As a strategic military outpost in the Pacific, Hawaii is an important piece of any Asia-facing security strategy. But the islands are hobbled by high energy prices that drain off economic resources and limit long-term investment.

So argues Jeffrey Kissel, CEO of Hawai'i Gas, in describing his need for federal support for a strategy to introduce more liquefied natural gas into the state's energy mix.

"Hawaii is really threatened by oil dependence," Kissel said during a Natural Gas Roundtable event yesterday, noting that energy spending in the state has doubled from what it was 10 years ago due to the combination of high oil prices and difficult transportation and distribution logistics.

Kissel said crude oil costs about $20 per barrel more in Hawaii than it does on the mainland, a difference that has driven state officials to embrace a diversified energy strategy that would reduce petroleum use in favor of renewable energy sources and cheaper natural gas.

The utility has devised a phased plan in which LNG would be introduced through the use of small containers that can be transported by ship or trailer truck. As familiarity with LNG grows, the company would invest in fixed storage tanks and regasification units, and in a third and final phase the utility would move from container-based shipping arrangements to dedicated LNG tankers or barges and sophisticated regasification and distribution infrastructure.

"We want to gradually, on a low-risk basis, build out this infrastructure" to regain a balance between state gross domestic product and energy costs, Kissel said. "We anticipate securing supply from the continental U.S., if possible -- North America, certainly," he added, and said the company will partner with other groups to ensure that the right shipping vessels are available to make that possible.

The state has applied to the Federal Energy Regulatory Commission for approval of the first phase of the plan and had originally requested a decision by early November, but that application remains pending amid critiques that it represents a continuation of the state's damaging dependence on fossil fuels (EnergyWire, Aug. 16).

Kissel rejects that argument. "LNG speeds up the development of renewables by freeing up capital for investments," he said in an interview.

Yesterday, FERC released an environmental assessment of the first phase of the project concluding that the environment is "not involved" in the project because there is no construction proposed.

There are a few points on which Hawai'i Gas is looking to the federal government. First, Kissel said, there are elements of the rules governing interstate natural gas shipments that were not designed to cover trans-oceanic cases like that of Hawaii. The company hopes that FERC will rapidly address some jurisdictional questions related to shipments across state lines and across waterways so that they do not become stumbling blocks for the state.

Further, Kissel said he wants the Energy Department to know that Hawaii supports natural gas exports. "Even though we don't want [to build] a large-scale terminal, we will benefit from that infrastructure," he said.

He also expressed support for proposed export projects on the West coast, such as those contemplated for the Oregon coastline. "If we can help those West coast states looking for export capability, we want to support that because we will benefit from that," he said.

Kissel believes that national security is part of the argument for the utility's shift toward natural gas. The Defense Department is an important customer for Hawai'i Gas, and the utility is working with officials there to make LNG storage sites accessible to critical DOD installations, perhaps even on the Pearl Harbor site.

Calling for support for the LNG plan, Kissel underscored that for Hawaiians, it represents an opportunity to reduce crushing energy costs that limit economic resilience and growth.

But he argued that given the extensive Defense presence in Hawaii, it should also be an important federal priority to reduce electric bills and move toward a more reliable energy supply. In a state that has played an important military role in the past, he said, adopting LNG is a smart role for the country's future.