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NEW FORTRESS ENERGY LLC (NFE 2.58%)
Q2Â 2020 Earnings Call
Aug 3, 2020, 8:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Ladies and gentlemen, thank you for standing by. And welcome to the New Fortress Energy Second Quarter 2020 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]
I would now like to hand the conference over to your speaker today, Mr. Alan Andreini, Head of Investor Relations. Sir, please go ahead.
Alan Andreini -- Head of Investor Relations
Thank you, Michelle. I would like to welcome all of you to the New Fortress Energy LLC second quarter 2020 earnings call. Joining me here today are Wes Edens, our CEO and Chairman of the Board; Chris Guinta, our Chief Financial Officer; Brannen McElmurray, our Chief Development Officer; Sam Abdalla, who leads our Mexico and Nicaragua projects; and Jake Suski, who leads Zero or Green Hydrogen division.
Throughout the call, we are going to reference the earnings supplement that was posted to the New Fortress Energy website. If you have not already done so, I'd suggest that you download it now.
In addition, we will be discussing some non-GAAP financial measures during the call today. The reconciliations of those measures to the most directly comparable GAAP measures can be found in the earnings supplement.
Before I turn the call over to Wes, I would like to point out that certain statements made today will be forward-looking statements, including regarding future earnings. These statements by their nature are uncertain and may differ materially from actual results. We encourage you to review the disclaimers in our press release and investor presentation regarding non-GAAP financial measures and forward-looking statements and to review the risk factors contained in our quarterly report filed with the SEC.
Now, I would like to turn the call over to Wes.
Wesley R. Edens -- Chief Executive Officer and Chairman
Great. Thanks, Alan, and thanks everyone for dialing in early on a Monday. As Alan said, we're going to flip through the supplement that we put online that hopefully you all have in front of you, and try to do so in a pretty straightforward manner. And then, of course, open up for questions at the end.
So let's start on Page number 4. So highlights for the quarter, there were many. Last four and a half months since the COVID situation developed has been challenging ways that we never expected, but also rewarding ways that we couldn't possibly hope for. This is a transitional quarter for us as we went from a Company in development to an operating business, highlighted by the project in San Juan, which was completed actually during the quarter, commissioned and then on July 10, it actually hit full run rate volumes on the two turbines that are down there.
Our record volume sold in July. The operating results for the Company speak for themselves. So, we had 1.7 million to 2 million gallons for the remainder of the day, I'll go through the detail of that in a second. Pipeline for our business and future customers is more robust than it ever has been. We undertook a number of corporate actions for the quarter that were meant to simplify and create the Company that we endeavor to become, so I think we're actually very positive in responded to and I'll go through those one by one. And lastly, the new logistic solution that we have greatly expands our growth prospects and reduces the time for us to convert a prospect into an operating asset.
So let's look to Page number 5. This page violates my presentation rules, have been overly dense and hard to see, but we've created a couple of circles to try and highlight what the differences are. This is simply a chart that I get every day, which shows the volumes across the portfolio. And you can see that on July 10 is when we had a significant step up in our overall volumes as we hit run rate in Puerto Rico.
The margin on the right-hand side is what that -- relates to those volumes. The next circle you'll see really relates to August 10, where we'll get one more incremental project which comes online, which is the Jamalco boilers, that's also the burning off of the last of the kind of expensive gas that we have in the Company. And so, our operating margin steps up considerably. If we just follow that far right-hand column on down, you'll see margins then go from $375 million to $446 million throughout the course of the rest of the year.
When I look at this chart, of course, what it speaks volumes to me about is that, there are a handful of assets that make up the bulk of our operating profits as a Company. Obviously, our goal long-term is for this page to have many more columns of significant assets that exist. As we diversify the portfolio, both by geographics, as well as by the nature of the assets, as we get more and more operating history, the Company's value is only going to increase substantially.
The net of it is, if you look at this page, we're averaging 1.7 million gallons per day. Now, that's going to increase to about 1.9 million as we close in at the end of the year, before then we get two projects that are in development right now in Nicaragua and in Mexico, they come online and then, of course, there's a long, long list of projects behind that.
So Page 6, five major corporate actions since last quarter, and I'll go through each of them one by one over the next couple of pages. All of them were in effort for us to now take the step of going from being a development company to an operating company, create the most simplistic and transparent, investor-friendly, shareholder-friendly company that we can, and we're very happy with how each of them has worked out thus far.
Just flip to Page number 7. First one was an easy one, which is basically myself, as well as Randy, are done converted all of our Class B shares to Class A shares. We had held our shares basically as an LLC prior to doing so. This simply creates one class of shares, all investors have exactly the same rights across the Company, greatly increases the number of shares that are available for investment [Phonetic], 170 million shares in total. Some shareholders were capped due to internal restrictions on percentage of free float. Doing so, this increase the free float prospects dramatically, top holders increase their positions by 10% since conversion, average trading volumes increased by 130,000 shares a day. Now, obviously, we still hold a disproportionate number of shares internally and we haven't issued any shares since the IPO. As we issue equity over time and inevitably we will, that will increase free float and only add to the -- that the trading volumes that we have.
Number two, and this is a very simple thing, which we did last week, which basically was to convert the Company from an LLC to a C Corporation. Over 99% of all the companies are included in the indexes are C Corporations. So this is a simple thing to do. Index and passive funds represent over $8.5 trillion in assets. We expect inclusion in a number of these indexes over the next couple of quarters. Again, something that expands our investor base, it should increase shareholder value.
Page number 8, the LNG contracts. We had contracted with the counterparty to buy a number of cargoes to remainder of the year, eight of them. What we did at the end of the quarter was negotiated a transaction whereby we simply canceled our obligation to buy those contracts. Now, those were done at higher prices before the market had come down. We paid a premium of $105 million, half of it now, half of it at the end of September. And what that does basically is allowed us to then go replace those cargoes and buy them at -- on a spot basis. And we think that that is a beneficial transaction for a couple of reasons: one is, the strike of the transaction that we consummated was $2.94. So in simple terms, to the extent that we are able to buy cargoes in cheaper than $2.94, it's a positive economic benefit for us. We have subsequently bought in two of the eight cargoes that we are short, so we have six more to go. The first two were bought in at a $1.92 and $1.85. So, we were able to meet the goal of binding a little bit cheaper.
But more importantly, what it does is basically you then replace $6.70 gas roughly with $2 gas and so your operating margins, on a current basis, go up substantially. It reflects the true operating potential of the Company. It's actually the right way to present it. So, in very simple terms, if we did nothing other than pay the $105 million to cancel the contracts and replace them at exactly that level, it still would have been a very, very beneficial transaction. The net of it as we expect it to be positive to us to the tune of $15 million to $25 million. So we do make a little bit of money as a result, but it also does represent an operating profile for us that is terrific.
