William Dezellem: So Westy, to make sure that I’m clear on what you’re saying. So if you have a plant in the Midwest that is based off of electricity, it gets hot in the summer, and so a great proportion of the time, the electricity and pulling off the grid is just fine. But in those periods where it’s extraordinarily hot or conversely, super cold in the winter, and it starts to put pressure on the grid, at that point to maintain their high uptime they need backup and that’s what you’re talking about here?
Westy Ballard: That’s exactly right. That’s exactly right. It’s that peak. It’s not baseload or primary power, that’s a market that we’re going to — those utilities are going to do that. It’s exactly right. The supplemental peak and non-baseload power demands they have is part A. Part B is just if you look at the general landscape of power demand, we think over the next five years, the U.S. is short 30 to 40 gigawatts. And that’s because you’re just going to have this proliferation of multidimensional hyper scale data centers that are coming online, and there just isn’t enough grid power to even suffice that. So those baseloads won’t be nearly — those new data centers coming on, the baseload offtake won’t be as high as the pre-existing. So there’s just — we’re just short power.
William Dezellem: Great. Thank you. And then would you please provide more detail on the power generation customer that you extended the contract kind of with?
Westy Ballard: I can’t give you the name, but it’s a customer along the Gulf Coast that we’ve had a relationship with for quite some time now.
William Dezellem: Is this a storm repair situation where the utility is just not — has not made the repairs as quickly as anticipated, so your customer has a longer contract, and therefore, you have a longer life on this also?
Westy Ballard: Yes.
William Dezellem: Okay, that is helpful. And then last question, is the marine bunkering. Would you please go into some more detail in discussing as much as you can about additional prospective marine bunkering customers and the process that they’re going through to make their decision?
Westy Ballard: Sure. So if you think about really the addressable market from our perspective, it’s really, really ratable and large offtake. That’s kind of the sweet spot for us. And so when you more specifically think about that, it’s those large cruise ships. It’s those large container ships, large car carriers, large voluminous buyers, but also it’s those that are as sticky as possible. We like the cruise industry because there’s ratability — every 5, 6, 7 days, they’re coming back to port and refueling because they’re on and offloading. Their cargo carriers are pretty predictable in their ports of call as are the container guys. So those are really, really interesting offtakes because they’re just so large and predictable.
But every market is going to be a little different. The Gulf Coast is going to have a heavier influence of tankers. West Coast has got that big trade lane coming out of Asia. It’s a big cargo port. That port of Long Beach, L.A., it’s one of the, if not the largest, busiest, most heavily traffic port in the U.S. East Coast has certainly got its own interesting demand needs. And I think as these vessels start to come online more and more throughout the latter part of this year and into next year, the real inflection point hits, and they — these procurement teams are in desperate need of finding a U.S. domestic solution for liquefied natural gas. And we think that we’ve got the credibility and capability and know-how to do Greenfield infrastructural construction, commissioning and operations of liquefied natural gas plants.
And so we are in lots of discussions with a lot of prospective customers who recognize that and recognize our capability along that cruise, cargo, car carrier, large kind of offtake big, big ships. Does that help?
William Dezellem: It does. And then I guess I’ll take that one step further. Is — are there — what are the key factors that they are looking for? And what slows them down in their decision making?
Westy Ballard: Well, I think the first one or two are obvious, it’s availability. And then secondly, it’s creating availability at scale. I think one of the interesting dynamics here is a lot of these procurement teams who have vessels traversing the planet, we’re not as, I think, in tune with the lack of liquefied natural gas infrastructure to support bunkering operations in the U.S. And so I think they’ve had to really think differently about, A, trade lanes and where they’re going to bring these ships in, to fuel their ships and B, their contractual obligations. Obviously, a lot of people would love to just have a gas station every corner and the optionality to refuel. That’s just not the case in the U.S. And so we’re very excited and bullish on the prospects of getting some ratability and some firmness to some of these contracts.
It’s not going to happen with all of them, but those discussions are ongoing. And as I mentioned earlier, we’re going to balance that with some merchant risk based upon the title wave of demand that we see of ships that need fuel. And so that’s really kind of the state of play right now.
William Dezellem: Thank you, and congratulations on another solid quarter.
Westy Ballard: Thanks, Bill.
Operator: [Operator Instructions] Our next question comes from Barry Haimes at Sage Asset Management.
Barry Haimes: Thanks so much for taking my questions and good quarter guys. First question is the Carnival contract, which I think you said started in the first quarter, for the balance of the year, is it a similar run rate? Does it ramp? Could you just describe how the volumes might look across the year for them? Thanks.
Westy Ballard: Yes, I think it’s pretty range-bound for the balance of the year and certainly through the next year.
Barry Haimes: Got it. Okay. And then the extra 100,000 gallons of capacity, when does that equipment actually get delivered? To get a feel for the timing. Thanks.
Westy Ballard: Yes. So one of the unique attributes of that is its mobile and it’s flexible and it’s modular. And so we want to be thoughtful about doing that. So trying to pinpoint a time line is difficult. But I think our predisposition is to have that on the water front or at least have decisions made in the next quarter or so about where that’s going to go in the waterfront in order to build out a first train for LNG capacity for bunkering operations, likely the Gulf Coast. And I think it’s — over the next few months, we’d like to have a firm appreciation of where that’s going to go. And once that happens, I think we’ll be — we’ll articulate that to you all.
