Containerized export of liquefied natural gas (LNG) holds the promise of connecting U.S. island states and territories with the mainland’s shale gas boom, according to the U.S. Energy Information Administration (EIA).

Hawaii and the territories of Guam, the Northern Mariana Islands, and American Samoa in the Pacific, and Puerto Rico and the U.S. Virgin Islands in the Caribbean, have historically relied on imported petroleum for energy, including to fuel power generators. High oil prices in recent years have driven up electricity prices. Natural gas offers a less-expensive and cleaner alternative.

Abundant gas supply in the Lower 48 states and smaller-scale standardized LNG shipping containers mean that suitable volumes of liquefied gas can be trucked, railed, and shipped like other containerized cargo. Once received by ship, the LNG is connected to portable regasification units adjacent to power plants or industrial facilities. The containers are typically filled on the mainland at utility peak-shaving units or, more recently, at small-scale liquefaction plants built to serve transportation, industrial, and marine uses.

Hawaii and Puerto Rico have diversified their power generation with the addition of coal-fired plants but are also turning to LNG. Puerto Rico has one independent power plant operating on natural gas, imported as LNG at a terminal adjacent to the plant. The Puerto Rico Electric Power Authority has also converted a nearby petroleum-fired generating station to use imported LNG and is planning to convert a second power station.

FERC recently issued a draft environmental impact statement for an LNG terminal offshore Puerto Rico (see Daily GPI,Aug. 7). Late last year, Crowley Maritime Corp. commissioned construction of two of the world’s first LNG-fueled combination container and vehicle transport ships to provide shipping and logistics services between the United States mainland and Puerto Rico (see Daily GPI, Nov. 27, 2013).

Crowley Maritime last year acquired Carib LNG LLC (see Daily GPI, May 9, 2013), which is licensed to export containerized LNG from the United States to free trade agreement countries and is seeking authorization to export to non-FTA countries (see Daily GPI, Oct. 25, 2013; Aug. 2, 2011).

Utilities in Hawaii and industry in Puerto Rico are testing the economics of small-scale LNG imports. Hawaii’s first shipment using a standardized cryogenic container was completed in April, taking approximately 7,100 gallons (about 0.67 MMcf) of LNG from a liquefaction plant in Boron, CA, through the port of Los Angeles to Honolulu (see Daily GPI, April 10). The LNG was regasified and injected into the Hawaii Gas distribution system. This LNG was the first nonsynthetic gas ever put into the system, according to EIA. Hawaii Gas typically makes a synthetic gas from a naphtha feedstock produced in one of the state’s two crude oil refineries.

Also this spring, power utility Hawaiian Electric took bids on having containerized LNG delivered to eight power plants on Hawaii’s five main islands, requesting 800,000 metric tons (about 39 Bcf) annually. The utility is evaluating whether LNG prices justify switching to natural gas from diesel and residual fuel oils. A recent study found that reliance on LNG to fuel power generation instead of fuel oil could greatly reduce electricity bills for Hawaiians (see Daily GPI, Jan. 9, 2013).

In Puerto Rico this fall, two privately owned bottling plants in the island’s industrial north are expected to begin receiving containerized LNG shipments (see Daily GPI, March 12). The LNG is be procured through third-party suppliers from southeastern U.S. peak-shaving plants, shipped from Jacksonville, FL.