Now, what we did subsequent to that is, we went to the rating agencies, we asked for a rating on our existing facility as a result. We got ratings on Thursday and Friday from S&P and from Moody's, basically B+. So Ba1/B+ on both of them. In both cases, we believe that our rating as a Company should be better than that, but this is very much of a process. I've been through this many times. And the comment that we got is, our operating history with some of these assets is quite new, which in fact is true. That will be less true three months, six months, 12 months from now. And so, if the operating metrics hold the same or improve, both of which we believe are likely and our operating history is consistent, we think that this is beginning of a long-term upgrade for the Company. Our goal is to begin the process to be an investment-grade rated Company. What that translates into, obviously, is just lower interest rates in terms of the debt facilities that we have.
Our overall debt is about $1 billion. Overall cost of debt is about 8.3%, 8.4% in total. We believe that there is material amount of savings to be had simply by refinancing where it is today. And obviously, if we need to get to investment-grade rating eventually we can save a very, very material amount of money.
So Page number 9, the last action that is still a work in progress is to consider a dividend. Talk to our Board about it. When you think of the growth prospects of the Company has, it may seem odd to talk about a dividend when you need capital to grow your business. But we believe the profile of our Company a year from now or two years from now is one that will generate significantly more capital than it has opportunities to invest. Not because there's not a lot of great opportunities in the world, but because our cash flow is so high and so productive based on the opportunities that we have.
I believe that considering a dividend on a modest amount of our cash flow, perhaps 20% to 25% of cash flow, so we still would retain a very significant amount of the cash that we generate, would be the right thing to do. As we look at our financing and refinancing prospects for the Company, this is something that will become a material prospect for us. 20% to 25% of free cash flow over the next 12 months would translate today into about $0.40 a share. So call it $0.10 a share per quarter. Just as a representative of what the dimensions would be if we did pursue something like this. So, more to come on this. The path would be go sort out the financing options for us. Number one, with our ratings in hand, and the number two, we'll address those, so.
Lastly, before I turn this over to Brannen and others, all of these actions, plus the operating performance completes our transition from the start-up to an operating company. The chart on the left-hand side shows the steep ramp-up that we're actually -- are going through right now in terms of operational cash flows. On the right-hand side, it translated into EBITDA numbers of $359 million in EBITDA growing to $479 million. I believe the growth prospects of this are much, much higher, then I'll go through the -- some of the pipeline stuff that we've got going on, but this is a good illustration of kind of what we've accomplished thus far. So, a very good quarter we got.
Brannen?
Brannen McElmurray -- Chief Development Officer
Yeah, great. Thank you, Wes. Good morning and thank you all for joining us. We're excited to update you on what we've accomplished since we last spoke.
Moving to Page 12, committed volumes at run rate across our operational facilities. We are proud to report that our committed volumes at run rate across our operation facilities, as Wes noted, with our San Juan Facility ramping up in Puerto Rico, we have completed our transition from a start-up to an operating company. Each of our four major operating assets have now hit their run rate volumes totaling in excess of 1.7 million gallons per day. In fact, we expect the Jamalco boilers begin taking gas in the next 24 hours, adding as much as 150,000 gallons a day to our total.
Importantly, each of these facilities has built-in capacity to serve additional customers. As an example, we started loading LNG tankers in Puerto Rico last week to serve on-island industrials looking for behind-the-fence power generation solutions. We expect demand for that service to grow significantly over the coming months. We are constantly looking for ways to optimize our assets and expand service by increasing volumes to existing customers and adding new ones. We've shown our customers that we can deliver critical infrastructure in the most critical period further adding to our reputation as a go-to infrastructure provider.
Moving to Page 13, operational asset performance. The health and safety and welfare of our people is a top priority. As is being a good steward of the environment in the countries in which we operate. Our operational teams continue to deliver terrific results. I would focus you in on Zero on the page because that's the one that we look at every day and it's probably the most important number. We've had zero days away from work. Zero recordables and zero spills, something our operational team is extremely proud of and we as a Company prioritize every single day.
Our availability and reliability numbers continue to exceed that of our customers. So in short, our assets are performing at or better than expected, 99% year-to-date average availability and reliability, which is critical to the customers that we serve.
We've executed on over 6,600 LNG truck and rail tender loads to date and over 650 STS transfers, all without incident, a testament to our team. We continue to be the clubhouse leader by conducting the most ship-to-ship and ship-to-shore transfers of any company in the Western Hemisphere. Operational excellence is a must-have for our customers and a competitive advantage to win new business.
Now, I'll turn it back over to the team to talk about new innovations and the way we deliver projects.
Wesley R. Edens -- Chief Executive Officer and Chairman
Great. Thanks. And I'll have of Sam Abdalla walk through our development projects in just a second here, but flip to Page 15. Let's spend just a couple of minutes on the cartoons in the next couple of pages. Basically, the cartoons represent our history as an operating company and how our -- and reflects how our business operates today. So, LNG shipments around the world in very large cargo ships, and the large ships are really large ships, 300 meters long, 70, 80 meters high, 60 meters wide, these are huge, huge ships. Very efficient way to ship LNG around the world, but not really the ships that can be accommodated in most of the harbors. They are simply too big to do so.
So, the first innovation that we had as a Company, it seems like a very simplistic one, and indeed it was, was simply to take those big ships, fill up smaller ships, they're still quite large, and then bring those ships in to port to offload their LNG and service our customers. The types of ports that we can bring in -- that bring these assets into went up exponentially, which is terrific. As Brannen said, we have actually managed to do hundreds and hundreds of ship-to-ship transfers without incident. So it's obviously a very safe way of doing so. The challenge is that, even once you have filled up a smaller ship, you still then need to have to -- you need to develop marine infrastructure in order to then bring it onshore. When you hear the words marine infrastructure what you really should here is 24 to 36 months. We'd like it to be faster than that, but the reality is, any time you do something on the water, it's going to be an extended period of development. And so, what we are very focused on is how can we cut down the time and the cost of doing so.
And if you flip to Page 16, we have actually a significant step ahead that we think is going to be making a meaningful difference to us in terms of the projects we pursue. We have looked at this and talked about doing it a couple of years ago, really in the context of our current projects, that I'll have Sam talk about, it was really his idea, the teams idea to actually look at this again. And we have subsequently have done the work on it and we believe this is a very, very good solution. And what we've done basically is just simply cut out a ship. So, you take the big ships, if you use, for example, 160,000 cubic meters of cargo, divide that by four, four gallons that would be 40 million gallons of gas on a ship. And what you're really doing is moving 40 million gallons of gas into 10,000 gallon containers. So, it simply takes a very, very efficient manifold that allows you to take the gas from the very big ship and put a directly into the ISO containers themselves. There's over 0.5 million ISO containers exist in the world today. It's a very, very prevalent form of transportation to move this around by both truck and by rail.
