On its recent earnings call Dominion Energy disclosed it has an agreement to buy several “modestly-sized assets,” from the big utility Southern Company, including Pivotal LNG.
Pivotal is a wholly owned subsidiary of Southern Company Gas. It is a partner with NorthStar Midstream in Jax LNG, a small-scale liquefaction facility in Jacksonville, Florida. NorthStar is backed by Oaktree Capital Management, and Clean Marine Energy.
The final transaction is subject to regulatory approval, and Dominion told Rigzone that because the acquisition is still pending, it could not provide any additional details beyond what was stated during the call.
In discussing the assets to be bought from Southern, Jim Chapman, Dominion chief financial officer and treasurer said, “the first is Pivotal LNG, which liquefies and delivers LNG as fuel for transportation in the Southeast U.S., primarily from a new LNG production facility in Jacksonville.”
Dominion chairman, president, and chief executive officer Tom Farrell elaborated. “At investor day last year, we identified marine LNG as one of the many innovative ideas we were working to advance. By way of background, cruise and cargo vessels primarily consume diesel or fuel oil, each of which is a major contributor of greenhouse gas and other emissions. The maritime industry is taking steps, encouraged by recent global regulation, to reduce its emissions footprint which is expected to result in a material shift to LNG.
“This expected growth in LNG as a fuel source allows Dominion an attractive opportunity to provide natural gas liquefaction and LNG distribution services to a growing list of maritime customers,” Farrell continued. “As Jim mentioned, we are acquiring an interest in an existing Florida-based operation that currently serves marine vessels with an on-shore liquefier coupled with marine-fuel delivery infrastructure. Customer contracts in this business are typically long-term, take-or-pay with no commodity exposure.”
That initial acquisition will support a broader marine LNG strategy that would include Cove Point, Farrell noted, “where we are partnering with an existing export customer to re-direct a small portion of their liquefied natural gas inventory to provide LNG to constrained markets along the east coast and to provide fuel for marine vessels under zero-commodity risk, take-or-pay contracts. Importantly, this arrangement does not alter the existing twenty-year, take-or-pay export contract revenues or terms.”
Though modest initially, the marine-fuel, or bunker, market “has the potential to support a significant decarbonization of the country’s marine industry in addition to dramatically reducing pollution at our nation’s ports,” said Farrell.
“Overall, inclusive of the acquisition from Southern Company, we expect to deploy approximately $200 million dollars on this strategy over the next five years,” Farrell detailed. “This is an innovative element of our long-term ‘beyond Dominion Energy” effort to help our customers, new and old, meet their emissions reduction targets.”
Jax LNG began operations in May 2019, with 15 million cubic feet per day at the inlet. Nearby, the $500-million Jacksonville Eagle operation has two LNG operations going: ISO-tank loading and a ship bunkering. The company is approaching final investment decision for an LNG export facility.
On its own Dominion began construction late in 2019 on modular LNG project in north central Pennsylvania, a joint venture with Rev LNG called Niche LNG. Dominion told Rigzone that facility is expected to be in service before midyear.
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