 This is Think Tech Hawaii, Community Matters here. All right. Oh, that's Jeff Kissel. I'm Jay Fidel. This is Energy in America. He joins us by Zoom from Southern California, and he was just briefing me on the status of laying the hurricane. That rhymes, doesn't it? Welcome back to the show, Jeff. It's wonderful to be with you, at least in spirit, if not in person. So what is the status of laying the hurricane? I mean, taking it from a guy who knows in Southern California. Well, all I'm doing is watching the Weather Channel and the other sources because, of course, I have a lot of friends and interests there, and I'm concerned naturally for people's safety and welfare first, and obviously the property and the recovery second. It seems to think that the big impact will be wind and rain, but not hurricane force winds, at least on Oahu. It's an open question on Maui at the moment, and obviously the big island. And the problem is, of course, having an infrastructure that needs a lot of help if it's damaged in this storm series, and it has to recover, whether it's water, whether it is sewer or electric or communications, all of it runs in Hawaii on oil. And that's the concern that everybody has that I talk to in the energy industry is, until the renewable plans are implemented, Hawaii has decided that oil is its bridge to its energy future. Yeah, but in the capital, we use more oil here than anywhere, we're the leader in percentage of the fuel we use as oil. But that's surprising given the mild climate than Hawaii is. They made a decision a long time ago and have stuck with it all these years. And that leads to the scenario of what happens. And we could have a real nasty storm in 24, 48 hours. And so my question to you is, how will that play out in terms of energy? How will this oil infrastructure, our dependence on oil, affect us in the context of a storm that is destructive? Well, in the short term, it hurts us. In the long term, it hurts us even worse. But now everybody has to think about the fact that electricity powers so much of Hawaii's infrastructure. And even though we say we're 20% renewable, it's almost impossible to get any of the renewables to the power outlets in our stores and factories and hospitals without supplementing it with oil. And people have to think about that. There are very, very few truly independent generating capabilities in the state of Hawaii. So if the oil goes out, if the grid goes out, 100% of the electricity goes out, regardless of whether it's renewable, then that's got to be a focus and a concern. Well, how does that play out if that happens? So we have a blackout. How does that affect the community? How does that affect other community services? Electric stops running, sewage treatment plants stop running, gasoline can't be pumped. Emergency services operating on independent generators operate as long as they have oil. They stop operating when there's temporary supplies of oil run out. Without electricity, you can't replenish those temporary supplies of oil. You can't operate the big oil pumps to load the oil trucks. It is a huge problem. When I say oil, I mean diesel, low sulfur fuel oil to run the power plants, propane, all of those products are dependent upon electricity to get delivered. And I might add that in our lives, when we wake up in the morning until we go to sleep at night, we use appliances of every kind of nature and the Internet is the source of information on everything we might want to know about. And if we don't have electricity, I mean forget about infrastructure for a moment. We don't have electricity to provide that information, to let us make telephone calls, get news, cook. We are really in trouble from moment one. We've all seen the pictures of the lines in Puerto Rico where people were standing to get their phones charged for hours. And that's a realistic possibility. People say, oh, I've got an electric car and I can plug it into my home charger. Well, newsflash, your home charger, the charger electric car and anything under a week must have electricity, it must have supplemental electricity. So it's really a big concern. Now, if the electric is out for a couple of hours, a couple of days, no problem. But if it tears up the grid and tears up the infrastructure to prevent delivery for weeks or a month, then you can't pretend that the Navy can bring a submarine up alongside the dock and plug it in. It can't take the power off a nuclear carrier because if it can't get through the grid, if the grid is down, doesn't matter what the generation capability is. So I refer to Puerto Rico as an interesting parallel because this sort of happened in Puerto Rico. Not exactly the same as we are talking about, but the community was non-functioning. And all the goods and services you need to lead a normal life were unavailable all of a sudden and there were no options for you. And there was nobody, there was no lone ranger who was going to save you. This could happen here, don't you think? Well, that's right. And Puerto Rico, at least you could depart by boat. You could depart by airplane to some degree. Why is so far from the continental US that it's impractical to move as many people off of the islands as would need to be moved in a prolonged and devastating outage? So it's a very, very serious problem. The governor