Commercial and industrial customers of Crowley Maritime Corp.’s Carib Energy unit in Puerto Rico soon could be enjoying lower energy costs, thanks to cheap liquefied natural gas (LNG) delivered via container from the mainland United States. But savings for prospective customers in Central and South America and the Caribbean are being delayed by the U.S. Department of Energy (DOE).

Customers are converting from using heavy fuel oil, No. 2 diesel, kerosene and propane for their production facilities and for power generation. In some cases, developing their own gas-fired power generation is allowing them to get off the local grid and save money, Carib Vice President Greg Buffington told NGI.

Power infrastructure in Carib’s market area is generally old and inefficient. Power can cost as little as 26 cents per kilowatt hour to as much as 52 cents, Buffington said from San Juan, Puerto Rico. “Once you do a conversion, you’re going to save between 30 and 40%,” he said. “General payback is somewhere between two and three years for the cost of your gas power plant.”

On Wednesday, Puerto Rico’s governor announced an overhaul of the island’s state-run power company to address allegations of corruption and complaints that power in Puerto Rico costs more than double what consumers pay for electricity on the U.S. mainland.

Industrial conversions to natural gas are even more compelling, offering combined heat and power synergies from firing boilers and ovens with natural gas, Buffington said, generating fuel savings of as much as 40-50%.

However, the savings aren’t as widespread as they could be as Carib is still waiting on U.S. Department of Energy (DOE) authorization to export containerized LNG to non-free trade agreement (FTA) countries. In an Oct. 17 filing at DOE, Carib’s lawyers said the DOE’s “Order of Precedence” for considering non-FTA export applications has disadvantaged Carib relative to other applicants.

With the September non-FTA export approval granted to Dominion Cove Point LNG LP (see Daily GPI,Sept. 13), Carib’s non-FTA application is next in line based upon the chronological order in which applications were filed. However, DOE’s Order of Precedence gives priority to applications for projects that received by Dec. 5, 2012 approval to use the Federal Energy Regulatory Commission’s (FERC) pre-filing process. That puts Carib at No. 7 in the Order of Precedence.

“This newly created [Order of Precedence] review process has put Carib behind several applications filed after Carib because the Order of Precedence inappropriately characterizes Carib’s application as not having received FERC approval to use FERC’s pre-filing process,” the company’s recent filing said.

Carib is not planning to construct an LNG export terminal. So far it has been sourcing LNG for U.S. Territories from existing peak-shaving facilities in the southeastern United States.

For non-FTA exports, Carib is in contract negotiations to finalize an offtake agreement for LNG from BP Energy Co. at a liquefaction facility being developed in Martin County, FL, called Floridian Natural Gas Storage Co. LLC. If DOE “…grants Carib’s non-FTA application, Carib could commence exporting LNG upon completion of the facility at the end of 2015. Unlike other applicants listed on the Order of Precedence, Carib would not have to await further FERC approvals or authorization,” the filing said.

Carib was the first to apply at DOE to export containerized LNG to South and Central America and the Caribbean. Others have followed with similar plans, the company said.

“…[F]or the past nearly three years, Carib has been marketing its prospective LNG sale and distribution solution in its target geographic markets, representing to its potential customers that it could deliver LNG to them in 2014 or 2015,” the filing said. “As a result, certain potential customers of Carib, which have been planning to convert their facilities from diesel fuel to gas in imminent anticipation of being supplied by Carib, are delaying or forgoing such plans, or moving to alternative sources of energy.”

Two other companies recently filed with DOE for authorization to export containerized LNG to FTA countries (see Daily GPI,Sept. 16). Those projects are targeting the Caribbean, too.

Buffington has a 32-year background in the propane industry and has been traveling around Puerto Rico and the Caribbean for business since 1987. “I’m very familiar with these islands and the companies that work here…It was a propane customer who asked me what I knew about natural gas five years ago,” he said.

More than two years ago, Carib received authorization to export LNG to FTA countries in Central and South America and in the Caribbean (see Daily GPI,Aug. 2, 2011). Earlier this year Crowley’s petroleum services group acquired Carib, giving it entry into the LNG business (see Daily GPI,May 9). Crowley has been operating in the Caribbean for nearly 60 years, Buffington said. The company’s liner service carries goods in and out of the islands and now is complemented by the LNG business.

“We are diligently pursuing [LNG] contracts with commercial and industrial customers in Puerto Rico to bring an energy-efficient solution for them to lower their cost of electricity in Puerto Rico,” Buffington said.