And so, what we're doing is, in this cartoon is, taking the big ship, filling up a number of ISO containers on a smaller vessel, be it an OSV, a barge, etc., then you bring that vessel in to port. Virtually every port in the world can simply take cargoes off your ships. And so, what we have done is, we have cut the cost of capital, because we cut one ship out of it by half or more. We've cut the operating cost out, again by taking the ship out of it by more than half, by probably taking a ship out of it. And then lastly and most importantly is, we cut the time down from 24 months to three to six months and we've greatly expanded the number of places in the world that you can do it. So, this is a big innovation for us. It's something we're going to deploy at our first two assets -- first two projects that we are developing right now with it.
And with that, I'll turn it over to Sam. Sam?
Sam Abdalla -- Vice President, Projects Development
Thank you, Wes, and good morning, everyone. It's really important to standardize the delivery method of our projects, so we can drive the cost and schedule down as Wes said. It's great also, we will have those two projects, Mexico and Nicaragua as a proof-of-concept to turn on this year.
So, a little bit of update on each of the projects. So for Mexico, we did the bathymetry surveys a few weeks ago and confirmed dredging is complete. This allowed us to start the bulkhead repair and terminal construction. That scope was awarded last week, and will be completed by December 15. According to this schedule, we will shift the power generation units beginning of October. We are currently finalizing the negotiations and contract with the vendors who have the equipment available.
Moving to Nicaragua projects, we have filed for all the critical permits, and expect to be fully permitted by end of September this year. We also completed the concept design and planning to award the construction package by end of August and target completion date end of this year. Thank you.
Wesley R. Edens -- Chief Executive Officer and Chairman
Great. Thanks, Sam. Flipping to the new business section on Page 20. We have a very, very robust pipeline. Over 10 projects that are in serious negotiations. Focus areas for us, in particular are Central and South America, but we do expect our first projects to go FID in Asia later this year. The goal and simple terms is to get to FID on at least two of these projects in our pipeline between now and the end of the year. There is a potential to get to as many as eight, we think.
If you flip to Page number 21. What that would mean in terms of the math of the business is actually very substantial. Each project is different. We've tried to generalize it because, of course, it's easier just to talk in terms of simple numbers then. For illustration purposes, we said assume the following, 300 megawatts of power, total project cost between $250 million and $300 million, operating margin between $100 million and $200 million. So in simple terms, four transactions would generate $600 million of margin for us, which is roughly double the amount of margin we have in our Company. Eight deals would be $1.2 billion in margin and we would roughly triple the size of our Company in the space of this. So, not a lot of detail, but I want to go to -- go into in terms of the different projects themselves. These are competitive situations and obviously, there is a lot going on around the world.
I think it is extraordinary, though, that in these COVID times the amount of communication we're able to have with people remotely. So, obviously, in the new business side, this is something that a hands-on interaction is very helpful. We've been very curtailed in doing so. And yet, we've made significant advances across the pipeline and I feel like the second half of this year is going to be quite a productive one for us.
So, next section is just, let's talk about gas. Gas prices are both the biggest threat and the biggest opportunity for our business. The chart that I put in front of you is one that we did for a customer here a few months ago and it simply shows that if you look at delivered gas versus delivered diesel, over the past 10 years, over 99% of the time gas has been cheaper. This shows you the tremendous value of the products and the proposition that we're offering to people. So over 99%. So all the 24 days in the last 10 years delivered gas is cheaper. Gas markets overall are still very oversupplied. US gas inventory is 15% higher than the five-year average. LNG prices have come down 85% over the last couple of years. So the gas situation is a good one to be short, which is effectively where we are right now. But there is other activity, which we think is going to be a mitigant to that at some point.
Gas rig activity has declined precipitously with drilling going down, gas supply will go down. If you simply do the math and forecast out six months, 12 months, 18 months from now, it is quite possible that this reduction in gas and oil drilling activity will lead to a stabilization and rebound. It's very important for us as a Company to capitalize on depressed prices in the near term. It is my number one priority as -- in the Company, it's something I am very, very focused on.
Put it in terms of the next page, Page 24. This year, we need eight cargoes to satisfy our customer demand. We bought in two. So we're net open on six. Next year we need a total of 33 cargoes between Jamaica and Puerto Rico, and Mexico and Nicaragua. We have purchased 12, so we're open on 21, or 64% of it. 2022 going forward we need a total of 36 cargoes. We have purchased a total of nine. And so, we're still open on a substantial amount of that as well. So, it's a big opportunity for us to close the gap, but obviously if the pipeline translates into new projects and the gas demand grows, there is a substantially greater amount that we need to do. I've got some real views about this that we're working on, not really ready to share with folks now, but I think in the next quarter or so, you will see a significant amount of activity from us on this front. We are not planning to be in the upstream business. I have been asked that question many times but specifically, I have no desire or interest or really experience in drilling. So we're not going to in the upstream business, but we do think that there is some substantial opportunities and we will focus on this soon.
Jake?
Jake Suski -- Director of Zero
Yeah. Good morning. We're excited to update you on our efforts to reach zero emissions as a Company, and the Zero division that we formed. As Wes has said repeatedly, our central focus as a team is to really define $1 per kilogram hydrogen. At that $1 per kilogram level you're about the equivalent of $7.50 MMBtus, which is about half the cost of diesel and around the cost of delivered LNG into our markets around the world. So, that's where we think we'll see hydrogen become a zero emissions alternative to a lot of distillate fossil fuels today and really transform a lot of the energy markets. Because we can utilize our existing gas and LNG infrastructure in large part with hydrogen, we believe that this presents a really great opportunity to decarbonize our existing customer base. And it also creates a tremendous amount of opportunities to grow our customer base across our markets.
Since Wes announced a couple earnings ago, our -- the formation of this division and our mission, we've actually received over 90 proposals. A lot of interesting technologies and projects that we've gone through due diligence on over the last several months. We've narrowed those proposals down to kind of a short list of what we think are viable proof-of-concept projects. And a number of what we think are really interesting, emerging technologies that could advance our efforts to lower the cost of making green hydrogen to $1 per kilogram.
Just one example to kind of share with you guys. There is a promising Israeli electrolysis technology that we've taken a look at and a company that we're talking to. We believe that the technology can significantly lower costs by improving efficiency and minimizing the power loss that you experience when you convert water, H2O to hydrogen and oxygen. It also holds promise to really lower capex. So, we think paired with low-cost renewables, this type of technology can significantly advance the efforts to reducing the cost of green hydrogen. Not only are we looking electrolysis technologies, but we do think that the -- that there are some alternative technologies that aren't as reliant on electricity costs, that we think can really accelerate the path to $1 per kilogram hydrogen. So, we're engaged with a number of companies in that effort.
