Washington state regulators agreed they will not oversee the portion of the proposed Tacoma LNG facility that would sell fuel for ship bunkering and high-horsepower applications.
The ruling yesterday by the Washington Utilities and Transportation Commission will allow regional utility Puget Sound Energy (PSE) to move forward with the $275mn project at the Port of Tacoma, Washington.
In 2008 Australian bank Macquarie led a group of investors that bought PSE for $7.4bn. One of the conditions imposed by regulators at the time was that PSE would not expose rate-payers to unnecessary risk.
The state does not have jurisdiction to regulate LNG sales for bunkering and high-horsepower applications. A settlement was reached in late September under which the parent company of PSE, Bellevue, Washington-based Puget Energy, would be allowed to form a new subsidiary called Puget LNG that would be the primary owner of the Tacoma LNG plant.
Puget LNG would not be regulated and would own 57pc of the planned infrastructure that would produce, distribute and store LNG for bunkering and other high-horsepower applications.
Regulated utility PSE would own about 43pc of the infrastructure, which would be used to produce, store and distribute LNG to help meet peakshaving demand for gas customers.
The governor-appointed utilities and transportation commission approved the settlement after concluding that rate-payers would not be exposed to risks incurred by Puget LNG. Joint ownership with an unregulated affiliate will allow PSE customers to save tens of millions of dollars in building the plant, according to testimony in regulatory proceedings.
The facility is scheduled to come on line in 2019 with initial production capacity of 250,000 USG/d, equivalent to 156,000 t/yr of LNG, or 21mn cf/d (590,000 m³/d) of gas, and could be doubled to 500,000 USG/d. It would have storage capacity of 8mn USG, equivalent to 667mn cf of gas.
The project is largely backed by a 10-year contract beginning in January 2019 for PSE to sell TOTE Maritime about 39.6mn USG/yr of LNG, equivalent to about 9mn cf/d of gas.
TOTE is retrofitting two Orca-class vessels to run on LNG in addition to diesel. The vessels carry truck trailers and other goods between Tacoma and Anchorage, Alaska. TOTE, which can unilaterally extend the contract for up to 15 years, wants to use LNG to help it comply with new regulations significantly limiting sulfur emissions.
