The Dominican Republic – an LNG benchmark

Sampo Suvisaari
General Manager, Wärtsilä Central America

The Dominican Republic was the second island in the Caribbean to receive the benefits of an LNG import terminal, but has since come to embody developments remarkable even on a global scale. The country’s private LNG import terminal was constructed almost ten years ago, together with a 300 MW power plant that, in the early years, was exclusively fuelled by gas.

In 2008, AES, the private company that owns the terminal, started offering gas for industrial customers, to be used instead of diesel in boilers and other factory processes. The response was very positive, and many factories now get their LNG delivered by truck from the AES terminal through distribution companies. In addition to industrial use, gas has also been successfully promoted as a transport fuel. Already thousands of cars in Santo Domingo use clean natural gas for fuel. This is a very significant figure, and a great benchmark for other forward-thinking cities worldwide. Few other places in the world are so advanced in their use of natural gas as transport fuel.

Seaboard, a Wärtsilä customer, made a gas supply agreement with the LNG terminal’s owners in 2010 to supply gas to their new 106 MW Flexicycle™ floating power plant in Santo Domingo. The 430 MW Quisqueya combined cycle plant, Wärtsilä’s first land-based Flexicycle™ power plant, will be another noteworthy addition to the country’s LNG-capable roster. Located in San Pedro de Macoris, the plant will be equipped with 24 Wärtsilä 18V50DF dual-fuel engines and will begin electricity production in 2013.

By this point, it is perfectly clear that LNG will become an important fuel in Central America and the Caribbean. The main unresolved questions simply concern when the next LNG import terminal will be constructed and where it will be located. Three official announcements have already been made for new terminals, but things frequently change fast in this industry, and there are no certainties as to which projects will be realised and at what precise point in time.

Another key question is what we call small-scale LNG. When will we see LNG distribution with smaller LNG ships (10-30,000 m3) become more commonplace?

The problem with LNG gas infrastructure is that until recently only large terminals were considered feasible. But small and medium-scale LNG storage and transportation technology has made significant advances in recent years, bringing costs down and offering more alternatives. This means that more and more unconnected regions, such as islands, may now consider LNG an alternative.

Wärtsilä’s dual-fuel engine technology is an ideal solution to this chicken and egg dilemma. These engines are designed with the necessary flexibility in mind, meaning that they can be operated on heavy fuel oil indefinitely. This means that the investor is not forced to make a gas terminal investment at the same time as their power plant investment. The power plant contract can be separate from the LNG supply contract. Once the power plant is under construction or ready, it becomes significantly less risky for whoever builds the gas terminal (and this need not be the power plant owner) to set things in motion.

Wärtsilä’s dual-fuel technology also, of course, makes it possible to take advantage of changeable fuel costs, previously something of a bugbear. If one type of fuel sees a temporary jump in fuel costs, it is always possible to go back to the other fuel, for as long or short a period as circumstances merit.

Looking forward to the immediate future, one of the most highly awaited developments in this sphere is the construction of LNG export terminals on the US Gulf of Mexico coast. Both Cheniere and Freeport LNG have announced plans to build liquefaction facilities to export gas from the US, which has enormous implications for the Dominican Republic and, indeed, the entire region. The two companies built large LNG import terminals some years ago when the US was relying on gas imports, and expected this trend to continue. Since then, the availability of domestic shale gas has taken everyone by surprise, and the country is not only going to become self-sufficient in natural gas, but also develop into a net exporter of gas (in the form of LNG).

Since the locations of Cheniere and Freeport LNG on the US Gulf of Mexico coast are very convenient for both Central America and the Caribbean, they are seen as very good candidates for LNG supply to the region in addition to the current supply from Trinidad. Pacific Rubiales has also announced plans to export LNG from Colombia, another interesting development.

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