New Fortress Energy has come under fire from the US Federal Energy Regulatory Commission (FERC) over its newly opened LNG import facility in Puerto Rico.
FERC commissioners have slapped an order on Nasdaq-listed New Fortress giving the company 30 days from 18 June in which it must show why its small-scale San Juan LNG facility is not subject to the agency's jurisdiction.
Wes Edens-led New Fortress, which recently tendered for two floating storage and regasification units, brought its San Juan terminal in Puerto Rico online this year and expects to fire up a fourth import facility in Mexico later in 2020.
The company also has two existing LNG import facilities online in Jamaica that use a mix of FSRU and small-scale LNG tonnage.
In its order, FERC stated that it has the exclusive authority to approve or deny an application for the siting, construction, expansion, or operation of an LNG terminal. The US regulator said New Fortress’ San Juan facility falls under these criteria.
FERC said the San Juan terminal consists of a receiving pier for an LNG carrier with an offloading hose, a truck loading facility, skid-mounted regasification units and potentially, small capacity onshore LNG storage.
The commission pointed out that it has previously approved two LNG terminals for Puerto Rico – the existing EcoElectrica facility and the planned Aguirre Offshore GasPort.
Drawing similarities with New Fortress’ San Juan plant, FERC said that the EcoElectrica terminal delivers gas to a nearby power plant and the Aguirre offshore port did not include any onshore storage.
“New Fortress Energy’s facilities are not similar to those the Commission has found to be non-jurisdictional,” FERC said.
The commission also noted that the previously approved LNG terminals include where natural gas is transported interstate by vessels and extends to facilities in Puerto Rico that receive LNG produced in the US.
“It appears that New Fortress Energy has constructed dedicated LNG facilities that directly offload LNG from tankers, regasify the LNG, and then transport the natural gas to an adjacent power plant, presumably via a short pipeline,” FERC said.
The commission said the San Juan terminal appears to be subject to its jurisdiction. “Fortress Energy is directed to show cause why its construction and operation of the subject facilities are not subject to the prior authorisation requirements,” the agency said.
FERC's order follows a report issued this month by The Institute for Energy Economics and Financial Analysis (IEEFA) which raised questions about the award of a $1.5bn contract by the Puerto Rico Electric Power Authority to New Fortress for the conversion to natural gas of two San Juan power generation units and the fuel deliveries to them.
