Puerto Rico Electric Power Authority, in the midst of a restructuring of its business, moved a step closer Tuesday to cutting costs through the use of natural gas rather than oil for electricity production.
The Federal Energy Regulatory Commission gave PREPA authorization to build of a marine terminal for receiving, storage and regasification of liquefied natural gas off of Aguirre, off the southeastern coast of Puerto Rico, on Friday. Technically, the commission confirmed the final Environmental Impact Statement, which had a finding of no significant environmental impact.
PREPA is in negotiations with its bondholders over how to restructure over $9 billion in debt including more than $8 billion in bond debt. Any restructuring of the bond debt would make PREPA the biggest defaulter on United States municipal bonds in history.
The gas port was PREPA's first scheduled capital spending project in a June 1 PREPA business plan, released by chief restructuring officer Lisa Donahue. In the plan the authority expected to spend $481 million in this fiscal year and next on the project.
The authority was investing in the project in order to improve system reliability, reduce its fuel costs, and comply with federal Mercury and Air Toxics Standards.
The approval of the Aguirre Offshore Gas Port is a "major step" for the project, PREPA said in a press statement. "This project is critical for PREPA to reduce the cost of energy in Puerto Rico and to reduce the emission of air pollutant," said PREPA interim executive director Carlos Castro.
The commission approved the gas port on several conditions, including that the authority gain additional federal permits.
The port is expected to be three miles off the coast of Puerto Rico, near Salinas and Guayama. Also part of the plan is a 4.1 mile long subsea pipeline connecting the gas port to the Aguirre port. The port will also include a floating storage and regasification unit moored at the gas port on a semi-permanent basis.
The facility will provide fuel to PREPA's Central Aguirre Power Complex, one of the authority's largest power plants.
Excelerate Energy expects to start construction of the site in the first quarter of 2016 and that the site will be put in service in the second quarter of 2017.