Our goal isn't really to create the science, but it's to partner with these companies, partner with these technologies, learn how to use them and commercialize it around the world for our customer base in the planet. Our goal is to get to FID by the end of this year on our first proof-of-concept project. We don't anticipate that being a huge capital investment, but it will put us on a path to getting to $1 per kilogram hydrogen and really help us build experience, build expertise in this space and quickly advance toward our goal of becoming a zero emissions Company.
Christopher S. Guinta -- Chief Financial Officer
Thanks, Jake. It's wonderful to get to talk to you guys all this morning. If you turn to Slide number 28, I'll quickly walk you through the financial results for Q2 2020. Starting with the production numbers, you can see that during Q2 we averaged just under 1 million gallons per day. The increase in volumes is driven by the Jamalco CHP plant operating for the full quarter and over 200,000 gallons per day on average in Puerto Rico. There was a little drop in volumes sold in Old Harbour versus Q1, which as a result of maintenance procedures being undertaken by our customer.
Revenue for the quarter was $95 million, which is just shy of a 30% increase quarter-over-quarter. Our cost of sales and O&M was slightly higher due to increased volumes. However, some of the costs associated with commissioning at the San Juan Facility was capitalized under the balance sheet.
Importantly, we have included here the line for contract termination charges and mitigation sales, which was a $124 million for the quarter. This is comprised of $105 million charge to terminate the eight 2020 cargoes, along with an $18 million mitigation sale charge for one cargo to match anticipated consumption. As Wes mentioned, we are paying the termination charge in two instalments during Q3. So you don't see any impact on cash at the end of Q2. Further, the timing of the cash outflows are similar to when the original cargo payments would have occurred. Also, and consistent with Q1, our cash, SG&A expense was right at the forecasted $20 million per quarter, excluding stock-based compensation, non-capitalizable development costs and costs associated with simplifying our corporate structure.
Lastly, important to note that we maintain ample liquidity to fund the build-out of all committed volumes, including Mexico and Nicaragua using a combination of cash on hand, plus cash flows from operations.
If you flip to Slide 29, you'll all be familiar with this page, but thanks to the decision to terminate the remaining 2020 cargoes. The timeline to run rate cash flows has been accelerated. We are operating at about 1.7 million gallons per day today and we'll grow to around 1.9 million gallons a day for the remainder of the year. We have a couple of additional assets that will fully ramp during the rest of Q3, including the boilers and some small scale customers in Bahamas, Jamaica, and Puerto Rico. Given the volumes running through the three online terminals today, the business will be at run rate operating margin exceeding $400 million during the third quarter and grows to over $550 million once our new terminals come online in Mexico and in Nicaragua. It is very exciting to note that if we continue to execute on contracting new committed volumes, we can clearly see NFE earning well in excess of $1 billion of annual operating margin.
If you turn to Page 30, you'll see that we are progressing on our capital plan, including lowering the cost of debt and returning capital to shareholders. Step one, as Wes mentioned, we met with the rating agencies and received a B+/B1 rating. Step two, we will soon launch a refinancing, which we expect will cut around $25 million of cash interest expense. And step three, after completing the refinancing, our goal is to implement a dividend that we expect to size around 25% of free cash flow. Our capitalization strategy for the business remains, as you've heard us talk about before, modest leverage, targeting 3 times or less, ample cash on hand to nimbly fund growth and strategic flexibility to build new terminals by ships and its ancillary equipment.
With that, I'll turn it back over to Wes.
Wesley R. Edens -- Chief Executive Officer and Chairman
We'll move to questions. Operator?
Alan Andreini -- Head of Investor Relations
Operator, we are ready for questions.
Questions and Answers:
Operator
[Operator Instructions] Our first question comes from the line of Alonso Guerra-Garcia with Scotiabank. Your line is open. Please go ahead.
Alonso Guerra-Garcia -- Scotiabank -- Analyst
Hey. Good morning, guys. Hope you're all doing well. First question, on your new business pipeline you highlighted two potential FIDs by the end of the year and also pointed to your first potential project in Asia. I wonder if you could share more about the progress on those discussions. And anything in specific you can share between the regions or countries you are targeting that makes you confident about advancing those here in the near-term?
Wesley R. Edens -- Chief Executive Officer and Chairman
Great. Well, thanks for the question. We have -- we signed three MOUs in our pipeline in different regions. For competitive reasons, I would prefer not to be specific about the country specifically. As we said before, there are 10 areas of the -- 10 sections of the country or the world that we think are of real interest. We are very focused on geographies that are large and growing populations, have growing economies, have a substantial amount of thermal power that is installed right now that is burning diesel or other fuel oils, and also needs incremental power. That actually is not a very refined search and it actually produces a lot of different outcomes.
One of the things that we are very focused on as a business is now to greatly expand our sales efforts and do so geographically. So, we have hired one senior sales person in the last couple of weeks. We have a goal to add another four to six people in that area, plus then all the relevant staff between now and the end of the year and really focus on building out our sales effort. Our business is all about customers. Essentially, it's customers and it's fulfillment of those customers' needs is kind of way the whole business operates. So, the more customers we can be in front of and the more solutions that we can provide to their challenges, the better and more robust our businesses are.
But -- I'm sorry but I don't want to be specific about the exact project or the countries that we have done. I feel very confident that we are going to have a substantial amount to report to you between now and the end of the year. My goal, as I said, would be to convert, at least a couple of those and I think it could be materially more than that.
Alonso Guerra-Garcia -- Scotiabank -- Analyst
Got it. No. That's fair. And then you previously outlined targets of $50 million in cost savings. Just how far along are you in that process? And what have you identified thus far? I think maybe more specifically on G&A and shipping savings, I think the interest savings are obviously tied to the refinancing process.
Wesley R. Edens -- Chief Executive Officer and Chairman
We are very far along. On the finance side, Chris, did a good job, I think, in laying out kind of what we're -- what our goals are. So looking at debt, we think we can save $20 million, 25 million readily just based on where debt for a B+ company in the infrastructure space should trade at relative to what our current financing rates are. So, on that side we feel very good about that.
On the operating side, we have done a substantial amount of work on our new logistics technology and we feel very good about that. We have actually placed orders for a couple of hundred of the ISO containers already. We think that we will be one of the bigger ISO container operators in the world. So that's a big, big focus for us. Obviously, we have a lot of great counterparties that we have bought from in the past and people that we're talking to now.
The ship portfolio, what happens when you cut the small ship out of the middle is, you go from a position of a fairly constrained market to one that is very oversupplied. So, in simple terms, there is about 500 large ships in the world. There's many, many fewer small ships. So that's a real constraint to the business. If you then cut that out and go to barges and offshore service vessels or OSVs, etc., you go to thousands, actually tens of thousands of assets that are available. So, the cost profile of it goes down dramatically. The availability of it goes up limit. And then, it just becomes a simple logistics and operational challenge of then moving the assets one versus the other. So, we feel really, really good about it.
