By Kevin Mead From Caribbean Business

AES Corporation is pitching its liquefied natural gas (LNG) infrastructure in the Dominican Republic as a potential hub to supply cleaner, cheaper energy to other Caribbean islands.

“The confluence of market forces, required infrastructure and political will has created a window of opportunity to continue to diversify the energy mix in the Dominican Republic and throughout the Caribbean,” AES Corp. Chairman Andres Gluski said in recent testimony in Congress.

Gluski’s appearance on Capitol Hill came amid heightened lobbying efforts spearheaded by the Puerto Rico government aimed at spurring federal approval for a $253 million LNG terminal in Puerto Rico. Last week, Sen. Marco Rubio, a Florida Republican, threw his weight behind the effort with a letter to the Federal Energy Regulatory Commission (FERC) voicing his concerns that the Aguirre Offshore GasPort proposed for Puerto Rico’s southern coast has fallen far behind schedule.

The Puerto Rico government and Puerto Rico Electric Power Authority (Prepa) earlier this summer urged federal regulators to fast-track approval of the project that is the cornerstone of the public power utility’s strategy to drive down sky-high energy costs and meet tighter U.S. pollution restrictions on the horizon.

The Aguirre Offshore GasPort has fallen well behind scheduled as it awaits the green-light from Washington, prompting Puerto Rico officials to step in to try to get the project back on track.

Houston-based Excelerate Energy has missed a target to launch construction in the first quarter of this year and faces further delay well into 2015 as it awaits regulatory approval. It plans to build the marine terminal through its Aguirre Offshore GasPort LLC subsidiary to feed Prepa’s Aguirre plant, the largest in the public utility’s system and the core plank in the government monopoly’s plan to ramp up the use of natural gas.

Aguirre LLC’s April 2013 application with FERC anticipated a final environmental impact statement (FEIS) being issued by the fourth quarter of 2013 with construction beginning in the first quarter of 2014 and lasting between 9 months and 12 months.

However, FERC said in filing in May that it plans to issue a FEIS on December 19, 2014, which results in a deadline of March 19, 2015 for other federal agencies to conclude their review of the aspects of the proposal under their jurisdiction.

Meanwhile, LNG is taking an ever-more prominent place in the Dominican power matrix and could branched out to other parts of the Caribbean that are grappling with the cost of their reliance on oil-fired power, Gluski said.

Gluski outlined the transformation of the Dominican Republic’s energy matrix since AES opened the first LNG terminal in the Caribbean there just over a decade ago. Natural gas usage went from zero in 2000 to providing 22% of the country’s overall energy usage in 2011.

“The arrival of LNG in the Dominican Republic has had a transformational impact on the energy sector, reducing dependence on imported oil from 71% to 36%,” Gluski told members of the U.S. House Committee on Foreign Affairs during a subcommittee hearing on bolstering Dominican economic growth and independence.

“Reducing the country’s dependency on oil is one of the most important results of the growing market for LNG, as it provides a more balanced energy matrix for the country and relieves pressure on the economy by reducing the amount spent on oil related subsidies, reducing electricity rates, promoting competitive growth for local industries and reducing the exchange rate effect over the Dominican peso,” the AES chief added.

Virginia-based AES owns and operates a 454 megawatt (MW) coal-fired cogeneration facility located on the southeastern coast of Puerto Rico. The project sells all of its firm energy and capacity pursuant to a 25-year power purchase agreement to the Puerto Rico Electric Power Authority, a public corporation and governmental agency of the Puerto Rico government. The project began operating in 2002.

AES was the first company to bring natural gas to the Dominican Republic and the first to use it as a fuel source to generate electricity. .It is currently among the largest electricity companies in the Dominican Republic, operating 850 MW of generation capacity, which represents 23% of the currently installed capacity in the country. It has invested over $850 million in the Dominican Republic energy sector and are the largest U.S. investor in the country.

Gluski lauded the Dominican government’s support for the use of natural gas in the power sector and beyond. . In 2007, the government declared the use of natural gas a matter of national interest and issued a mandate to promote the increased its use. The government also established an organized framework to create technical standards, technician certifications and licensing processes for companies that work on any natural gas installations or LNG equipment in the country.

As a result, a new market exists where natural gas is sold on a daily basis to 6 wholesale distributors who in turn supply as many as 65 large industrial and commercial customers, Gluski said.

The AES said his company and the Dominican Republic are well positioned to help islands in the region reduce their dependence on foreign oil that, with its high volatility and high prices, has contributed to the economic and political instability of the Caribbean.

“The instability of the energy matrices has made Caribbean economies vulnerable and depressed economic growth,” Gluski said.

He pointed to the Atlantic Council’s recently-published report, “Uncertain Energy: The Caribbean’s Gamble with Venezuela,” that found the future of Venezuela’s Petrocaribe Agreements, which provide low-cost, long-term financing for petroleum imports from that country, is increasingly uncertain. The financial assistance that Petrocaribe provided countries in the Caribbean and Central America in 2013 totals $1.9 billion, including $470 million for the Dominican Republic, $370 for Jamaica and $220 for Haiti. Providing these countries with natural gas from an efficient hub in the Dominican Republic could alleviate the uncertainty of continued dependence on Petrocaribe.

“By expanding current AES LNG infrastructure, the Dominican Republic could become the center of a ‘Hub and Spoke’ system whereby LNG would be imported from the U.S. in large, efficient tankers and then re-exported in smaller volumes, likely as LNG or as compressed natural gas (CNG), to various Caribbean islands,” Gluski said.

An independent Castalia Strategic Advisors study prepared for the Inter-American Development Bank (IDB) found that the LNG infrastructure in the Dominican Republic provides an opportunity to transform the Caribbean’s energy matrix, according to Gluski. Specifically, the study stated, “The Dominican Republic may be the best option for a physical hub in the Caribbean because it is centrally located, and because AES Dominicana already has LNG facilities and operations in place there.”

Smaller LNG import terminals would be built in other Caribbean islands under the AES Gluski said new U.S.-based liquefaction facilities in the Gulf states would also benefit, as it is significantly less expensive to ship U.S LNG to the Caribbean than it is to more distant markets in Europe and Asia. Furthermore, signatories of Free Trade Agreements, such as the Dominican Republic, are countries with which the United States shares long-term ties of friendship and cooperation, he added.

Smaller LNG import terminals would be built in other Caribbean islands under the AES model.

To make this project a reality, significant investments from local and international private sector companies will be needed to develop the necessary facilities and market infrastructure, he acknowledged

“The expansion of our existing LNG facility provides the fastest and least costly way to increase the availability of natural gas in the Caribbean,” Gluski told Congress.

For more on this story go to: http://www.caribbeanbusinesspr.com/news/aes-pitches-dr-as-hub-of-us-sourced-natural-gas-network-in-caribbean-99282.html