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New Fortress Energy: Promises to keep

February 01, 2022
Tom Sanzillo and Suzanne Mattei
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Key Findings

New Fortress Energy has a limited track record of successes, and faces significant challenges in meeting the promises it has made to investors and energy consumers at home and abroad. 

New Fortress Energy continues to invest significantly in new oil and gas projects despite warnings from climate experts and market trends towards development of renewables. 

NFE’s business investments are on a collision course with global policy and capital allocation trends away from fossil fuels.

Executive Summary

The business model for New Fortress Energy (NFE) supports the expansion of natural gas use around the world. The company’s financial progress has been slow. For a new company entering risky markets, asking investors for patience is not unreasonable—but ignoring red flags is perilous.

To date:

  • The company’s promise to investors to develop five to ten new liquefaction facilities by 2024 is unlikely to materialize. It currently owns one small liquefaction plant in Miami, Florida. Since November 2018, the company has not acquired or demonstrated substantial progress on any new liquefaction assets. The failure to build liquefaction assets exposes the company and its customers to market and price risks.
  • Sales growth from its more mature assets in Puerto Rico and Jamaica have been slow to materialize. The company’s utilization rates have been far below both the market average and maximum capacity levels.
  • Recently, the Sagicor Group, a prominent full-service investment house in Jamaica, pulled its equity pledge of $100 million from a power plant refinancing deal. NFE lost an opportunity to reduce debt levels that have been increasing as the company has added assets.
  • Jamaica and Puerto Rico consumers have experienced significant electricity price increases linked to the electric grid’s dependence on natural gas.
  • In New Jersey, Pennsylvania and Puerto Rico, community concerns have resulted in litigation by or with the Federal Energy Regulatory Commission (FERC) and significant delays in a priority liquefaction project. An NFE project in Ireland faces considerable opposition from political and community organizations.

From a climate perspective, NFE’s rationale is bankrupt. The Intergovernmental Panel on Climate Change (IPCC) and International Energy Agency (IEA) have sounded alarms that the world cannot afford more new oil and gas projects. Major financial institutions are warning community and national governments to think twice about overexposure to natural gas. Market and policy analysts emphasize the expanding need, desirability and affordability of renewable energy investments.

For the most part, NFE’s natural gas planned facilities are unnecessary, unwelcome and unaffordable.

NFE’s presence in the market creates a risky financial and dysfunctional economic dependence on natural gas as a future resource for host nations and communities. In most instances, its new projects expose host communities to higher electricity prices and undermine efforts to build cheaper, more reliable and environmentally sound renewable energy.

Please view full report PDF for references and sources.

Tom Sanzillo

Tom Sanzillo is Director of Financial Analysis for IEEFA. He has produced influential studies on the oil, gas, petrochemical and coal sectors in the U.S. and internationally, including company and credit analyses, facility development, oil and gas reserves, stock and commodity market analysis, and public and private financial structures. He also examines such areas as community and shareholder activism, institutional investment, public subsidies and Puerto Rico’s energy economics.

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Suzanne Mattei

Suzanne Mattei is an attorney with over 30 years of experience in public interest law and policy. She has analyzed the Federal Energy Regulatory Commission’s policies related to interstate pipeline approval. She has also conducted research on blue hydrogen, petrochemical projects, gas flaring and fossil fuel extraction on public lands.

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