Alonso Guerra-Garcia -- Scotiabank -- Analyst
Great. That's it from me. Thanks, guys. Appreciate the answers.
Operator
Thank you. And our next question comes from the line of Devin Ryan with JMP Securities. Your line is open. Please go ahead.
Devin Ryan -- JMP Securities LLC -- Analyst
Great. Good morning, everyone. First question here, just want to talk a little bit more about the hydrogen opportunity, which is quite interesting to us. And I'm just trying to think a little bit more about the commercial opportunity for NFE and really if you can just a little more detail around how you would actually look to monetize the opportunity. Appreciate you're looking at a number of potential applications here. But anything more around kind of the monetization? And just what that could look like from a timing around implementation?
Wesley R. Edens -- Chief Executive Officer and Chairman
Yeah. So, let me take this. So, as I said a couple of quarters ago, we are very interested to hear from people. And I think that they've got a good solution to produce it. 75% of all the elements in the universe are hydrogen, 24% helium, 1% other. So, the world is full of hydrogen. The challenge is that, it is tied up in the molecule with something else. And so, really the simple goal is how do we actually extract the hydrogen from whatever it's hooked up with in a way that's cost-efficient so that we can then use it. That is the mission of the entire zero kind of focus for us.
So, electrolysis, which has been around for 100 years is a tried and true method. There have been improvements to it. As Jake said, we've met with a number of companies in this sector. There's one in particular that's promising. That's all great. It is not cheap enough in terms of being a goal of the $1. And I think that in the foreseeable future it's not likely to meet it at that level.
The good news is, there are many non-traditional forms of extraction that we think are really interesting. And when Jake says, we're looking to create a pilot program, essentially, what I would like to see us do as a Company is, find something we think is interesting, build a hands-on proof-of-concept pilot program to see what the actual cost of extraction results in and see how close we can get to the $1. Once we have hydrogen, the benefits from our standpoint is, with the vast majority of our gas infrastructure could burn hydrogen today. So we had hydrogen, we can inject it in part -- into our pipelines, inject it into our turbines. It could burn it today. The difference between hydrogen and methane, CH4, is, obviously, cost, right, so that's -- the cost, we're very focused on. But most importantly, if you really burn hydrogen, there is no emissions.
So, in simple terms, if we really can create $1 hydrogen in really significant quantities, what we would have is a source of sustainable product that creates no emissions. I mean, that is the goal. And so, we are relentless about trying to find different options for that. And we looked at a bunch of different technologies, but I think that the path and what we want to see is get proof-of-concept that we agree on, build it, test it, see the test's viability on a long-term basis and go from there.
Devin Ryan -- JMP Securities LLC -- Analyst
Okay. Very interesting. Thanks, Wes. And then just a follow-up here on LNG pricing, good to see how nimble you guys are able to be just taking advantage of supply demand dynamics for LNG. And given that you have a pretty good line of sight into kind of the intermediate term needs and cost. Just given the low pricing today, how far out are you willing to kind of push duration as you ramp operations? And really just kind of the ability to take price off the table or that the price fluctuations off the table as you look to take advantage some of that in the currently favorable conditions?
Wesley R. Edens -- Chief Executive Officer and Chairman
I will have much more report on this next quarter is all I'll tell you. I mean, I think we are very, very focused on creating long duration supply at variable prices. And there is a number of different initiatives that we're in the process with. In the short-term, I think our position is a very good one, right, prices are depressed, we can actually buy into the open market. When you can buy LNG delivered at $2 or less, then long-term supply is really not much of an issue that needed to be concerned about. But all you have to do is look at our future and how much gas we're going to need to fill the needs we have for existing customers, plus all the incremental business we have and you realize why it's such a hot topic for us.
So, I've got a very specific point of view on what we should be doing around this. And I think we'll have a lot to talk about with that, hopefully, next quarter, but it's something I'm very focused. As I said, I think it's our greatest opportunity in the short-term for sure, right? And it is our greatest threat to our business in the long run for us and our customers. And so, to the extent that we can create long-term sustainable supply at very low prices, it's a massive competitive advantage for us. It's a massive risk mitigant in terms of what the business is. So, it deserves to be at the top of list, and that's where it sits right now in terms of my priorities.
Devin Ryan -- JMP Securities LLC -- Analyst
Okay, great. I will leave it there. Appreciate the color.
Wesley R. Edens -- Chief Executive Officer and Chairman
Thanks.
Operator
Thank you. And our next question is Ryan Levine with Citi. Your line is open. Please go ahead.
Ryan Levine -- Citigroup -- Analyst
Good morning. So, in some of the prepared comments, you had highlighted a potential or current thoughts around that $0.40 dividend. Do you have any preliminary comments around growth rates or how you're thinking about structuring that policy over the long term?
Wesley R. Edens -- Chief Executive Officer and Chairman
Yeah. They -- actually what we laid out in the presentations is how I think about it. I think that a projected dividend that is 20% to 25% of cash flow for the foreseeable future is a good way to start. It uses a modest amount of our cash flow right now. It returns capital to investors. It creates great transparency between the money that we make and the returns of the Company. And it greatly expands the industrial universe. A lot of people are that are investors who will invest in companies that pay a modest dividend. So there is many obvious benefits of doing so.
We have a bit of work left to do in terms of the financing of the Company to accommodate that. But I think we will be successful around that. And I think that then as the Company grows, as our cash flows grow, returns grow, we can then pass those -- that growth back to shareholders, at least in part is the reason why I think it's a sensible policy. But, obviously, it sits with the Board, at the end of the day, we can make our recommendations. We had a very robust and very positive conversation about it in our last Board meeting. And now, we'll just see how it all works out of the financing side and kind of go from there.
Ryan Levine -- Citigroup -- Analyst
Okay. And then there is also a comment around looking further upstream in terms of your potential investment opportunities. Would this be more of a step out acquisition or investment? Realizing you're probably not going to go to E&P, but does that incorporate more traditional midstream assets as potential investment opportunities for the Company strategically?
Wesley R. Edens -- Chief Executive Officer and Chairman
It's definitely not upstream to the extent that we're not going to be buying gas leases anytime soon. And I think that, my focus is to find long-term sustainable forms of supply. And -- but I don't want to avoid the question, but I also don't want to be really specific about it. I think it's an obvious opportunity for us and something that I'm very focused on. And the minute that we have something, which is really concrete, I'll be happy to share it with you, so.
Ryan Levine -- Citigroup -- Analyst
Okay, great. That's all from me.
Operator
Thank you. And our next question comes from the line of Igor Levi with BTIG. Your line is open. Please go ahead.
Igor Levi -- BTIG, LLC -- Analyst
Hi. Good morning, guys. Talking about long-term supply, let's say, today, you knew for a fact that you're able to secure at least two projects per year for the rest of the decade. How far out would you be able to contract out LNG supply if you decided to do as much as possible to fill those contracts?
