New Fortress Energy Opens Baja California Sur LNG Terminal

New Fortress Energy (NFE) began its commercial operations in its liquefied natural gas (LNG) terminal at the port of Pichilingue, Baja California Sur on Friday, July 16. The growing LNG-player aims to supply natural gas to two CFE power plants, as well as a third one from NFE, which is expected to become operational in the near future.  

“The delivery of more affordable and cleaner-burning natural gas is a significant milestone for Baja California Sur,” explained Wes Edens, Chairman and CEO of NFE. “Our facility will enable customers to significantly reduce emissions and costs by switching from oil-based fuels to natural gas.”

Through the new terminal, NFE will supply between 20,000-40,000 MMBtu/d of LNG to CFE power plants TG La Paz and CTG Baja California Sur. The terminal features a truck-loading operation so that NFE can supply LNG to local industrial operations and hotels through the company’s ISOFlex system. The ISO storage containers allow for easier offloading onto trucks, which saves time and makes the terminal more efficient.

The company’s own gas-fired power plant, features a 135MW nameplate capacity and is  expected to provide energy to Baja California Sur’s isolated grid in 3Q2021.

Aiming to switch consumers from more polluting fossil fuels to cleaner burning natural gas, NFE helps bigger and smaller energy users to switch to LNG. It focuses on such smaller end-users in Puerto Rico, Jamaica, Brazil, Nicaragua and now Mexico.

Natural gas remains an interesting area for investment in the Mexican market. Whereas utility-scale renewable energy project development from private players is slowing down significantly under the government’s energy sector paradigm shift, while demand for natural gas continues to grow. Private investment here remains relatively encouraged. Companies appear willing to bet long-term investments on LNG in particular: IEnova is constructing an LNG export facility next to its Energia Costa Azul regasification plant and Mexico Pacific Limited is proposing a similar project. Both projects would be in the Baja California peninsula, albeit on different ends.

Baja California Sur remains isolated from the national interconnected grid. As a result, energy prices are about 50 percent higher than the national average. As of 2020, the 638MW of inflexible capacity installed is not enough to meet demand on a constant basis, and this has led to 31 blackouts between 2016 and 2020. The issue is expected to worsen substantially because energy demand is growing by the year. In an effort to alleviate the problems plaguing the peninsula, CFE is investing in back-up power and new gas-fueled combined-cycle power plant. Recent reports considering CFE-backed solar plants suggest that the state utility is considering to begin interconnecting the area.