Florida’s LNG industry has reached a watershed moment — new regulatory changes combined with the economic incentives surrounding liquefied natural gas has created a turning point at which Florida could become a hub for the burgeoning industry.
The Southeast has an opportunity to capitalize on a growing industry whose demand is rising exponentially due to environmental regulations combined with economic benefits of switching from traditional fuels. Advocates say Florida has a chance to be a small-scale distribution hub that can facilitate and exploit a budding industry and open Florida up to other markets.
Jacksonville has recently witnessed a few firsts in the LNG sector, including becoming the only U.S. East Coast port to offer on-dock and near-dock fueling capabilities.
Texas-based Eagle LNG recently announced an export-plant out of Jacksonville, a move which the company believes will solidify Florida’s place in the small-scale distribution market.
Linda Berndt, Eagle LNG’s vice president of government and public relations, said that Florida’s location was critical in its decision to put an export plant in Jacksonville because of the workforce that’s available, as well as the geographic location.
“Florida, from a standpoint of being close to the market, having that proximal location, is absolutely critical to the sales of the fuel,” said Berndt.
She added that she expects the Florida LNG industry to see steady continued growth over the next few years. Eagle LNG will continue to build the infrastructure to support that growth, but in a way that keeps prices low and competitive compared to other fuel sources, Berndt said.
Eagle LNG partnered with Crowley Fuels in 2018 to supply fuel for a Puerto Rican pharmaceutical company .
Matt Jackson, Crowley’s LNG vice president, agreed that infrastructure is key to further developing Florida’s LNG industry.
Jackson said that there are three things that drive the small-scale LNG market: supply, infrastructure and regulations for low emissions — all of which Florida has.
“This whole small-scale market has been developing because of access to natural gas and the ability to get it cost effectively, on a reliable performance,” Jackson said. “In addition to that, another big driver in the marine space, IMO 2020, the low-sulfur regulations set in place to reduce vessel emissions.”
Crowley’s LNG business is focused on the small-scale distribution side. They’ve created a “virtual pipeline” from Jacksonville to Caribbean and work with industrial partners in Puerto Rico and help them replace their current fuels with LNG, which is more cost effective and environmentally friendly. Jackson added that Florida is vital to Crowley’s LNG operations.
That growth has been driven by the two shipping lines — Crowley and Tote Maritime — that are using LNG-powered ships, as well as the export industry and the Florida East Coast Railway, which is also powered by LNG.
However, infrastructure and development is key to facilitating and sustaining that growth. Florida’s business friendly stance has been a big driver in attracting the industry to the state.
Jacksonville has two LNG plants already and Port Canaveral offers ship-to-ship bunkering for LNG powered ships. Of the 80 new cruise ships on order, 26 will operate on LNG and one Carnival ship already is running on LNG.
Carnival announced in September that it would be expanding its terminal in Port Miami to accommodate its new LNG fleet. The terminal is set up open in October 2022.
Both Jackson and Berndt agreed that while the industry has certainly seen growth, it’s still in its infancy.
Less than 1 percent of the world’s ships are LNG powered, Jackson said. And IMO 2020 has led to more of slow rise in growth, rather than the sharp uptick many expected, Berndt said.
“There’s almost no reason to convert existing ships, like what Crowley uses in trade between Jacksonville and Puerto Rico,” said Berndt.
Both agreed that there would be growth, albeit gradual. What it’s really going to come down to is cost savings. LNG is priced 50 percent to 75 percent less than diesel on an energy equivalent basis, according to a study by the Florida Ports Council. Providing the economic incentive could fuel the growth of the industry.
“That’s always the motivator for making the change to conversion of natural gas,” said Berndt. “But in all the years I’ve been doing this, we’re seeing a lot more interest, a lot more development because of that cost savings and we have the numbers to back it up."