Wesley R. Edens -- Chief Executive Officer and Chairman
15 to 20 years readily. So the answer is, a long, long ways.
Igor Levi -- BTIG, LLC -- Analyst
Got it. So, when you talked about gas prices being the biggest opportunity and biggest threat. I mean, at this point, it's just the fact that these projects aren't in the bag. But once you get each year as you secure them, is the plan to contract out LNG supply for the duration of the project, given that you have them in the bag? Or is that -- because that you aren't doing it ahead of time, even though you're confident that you have those projects coming up.
Wesley R. Edens -- Chief Executive Officer and Chairman
Yeah. Our general philosophy around the gas is to be contracted long-term. Once the assets are operating, have an operating history and thus, a future that we can -- we feel good about predicting of about 80% of our volumes. That gives us flexibility that if an asset goes down for one reason or another, there is maintenance or whatnot, we've got some wiggle room between what we have contracted and what we're actually providing. So, with that, we would then look to set our goals on how much gas we're actually going to lock in.
I do think also that there is the possibility for a significant disruption in the business on the hydrogen side, that's a big part of it. So that will go into our thinking about it a little bit as well. But I think, obviously, between being quite short right now to 100% contracted, there is a lot of room in between there to establish the right balance. But once again, this is something that's a huge opportunity, a big challenge, and I think it's something gets a lot of focus around here.
Igor Levi -- BTIG, LLC -- Analyst
Thank you. And as far as using ISO containers onboard OSV, will we see a project next year where you will secure the project and then you have that producing within six months?
Wesley R. Edens -- Chief Executive Officer and Chairman
Yeah. We -- the answer, in short is, yes, we've got both the projects as Sam talked about in Mexico and in Nicaragua are essentially going to be serviced by this. So, think of the logistics being a large ship anchored close by but offshore. A barge or an OSV that goes out with a bunch of containers on it, with the manifolds that actually can then be fill -- that can fill them, and then that vessel comes into shore, it's offloaded by a crane. You put the empties back on to it, it goes back out and repeats it. That's essentially how the operation works. Both these first two projects, we expect to be done, plus or minus around the end of the year. So I'm hoping by Mary Christmas we'll be able to show people the real life example of how this is all going to work.
And then the rest of the answer to your question, if, for example, we were able to go FID in September, September plus six months is roughly March, we do think we can actually fulfill another project in that timeframe with this technology. So, that would be the next step of it.
Igor Levi -- BTIG, LLC -- Analyst
That's pretty incredible. Thank you. I'll turn it back.
Operator
Thank you. And our next question comes from the line of Martin Malloy with Johnson Rice. Your line is open. Please go ahead.
Martin Malloy -- Johnson Rice & Company -- Analyst
Good morning. Just following up on the ISO container method and the cost savings there. Does this open up or broaden the potential customer base to more industrial or smaller users?
Wesley R. Edens -- Chief Executive Officer and Chairman
It does. I mean, we already service many customers in exactly the same way. So -- and the way that we do it is exactly how I am describing, which is you take an ISO container, we load it at our terminals now. In this case, we'll be loading directly from a ship. We then stick it onto a truck, dray it to their site. Have got on-site vaporization, we basically drop off the full ones, pickup the empty ones and return them back to the base and repeat the exercise. So, we do this every day and have done it thousands of times. So, it's a very tried and true technology. Very, very safe. The transport for gas in this way is extremely safe. We've had a couple of accidents where we've had trucks that have overturned or whatnot. No leakage -- fortunately, no injuries on behalf of the drivers or anybody else. So, that's good, but when you move assets around, you're going to have accidents from time-to-time, but it's proven to be a very, very safe way of doing things.
And really what -- when I think of this is simply replacing a form of infrastructure with logistics, which happens every day. I mean, Amazon, UPS, FedEx, have done exactly this, and they've been able to really service their customers much better as a result. And so, that's obviously the path that we want to be on for ourselves and we feel really, really good about it.
Martin Malloy -- Johnson Rice & Company -- Analyst
Okay. And then as far as the future projects out there, should we expect that you'll be more likely to own power generation assets associated with the projects?
Wesley R. Edens -- Chief Executive Officer and Chairman
It's a mix. I think that in the case of Mexico, I think there'll be some of both. We'll own some generation. We'll also be servicing a bunch of customers, hopefully, on both the utility side, as well as on the commercial side. In the case of Nicaragua, we own the power down there as well. So, there is no doubt that power is going to be a big component of our business on the infrastructure side going forward. We had a really great experience in Jamaica. The Jamalco plant came in on time, on budget has performed fabulously. I think Brannen and his squad have done a great job of operating that. So that's terrific. So that'll be a big part of it.
At the end of the day, most customers in the world need power, right? When you woke up this morning, you wanted to make sure that your coffee pot worked, your hair dryer worked, that you actually have electricity in your house. And so, there is a much bigger demand for power I think in the world than there is for LNG per se. But in certain cases where people have got thermal power that's running on diesel, it's a very obvious switchover to go from burning diesel to burning gas, that's why that chart that I gave you is a pretty handy reminder for how much savings they really generate from doing so. But I think the answer at the end of the day is of the healthy amount of both.
Martin Malloy -- Johnson Rice & Company -- Analyst
Great. Thank you.
Operator
Thank you. And our next question comes from the line of Ben Nolan with Stifel. Your line is open. Please go ahead.
Benjamin Nolan -- Stifel, Nicolaus & Company -- Analyst
All right. Thank you. Good morning, Wes. So, I'm curious first of all, on some of the small scale penetration that you've been able to experience thus far, specifically in Jamaica and Puerto Rico, and maybe talk to how that has progressed. Obviously, it's really important to the margins, but how that has progressed with respect to winning new smaller customers and getting deeper penetration into the markets that you're in?
Wesley R. Edens -- Chief Executive Officer and Chairman
Yeah. We've had a lot of success. I mean, we -- the Jamaica projects, there are dozens of customers both current and planned. Sam has been at the forefront of building a lot of that stuff and that's been actually extremely successful. We continue to make headway in the Bahamas, servicing out of our Miami plant. We've signed another new contract last week. We have project in Bimini, which is just taking first gas, I think, in the next couple of days, and it's a significant one. So, we think that those are real prospects for us.
Puerto Rico has just started. We did -- we loaded our first trucks, I believe last week, right? So, that plant is now fully commissioned. We've got a number of very significant customers that we think there will be very early users of our projects. So, yeah, in total, we've got 39 contracts, 37 different customers, it's 15 in Jamaica, and then the rest of them are scattered around Puerto Rico, around the Bahamas, etc. So, it's 39, it could be 390 to sum next year. I mean, that's a superficial conversation but there is so much opportunity to displace distillate fuels. I mean, customers care about cost and customers care about environmental issues. So we care about both those things. So, that really is the focus.