and the mayor made all the right moves. The mayors, sorry, are making all the right moves. The emergency services people are making all the right moves. You know, they're making the best of the situation. Question is, are we on the right path? And should we diversify our energy sources so that we can preclude the impact, preclude this from becoming a crisis from a severe situation? Well, you're right. That's a really good question. And very clearly, this is one storm. There might be others this very year. Next year is El Nino. There will be other storms next year. And so we could find ourselves in a repetition of the lane experience, better or worse, in the years to come. So we really need to think ahead. And I hope this doesn't stand as a reminder, but we need to think ahead so we are as resilient as we can possibly be. So I guess the question I would put to you is, how do we, one thing you said is we needed to diversify our sources of energy. But how do we do that? In what way, in what manner do we make that into a resilient economy? Well, you know, I've been talking for a long time about the advantages of liquefied natural gas. And I brought along some slides to talk about what's going to happen to the price of oil in Hawaii, and what could be a potential way to diversify while we're becoming renewable, which is to bring in liquefied natural gas and the costs associated therewith. So if you want to take a quick look at my little slide back, I have a picture of an LNG carrier on slide one. And I want to talk about why the coming international regulation of bunker fuels could cause a huge spike in Hawaiian electricity prices and thereby making it even more expensive for us to diversify our sources of energy. Why do you anticipate that the cost of bunker fuels will increase? Well, if there is a convention in the world that is going to require all of the ships in the world to use ultra low-salt for a bunker fuel in the future or install very expensive pollution removal equipment in their exhaust system, in order to do that, they have to spend huge amounts of money. While there is a route for the purpose of shipping, there's an inexpensive alternative. It's low-salt for fuel oil. Unfortunately, that inexpensive alternative is exactly what Hawaii is almost totally dependent on to make its electricity. As a result, you've got the upward pressure on electricity prices and the lack of availability of low-salt for fuel oil facing Hawaii. So it will need to switch to even more expensive diesel fuel, maintain its electric supplies in the short term. If you look at the advantages of LNG, I just want to show you a slide too quickly. LNG is spreading all over the world. It's available in the Pacific now. It's available, obviously, throughout Europe, the Middle East, and Africa. And there are literally hundreds of LNG cargoes being shipped around the world today. What is going to happen is the cost of LNG is going to continue to decline, and that will somewhat offset the cost of the LNG infrastructure that has to be built in Hawaii to accommodate. However, if you look at slide three, the price of low-salt for fuel oil has already started to spike. And what they call the forward pricing curve, which is the commodity pricing of this, is up by over $100 a ton. Now, what that means is there are seven barrels a ton of oil in low-salt for fuel oil. So that indicates that the cost of this fuel is already going up by about $20 a barrel from its present cost of around $85. So it's over $100 a barrel on the forward commodity market. That's a huge difference. While LNG is flatter down, that's really interesting. But you made one comment that I'd like to dwell on for a minute. You said we will have to spend some money in Hawaii to debark, to offload the LNG. And I recall that was an issue because it comes in big gas container ships, I guess, LNG ships, and we don't have the infrastructure to offload it from those ships. What do we need to do to become an LNG using state? But we need to study it a little bit and really understand the numbers. For me, to spout off numbers, it's just not responsible. And the Energy Policy Research Foundation really does rely on our data. But I will tell you with the rising cost of low-salt fuel oil, the importance of knowing those numbers and making a well-considered, transparent, publicly discussed decision grows every single day. So not only is this an issue of diversifying because we need alternatives in the event of a natural disaster, it's diversifying in the face of rising costs so that we can actually afford to get to our renewable energy future. And we don't have to continue to push it off, as we have been doing for the past 15 years. Wow, OK. It's time to think and contemplate what that means, your last statement. We're going to take one minute, Jeff. This is Jeff Kissel of Eprink, formerly the CEO of Hawaii Gas. And we're going to think about that, come back and explore exactly what that means for us. We'll be right back with Jeff Kissel. This is Think Tech Hawaii, raising public awareness. I sang this song to you because I think you either are cool or have the potential to be seriously cool. And I want you to come watch my show where I bring in experts who talk all about easy strategies to be healthier, happier, build better relationships, and