New Fortress Energy Inc. management expects demand for liquefied natural gas (LNG) to “significantly” exceed supply through 2039, saying in the third quarter 2021 earnings report that the sub- investment in fossil fuels has made the global market vulnerable.
Investments in oil and gas projects, according to NFE, have fallen sharply in recent years, from $ 800 billion in 2014 to $ 400 billion today. Meanwhile, climate-related events like lack of rainfall in Brazil and inclement weather in China are occurring more frequently and are shaking the market. Global gas prices have skyrocketed this year in response.
This trend places ENF in a position to meet growing demand, especially in underserved markets. Ongoing energy shortages in Brazil led to emergency power measures, including an auction in the south and southeast of the country in October. NFE said 1.2 GW of new power projects were awarded at the auction.
The company’s Santa Catarina terminal under development in the southern region of Brazil could supply more than 900,000 gallons / day of LNG to new power plants.
“I think our terminal is in a great location,” NFE chief executive Andrew Dete said on a call to discuss quarterly results. “Apart from some very limited domestic gas, our LNG terminal is really the main source of fuel for these new plants.
South America has imported significant amounts of LNG this year, especially in Brazil. Cargo arrivals have reached record levels amid a historic drought that has depleted hydroelectric reservoirs and created power shortages. NFE said 18 million gallons / day of LNG is imported into Brazil to meet energy needs, up from historic levels of around 4 million gallons / day.
NFE gained a foothold in Brazil earlier this year when it acquired Golar LNG Partners LP and Hygo Energy Transition Ltd. in a deal valued at $ 5 billion. NFE has taken over an operational import terminal and power station in the country. It is also developing similar assets to the north and south of the Sergipe operational facility. The company has made deals with a wide variety of Brazilian customers this year to support its import terminals and power generation projects there.
Despite its optimistic views on natural gas, the company is also moving forward with plans to deepen its role in the energy transition. Earlier this year, NFE announced that it would form a new company dedicated to the production of hydrogen and renewable fuels. Management said during the earnings call that a final investment decision (FID) on a blue ammonia production terminal is near.
The company plans to acquire a site along the US Gulf of Mexico coast by the fourth quarter and expects the new facility to be operational two years after FID.
The timelines for other NFE projects continued to slide. The company has again pushed back the start date for its 2.4 million gallon / day import terminal and 300 MW gas plant in Nicaragua. These assets were due to be commissioned by June after delaying start-up to the end of last year following construction and authorization delays. NFE now plans to complete construction of the assets by the end of the year and put the plant into service in 1Q2022.
A 1.8 million gallon / day receiving terminal at the port of Pichilingue in Baja California Sur, Mexico also started operations this year, but a 135 MW gas-fired power plant is now expected to be commissioned. by the end of the year instead of October as originally planned.
NFE has similar projects in operation or under development in the Caribbean, Europe, Latin America, the United States and Asia.
NFE said its LNG sales increased to 1.8 million gallons / day in the third quarter, from 1.5 million gallons / day in the prior year period.
The company reported a net loss of $ 17.8 million (minus 5 cents / share) in the third quarter, compared to a net loss of $ 37 million (minus 21 cents) last year.