Benjamin Nolan -- Stifel, Nicolaus & Company -- Analyst
Okay. All right. And then with respect to thinking about your gas supply and appreciating that you don't want to be specific on that. But especially with the approval of LNG by rail, is there any incremental progress or reinvigoration, I guess, of the liquefaction concept? Is that -- or is that still sort of a little bit on pause at the moment?
Wesley R. Edens -- Chief Executive Officer and Chairman
The short answer is that, we have essentially 100% of the permits in hand that we need to move LNG by rail. We know how safe it is. We know it's the right solution. That's why we spent all the time and energy, obtain those permits. So, that is something we think is a very appropriate and useful strategy for us long-term.
And with respect to the gas supply stuff, I just really would not prefer to -- or preferring not to kind of leg into it. We have something specific to share with you, I'll be delighted to do so. And I think we will in the very near term, so.
Benjamin Nolan -- Stifel, Nicolaus & Company -- Analyst
Okay, perfect. Appreciate it. And then last real quick, on the $1 per kilogram hydrogen, based on where sort of you are now, any sense of how close you are to being able to get that, without sort of actually being able to prove it out, but are you closing in on that part?
Wesley R. Edens -- Chief Executive Officer and Chairman
Jake and [Indecipherable], and the squad have a better answer. My view is that, on the traditional sources, $1 hydrogen is not really obtainable anytime soon. $2 hydrogen, which is still very productive, especially for transport issues. I think is very much a possibility. The non-traditional stuff and there are many different forms that we have seen that have yet to be really proven out in large scale. There are definitely concepts that produce significant amounts of hydrogen at $1 or less. So, we'll see. I think from our standpoint, we're probably much more excited about the non-traditional forms of hydrogen production than the electrolysis, but that's with -- the guys are spending lots of energy on, so.
Benjamin Nolan -- Stifel, Nicolaus & Company -- Analyst
All right. I appreciate it. Thanks, Wes.
Operator
Thank you. And our next question comes from the line of Sean Morgan with Evercore. Your line is open. Please go ahead.
Sean Morgan -- Evercore ISI -- Analyst
Hey, guys. Thanks for taking the questions today. So, in terms of getting that 12- to 18-month rerating to investment-grade, obviously, there's a number of credit upgrades that you'd have to achieve to get to investment-grade. So, have the rating agencies given you concrete hurdles that -- in terms of operations, or maybe is just a pure leverage to kind of cash flow generation that you need to hit to start achieving these incremental upgrades on the path to investment-grade?
Wesley R. Edens -- Chief Executive Officer and Chairman
The -- there is lots and lots of relevant data points to look at of companies that are investment-grade and what the attributes are of those companies, both in terms of leverage, in terms of diversity, in terms of stability, etc. So, there is -- there are literally 1 million data points you could look at. We've been through many of them. So, I think it's actually quite clear that if you had the credit statistics that we have and you had a long operating track record, I believe that where we are right now with the investment-grade or is it going to be investment-grade. So, we understand what the objectives are right now.
So, the rating agencies themselves are not in the business of providing concrete guidelines for anything. I mean, the rating process itself takes into account a lot of different factors. We've had great conversations with them. Really we had talked to them originally, probably 18 months ago, and it was great to come back and refresh those conversations because essentially what we had hoped to achieve and we thought we would achieve happens to match up very well with what we actually did achieved. So, that's a -- that itself is a big credentializing thing. And you don't become an investment-grade company overnight, but there is really three things that we need. We need operating history, which is consistent. We need to become more diversified. So the five columns that -- or 90% of our assets. It'd be great if that was 15 or 20 or 25, just a bigger number. And then lastly, we need to just be bigger, so that not only do we have a number of assets, but just the sheer volumes of terminals and assets and customers gets bigger. So, it's a very, very clear path on how we get from here to there. And just it's a function of the time and focus and performance we need to get that, so.
Sean Morgan -- Evercore ISI -- Analyst
Okay. All right. So, I mean, I guess, the business is sort of growing in terms of step changes and it's not really linear. So could we expect that the rating agency might do multiple notch upgrades that sort of commensurate with the new projects turning on and just kind of the incremental growth you guys have?
Wesley R. Edens -- Chief Executive Officer and Chairman
I mean, the way I think about it is, if we hit the growth objectives that we have on the new business section that I talked about and we turn on four, eight new projects over the course of the next 12 to 18 months, we will have accomplished a lot of these goals in terms of the diversity and the size. And then the operating history of the existing assets creates a new data point every day and a reassuring one. And that's why I shared with you that page, it's a great deal of detail, but it shows you kind of what it is. And you have the vagaries day by day because customers go up and down. They have -- themselves, they have issues. They have maintenance issues. There's things that happen every day. They have storms. I mean, stuff that definitely happens. But no doubt that if we are able to have a great operating history and we get to the diversity from another handful of terminals. I think we'll get closer and closer to our goal of the investment-grade. And then the savings would obviously be tremendous on the debt. We are not that heavily indebted as a Company, nor do I expect to be, just given the cash flows of the Company, but it's a good objective.
Sean Morgan -- Evercore ISI -- Analyst
Okay. Great. And then just quickly pivoting to the ISO containers on Page 7, where you talked about all the active regions. Can you maybe just give us a little bit of just more information around which of those regions you think that might benefit from this ISO container strategy and the smaller ship, more efficient transfer?
Wesley R. Edens -- Chief Executive Officer and Chairman
Yeah. I think the answer is all of them do. When you think about it, for the large-scale customers having an offshore or onshore LNG terminal, makes a lot of sense. So, if you have a customer that is using 1.5 million or 2 million or 3 million gallons a day, the traditional FSRU and the long-term terminal makes a lot of sense.
For the customers that have got -- here is a good rule of thumb is, for every 100 megawatts of power, you use about 250,000 gallons per day of LNG. So, 10,000 gallons per container, that's 25 moves. That's a -- so for 300 megawatts, you'd have 75 moves a day, which is over 24-hour timeframe is just not that many trucks and containers. So that's the way to think about dimensioning it. Obviously, if you're in a situation where you've got 2 million or 3 million or 4 million gallons a day from a single customer, or group of customers having a different solution makes a lot of sense. But I think on balance, you'll find there's many, many more applications in the world for people that have got smaller scale needs than the large-scale needs. And I think in terms of the time to deliver the diversification, all the things it does for us, it's incredibly positive, so.
Sean Morgan -- Evercore ISI -- Analyst
Okay. Thanks. I'm going to turn it over.
Wesley R. Edens -- Chief Executive Officer and Chairman
Thanks.
Operator
Thank you. [Operator Instructions] Our next question comes from the line of Marc Solecitto with Barclays. Your line is open. Please go ahead.