make your life a success. So come sit with the cool kids at Out of the Comfort Zone on Tuesdays at 1. OK, we're back. We're live with Jeff Kissel. And I just want to revisit the statement he made is that over the past 15 years, we have not made all that much progress in moving to renewables. This is a great concern because we're supposed to be, and we're supposed to be becoming more resilient against extreme weather. So you want to discuss that further? Sure. We operate, as I said earlier, on data. The data is very simple. If you look at the installed solar capacity, it peaked out at a little over a megawatt a month. Today, the installed solar capacity is virtually flat. It is not growing. If you look at the wind farms, we had a wonderful surge in wind generation. But because the grids are fully loaded with variable power, they can't take any more. We lost the remaining gas and agricultural product produced electricity when the pineapple plantation closed on Maui. We have lost the geothermal plant effectively. So we're actually not only flat, we're actually declining in our ability to produce renewable and produce and use. We can produce it, but we can't use it in Hawaii. And it really is not a good idea to fool ourselves into thinking that electric cars are running on zero fossil fuel. Electric cars are running on 80% oil because only 20% of the energy produced in Hawaii is not from oil. You've got to really look at this the way it should be examined and realize that a change in the strategy, and I'm not advocating only one changed LNG, again, my advocacy is diversification, a change in the strategy is warranted. And having a good solid strong public debate over what the change should be and then making it is really essential. Well, as you said, diversification is the magic word. If we diversify, we're better able to handle these storms and climate change in general. If we don't diversify, and in many ways we're focusing on fewer things these days rather than many things, if we don't diversify, we're less able to handle this extreme weather and climate change in general. What's the net effect of not being able to handle climate change in general? I guess it affects the economy, it affects quality of life, it affects the forward motion of the state in terms of building, building not only infrastructure in general, but new energy infrastructure. What's the effect of not diversifying, Jeff? Well, I wish I had a cartoon to put up there of a deer in the headlight because that's what happened to our energy policy. We are paralyzed. Now, you mentioned the tourism industry. It doesn't take more than a month, look back, to see the devastation in that industry from the volcano. Question is what's going to happen next as a result of the storms? And I can't answer it. I will answer it however. So people are going to be reluctant to come all the way to Hawaii and get caught in a storm and have trouble getting home. That's real. That's not something. I think that's already happening. That's already happening in Honolulu. People don't know how they're going to get home already. So you had some other slides. You want to discuss them as well? Yeah, I just want to go to slide four, which basically shows what's happening now is that the price of the alternative fuel oils is beginning to peak. And the economics of burning high sulfur fuel oil for power generation are still strong. But this is the old 15-cent pork chop story. It would be great if we had 15-cent pork chops. We don't have them. And the alternative though is natural gas. And that's on slide five. I talk about the natural gas market. It's there. It's growing. And it's an efficient market because the costs are effectively falling relative to inflation. We've got more LNG terminals, more transparency in the market, more capacity. And there is still room to lower costs through market efficiencies and service delivery efficiencies. We have a little slide on six that talks about what our current costs are, which are relatively low, and what they are projected to rise to in 2025, which is not much. And obviously, you know, Jay, this is up on our website. You can put it up on your website. I won't go through all the details because time doesn't permit. But costs for LNG are stable to declining. Supply of LNG is abundant and growing. It just makes sense for us to start to explore it and discuss it as far as the public debate is concerned. I realize our time is short. So slide seven, I think is really interesting. It shows the dramatic growth in the availability of this resource. The numbers are not terribly important, but the trend is there. The resources there, whereas oil is not growing at that rate and the low sulfur fuel oil that we have to have is definitely not growing at that rate. And then my final slide shows on slide eight, it shows the supplies that are coming on through 2023, 2024, and 2025. And those are really, really growing. So the market is there. The opportunity is there. I think it takes a little bit of courage on the part of government to initiate the debate. And hopefully if the debate results in a favorable decision, Hawaii will have one way of diversifying its resource and not be dependent on oil as its bridge to the renewable energy future. Yeah. Well, you know, it strikes me. Something you