Hawaii Gas

Only a few months ago, it seemed likely that Hawaii’s electric and gas utilities would wean themselves off crude oil and naphtha-based gas in favor of liquefied natural gas (LNG). Now though, with oil prices low—and expected by many to stay low—the Aloha State’s governor says that he thinks the planned shift to LNG would be too costly and that he’ll fight it. The utilities still see LNG as the way to go, pointing to falling LNG prices and natural gas’s environmental benefits over oil. Today, we consider how lower prices for crude oil and LNG are affecting the debate about Hawaii’s energy future.

It seems increasingly likely that Hawaii’s electric utility and gas utility will be leading the Aloha State through a multi-year transition from an oil-based economy to one founded largely on liquefied natural gas—most of it sourced from Western Canada. Hawaii Gas, which currently makes syngas from naphtha, has proposed a two-step transition to LNG that begins with ISO container shipments and follows up with bulk shipments. That meshes well with Hawaiian Electric’s plan—also a two-stepper. Today, we up update our recent series on Hawaii’s big-wave move to LNG-based natural gas.

Hawaiian Electric’s plan to shift quickly from oil to liquefied natural gas (LNG) based natural gas as its primary power plant fuel is ambitious, but is it broad enough to benefit from the economies of scale that a more comprehensive, state-wide LNG program might provide? Hawaii Gas, which distributes synthetic natural gas it produces from naphtha, wants to shift to LNG as its gas source too, and state policymakers and environmentalists are interested in transitioning a significant part of the transportation sector from gasoline and diesel to natural gas. Will Hawaii become an island paradise for LNG suppliers? In this final episode of our Blue Hawaii series, we consider Hawaii Gas’s LNG plans, and assess the potential for an economy-wide shift to natural gas in the Aloha State.

Hawaii is unique among the states. Not only is it a group of islands hours by plane from the US mainland, it alone—unlike the Lower 48 and Alaska—has neither indigenous oil or natural gas of its own nor any pipeline connections. That leaves Hawaii with no choice but to bring in via ship whatever energy it cannot wring from the sun, the wind or the earth (as in geothermal). After decades of burning oil to generate most of its electricity and making synthetic natural gas from naphtha, the state’s electric and gas utilities are moving toward liquefied natural gas (LNG). Today, we continue our examination of the Aloha State’s energy future with a detailed look at Hawaiian Electric’s plan to quickly shift from oil to LNG.