20. Two LNG trucks would need to be transported to the island by the ferry charter every five days, according to Milner.
“I think Block Island is really going to want to know the safety issues,” said Bill Penn of the EUTG.
“Safety is a priority,” responded Coleman, who claimed LNG is “much safer than propane.” There has to be a very precise ratio of natural gas vapor to air in order to explode, Coleman said.
“Our entire system is outdoors,” said Coleman, who said that if the gas leaks, it would evaporate into the air. “It would be very hard to achieve an explosion.”
Coleman also said that as far as transportation goes, the company’s trucks are double-walled, while propane and oil trucks, have a single wall.
“The double wall gives another layer protection should there ever be an accident,” said Coleman.
Additionally, if LNG mixes with water, it evaporates and causes no contamination, said Coleman. “It’s a safe alternative to both oil and propane as for how it can impact water,” he said.
Coleman said that Clear Energy would work with the town rescue squad and fire department, and would pay for required safety training. He said there would be no special chemicals required to handle an emergency situation.
BIPCo would monitor the equipment onsite, and Clean Energy would monitor its trucks remotely.
In addition to costs savings, the switch to LNG would be better for the environment, as Coleman said that oil produces higher emissions compared to LNG.
“This does drop our emissions,” agreed Milner, who said much of his job currently is working with the R.I. Department of Environmental Management’s clean air regulations. “This is going to be a win-win for us.”
However, First Warden Kim Gaffett said she was concerned about the source of the LNG, which could come from fracking. Fracking is the process of fracturing rock layers to release natural gas that has drawn much opposition from environmentalist groups for damage it can cause to the environment.
“Our firm doesn’t actively participate in fracking, but our associates do,” said Coleman.
Gaffett said that if Clear Energy truly were concerned about the environment, it would source from only companies that use safe fracking methods. Coleman said his company did not have this capability.
Coleman noted that the current fuel used to power the generators on the island — diesel — could come from fracking.