said is that, and these charts demonstrate, is that there's more LNG going out in the world today, much of it from the United States than ever before. And it's a dramatically increasing amount of LNG that's going all over the world. Why is that? Why is it because it's really popular? Why is it popular? Is it because the technology is making it easier to deliver and distribute and use? What is it that makes LNG so popular worldwide? There are three key factors. It is cost effective. It's relatively inexpensive. It is less polluting than oil and certainly less polluting than coal. And it is very easy to move around the world now that it is, it's being delivered in bulk. So you can get it and you can get it safely. And you, you aren't dependent upon a pipeline that might be running across a region in a war-torn sector that might be disrupted. Oh yeah, interesting. So it's moved, in large part, it's moved by water, by ship. So that makes it actually safer. The other thing I was going to ask you is, you know, where does this market go? You mentioned that as the use of LNG is more widespread, then the technology improves for developing infrastructure and delivery systems. And therefore the price of LNG is likely to go down further. Did I get that right? Yes. When I say the price is going to go down, it's relative to the other sources of energy. Now the price of coal, even though coal is incredibly cheap, the price of using coal is incredibly high because you have to clean up the emissions from coal. The price of oil similarly is rising relative to other energy sources, even solar and wind, because it's expensive to use oil and keep it clean. So what effect ultimately is this going to have on the developers of LNG in the United States, on the people who live in the areas where it is being developed? I suppose Oklahoma would be an interesting example. And on the investors who are able to build the plants and distribution systems and the ships, what effects does it have on the American economy to be a world center for LNG? Well, natural gas, of course, is replacing coal and other forms of power generation in the United States at a record pace. Doing so in China and other major power consuming nations. LNG, which is, of course, just liquefied natural gas. Is providing access to markets that don't have good pipeline access. The Northeast is a good example. So that they can generate electricity on a large scale using LNG and not have to build expensive pipelines from Texas and Oklahoma. So I guess what's going to happen is within this country, there'll be more use of it. Internationally, there'll be more use of it. And the United States will have kind of a lock on it because we have such a big supply. Is there anybody else, any other country in the world that would compete with us in finding and selling LNG? In the short term, no. But of course, in the long term, we have to realize that hydrocarbons are all over the world. And certainly there will be competition. But the competition, I think, will serve increasing demand. I don't think it's going to impact the United States' ability to produce it profitably and deliver it in a competitive environment. It's truly competitive because LNG, even though it looks like it's a big-scale operation, it really has been developed from small-scale economic. Because the individual wells are being drilled by independent entrepreneurs. And to a large extent, and then only supplemented by the major outcome. You know, one thing is when NextEra was here trying to get approval of its deal, its merger deal, with Hawaiian Electric, there was an issue about whether NextEra favored LNG or not. And Governor E. Gay sort of pulled the rug out from under that possibility by saying he did not favor LNG. But my understanding is that not only NextEra, but many utility companies on the mainland are shifting their infrastructure to generate electricity on the basis of LNG these days, rather than other fuels. Am I right about that? What is the level of adoption, so to speak, in the utility industry in the United States? Well, all of the new power plants are being built for natural gas. Now that could come from LNG, or it could come from natural gas coming right out of the ground. So, you know, there are virtually no new nuclear projects planned in America. There are only a few coal upgrades being planned, so that the old plants can continue to use coal. So almost all of the new power in America is produced, either from wind, solar, or gas. Now, wind and solar work really well in areas where people are willing to invest in the grid. Unfortunately, Hawaii has not found a way to invest in its grid. So again, it's treading water. And unfortunately, the waters are rising. The waters, the temperature, the wind, the extreme weather, it's all rising. I mean, there are people around, including people in high positions, who deny climate change. But we are in the middle of it. We have to change our way of thinking. We have to find new solutions. We have to be resilient more than ever before. This is not a drill. That is completely true, Jay. It is completely true. Thank you, Jeff Kissel and E. Prink, formerly CEO of Hawaii Gas. I hope we can do this again soon. We always enjoy energy in America with you and Lou Pulirisi. Thanks so much. Thank you, Jay. Aloha. Aloha.