Mexican LNG cargo on the way to Puerto Rico as US player seeks to keep its import and regasification terminal open for business

U.S. energy infrastructure player New Fortress Energy (NFE) has wrapped up another liquefied natural gas (LNG) cargo loading at its floating LNG (FLNG) unit off the coast of Altamira, Mexico. This cargo is destined for the firm’s LNG import and regasification facility in Puerto Rico, which the U.S. firm is interested in continuing to operate. As a result, the Federal Energy Regulatory Commission (FERC) is laying the groundwork for a draft environmental impact statement (EIS) covering the terminal’s impacts on the environment to determine whether it is in the public interest to keep the project going.

The cargo, which got loaded onto the BW Pavilion and set sail for NFE’s operation in Puerto Rico, came from the U.S. firm’s Fast LNG (FLNG) unit, also known as FLNG 1 and made up of three repurposed jack-up rigs off the coast of Altamira. This is the Mexican FLNG asset’s third cargo loading operation, following the loading of the unit’s Europe-bound LNG cargo onto the Energos Princess less than two months after the completion of the first cargo load and sail operation.

The Altamira Fast LNG 1 asset, which is producing at or above its nameplate capacity of 1.4 million tons per annum (mtpa), is envisioned to help pave the way for the establishment of a new FLNG hub off the east coast of Mexico. To this end, NFE secured a blessing from the U.S. Department of Energy (DOE) to export LNG to non-free trade agreement (non-FTA) countries from the facility for a term of five years, and obtained a loan to build its second installation, FLNG 2, with construction works scheduled to be over in the first half of 2026.

Barry Clayton, NFE’s Senior Vice President of FLNG Operations, commented: “We are excited that we have achieved full nameplate performance and believe there is room for further production gains as we continue to commission our facility. Now that we have reached full production¹, our focus is on the continuous reliability and production of our installation. This is a significant milestone for our FLNG unit and team, and we are very pleased with the progress we have made to date.”

Meanwhile, New Fortress Energy’s Puerto Rican subsidiary, NFEnergía, has proposed to continue operating its LNG import and regasification project at Wharves A and B of the Port of San Juan, which is perceived to be within existing industrial uses in northern Puerto Rico where it can supply natural gas. The operations at the facility are enabled by vessels, which bring LNG into the San Juan Harbor where it is transferred from the vessels to a non-jurisdictional floating storage unit semi-permanently moored adjacent to the project site.  

With a regasification capacity of 120 million standard cubic feet per day (mmscfd) of natural gas and a truck gas loading capacity of 87.52 mmscfd or around 1,060,000 gallons of LNG per day, the unit then transfers LNG onshore where some of it is loaded onto trucks for over-the-road delivery to end users while the remaining LNG is regasified and made available to units 5 and 6 of the adjacent San Juan power plant using an existing 75-foot-long, 10-inch-diameter segment of power plant piping.

NFE, which constructed and operates a 220-foot-long, 10-inch-diameter pipeline at the LNG facility, deems it to be necessary to supply natural gas to the U.S. Army Corps of Engineers emergency temporary generation project, which is part of the ongoing efforts of the Puerto Rico Grid Stabilization Task Force, a joint operation between the U.S. Army Corps of Engineers, Environmental Protection Agency, Department of Energy, and Federal Emergency Management Agency, charged with restoring Puerto Rico’s power system reliability.

New Fortress Energy, which supplies natural gas to the power plant from its micro fuel handling facility in the Port of San Juan, is interested in continuing to meet existing demand for imported natural gas for delivery to Puerto Rico commercial and utility customers; supporting the country’s grid stability, and complying with fuel supply obligations for natural gas-fired electric generation to maintain the country’s fuel diversity and energy supplies.

Aside from this, the firm claims to be intent on enabling electric generation that supports improvements in air quality in the San Juan region while reducing sulfur dioxide emissions and supporting efforts made by the Puerto Rico Electric Power Authority (PREPA) to achieve regional emissions reductions and also slash electricity rates and fuel costs for its customers. 

After a decade of multiple conversion attempts, PREPA launched a competitive request for proposal (RFP) bid process in July 2018 for the supply of fuel and the conversion of San Juan power plant’s units 5 and 6, after which NFEnergía’s bid was selected as the winner, thus, the duo entered into a contract in 2019 for the supply of natural gas and conversion of units 5 and 6 of the San Juan combined cycle power plant.

The two players agreed on a five-year initial term of the contract, which also offered the Puerto Rico Electric Power Authority options to extend the deal for three additional five-year periods. At the time, PREPA estimated that the conversion of the units from diesel to natural gas would generate around $750 million in fuel cost savings over five years and significantly reduce emissions.

In the wake of NFE’s proposal to keep its Puerto Rican LNG terminal in operation, FERC disclosed that its staff had identified several expected impacts such as air quality, noise, and safety that deserve attention in the EIS concerning the project’s environmental impact analysis, which is limited to operational impacts of the existing facility.

Therefore, the commission’s draft EIS will discuss impacts that could occur as a result of the operation of the project under the general resource areas, encompassing geology and soils; water resources and wetlands; vegetation and wildlife; essential fish habitat; threatened and endangered species; cultural resources; socioeconomics and environmental justice; land use; air quality and noise; and reliability and safety.

Recommendations on how to lessen or avoid impacts on these resource areas will be included. The U.S. Coast Guard, together with the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration, are cooperating agencies in the EIS preparation while public comments are expected to help FERC staff focus its analysis on the issues that may have a significant effect on the human environment.

All necessary reviews of the project and a final decision on the request for federal authorization are expected within 90 days of the final EIS, which will be based on the issuance of the draft EIS in May 2025, opening a 45-day comment period that will be used to gather views on the draft EIS and revise the document, as necessary, before issuing the final one. 

FERC, which is asking the public and interested agencies to submit comments regarding any additional alternatives, including alternative facility sites, underlines that the EIS will evaluate reasonable alternatives that are technically and economically feasible and meet the purpose and need for the proposed action related to NFE’s San Juan micro-fuel handling facility project.

The commission’s notice regarding the opening of the scoping process is part of the National Environmental Policy Act (NEPA) review process. Those interested in providing their views can submit comments to FERC by November 25, 2024.