Marc Solecitto -- Barclays Bank -- Analyst
Hi. Good morning. Thanks for taking my question. Just first on the legacy Centrica cargoes that are scheduled for 2021. How should we think about those, and when you look potentially revisit those similar to the cargoes you did in 2020 just as you build liquidity with your facilities ramping up through the end of the year?
Wesley R. Edens -- Chief Executive Officer and Chairman
It's a great question. The ink is barely dry on the existing deal. So we haven't focused on 2021 yet. And I went through the numbers in terms of the relative needs we have in the business on where we are to kind of show you that we still have a substantial open position. It may make sense for us to do a similar transaction at the first part of next year, it will depend on their needs as a counterparty. And so, it's a very friendly conversation, obviously. And so, right now we still are about 65% open with existing volumes. And I think that that number is going to go up not down because we do think we're going to need a bunch more gas for customers that are in the pipeline right now. But I think for the moment we just assume that we burn those cargoes as they are scheduled to come in. And we'll make that decision and adjustment later in the year as the year passes by.
Marc Solecitto -- Barclays Bank -- Analyst
Okay. Great. And then shifting to capital allocation, the commentary on the dividend strategy was helpful. And I think your answer to the prior question, you touched upon this. But just wondering if you have like a run rate leverage target in mind as well.
Wesley R. Edens -- Chief Executive Officer and Chairman
We do. I mean, our goal, long-term is to be less than 3 times. Right? I think that's kind of where we are right now, honestly. So we think 3 and less is the -- that's the region where you get investment-grade consideration. And it also is what we think is reasonable given the potential disruptions from any one asset or series of assets, etc., those are all considerations that we take into account. But we think that 3 or less long-term. And we think with these growth numbers, it could be substantially less than that, frankly. But that's kind of the guidepost.
Marc Solecitto -- Barclays Bank -- Analyst
That's helpful. Thanks.
Wesley R. Edens -- Chief Executive Officer and Chairman
Great.
Operator
Thank you. And our next question comes from the line of Craig Shere with Tuohy Brothers. Your line is open. Please go ahead.
Craig Shere -- Tuohy Brothers -- Analyst
Good morning. To start with on your new ISO Flex model, do you see this materially enhancing the value of your first mover hub-and-spoke Central American and Caribbean bunkering strategy? And is ISO Flex the reason that Nicaragua's timeline is moving up? And is there any size project where ISO Flex is not the ideal solution?
Wesley R. Edens -- Chief Executive Officer and Chairman
Maybe I'll take them in reverse order. The size is the example I used before. So if it was a very large project, I think it would make more sense in the long term to have fewer logistics, fewer handling of the product. And so, have the FSRU that is anchored for us off the coast of Jamaica right now is a good example of that.
The answer to the second question is, yes, specifically the reason why the timeline on Nicaragua has been advanced is specifically because of this solution. So, that's a kind of real-life manifestation of why we think it makes so much sense. And we really believe that the -- having the ability to again service each of the parts of the value chain is what gives us really the competitive advantage. So, none of these things individually, I don't think is that complicated. But you need a big ship and you need manifolds, you need ISO containers and you need trucking and logistics and you need power and you need vaporization and you need all those things and yeah, it'd be helpful if you have all the capital to pay for it.
So, there are -- certainly, there will be competition and there is competition for us in the world. But the world is so under-electrified and so in need of these projects, and they don't need a project that turns on five years from now. They need a project that turns on now, and that is at the epicenter of why I believe that the solution is such a meaningful one because a 1,000 megawatt or 2,000 megawatt MOU, I've seen signed [Phonetic] at all these different countries around the world, that says it's going to deliver in five years. It's just not that relatable. It is not -- it does not address what the issues really are. And I think this -- the project in Nicaragua is a very good example of something that's meaningful to the country. It's the first new infrastructure that's been built on the power side in a long time. It's been done with gas, which is much cleaner and much cheaper than the alternative at the moment, and we think that there are many, many, many of those solutions around the world that are needed.
Craig Shere -- Tuohy Brothers -- Analyst
And on the hydrogen, in terms of your owned generation and customer generation to achieve supply fuels, what is the max hydrogen that can be in the fuel mix with existing turbines?
Wesley R. Edens -- Chief Executive Officer and Chairman
Existing turbines, the GE folks tell me it can burn up to 95% hydrogen today. So, the answer is a lot. I mean -- and so, the answer is, a lot. Right? And we -- that's why I think that we're so focused on hydrogen as an alternative because the infrastructure that we are busy developing all over the world is then very usable for. So, if we were able to come up with the hydrogen production capability that actually magically generated the $1 hydrogen, which of course, that's the goal, you would turn it on to your plans immediately. And that's our real value as a potential customer and partner of these different technologies, because we could actually like ourselves obtain proof-of-concept by using them on our existing assets, so.
Craig Shere -- Tuohy Brothers -- Analyst
Interesting. Last question on the long-term LNG supply concern, which 10 years from now may not be a concern if you come up with this hydrogen solution. But where does infield small scale liquefaction opportunities fit into that solution for the long-term risk?
Wesley R. Edens -- Chief Executive Officer and Chairman
Yeah. It's interesting, we look hard at it four years ago, I guess, is when I spent a lot of time on it. And there are -- there is a lot of gas that is flared in the world, so it seemed like it was a sensible way to take the liquefaction to places where they're flaring gas. And I think it would -- that, in fact, is true. And I looked at some examples. I actually did some field trips and actually saw places where it was being deployed. So, I think it's actually interesting. We could never really get a clear sense of the numbers, though, actually. I mean, I asked a very, very simple question, which is, for every molecule that goes in, how many molecules come out? I mean, not to oversimplify, but just trying to figure out how much has been used in that process, and I could never get really the numbers to my satisfaction that led us to believe that it was a great solution long-term.
But I think there's still is a lot of gas that's flared in the world that could be definitely liquefied in that manner. And I think that there are people that are working on that. I don't know how that would fit with the scalability of what it is that we're trying to accomplish. So -- but I think it may be viable commercial and it's probably -- it's certainly desirable environmentally if you can do so. So, I would applaud efforts to do that, but I'm not sure the application for us given the scale what our business has turned into would be the right answer, so.
Craig Shere -- Tuohy Brothers -- Analyst
But was -- even apart from solving the flaring issue and creating a win-win for you and the world. In terms of like what you have the opportunity in the Pennsylvania Marcellus and deploying that in other locations where you actually control and own long-term known liquefaction supply without owning the reserves.
Wesley R. Edens -- Chief Executive Officer and Chairman
Yeah.
Craig Shere -- Tuohy Brothers -- Analyst
Could -- I know in today's market with the world awash with LNG and FID in Pennsylvania, sounds nutty. But as you look out a couple of years, do things like this really fit into the long-term solution?
Wesley R. Edens -- Chief Executive Officer and Chairman
Well, I think that the answer is absolutely at some point. Right? And we're looking at a lot of alternatives. The same thing, I don't want to be evasive about not answering questions directly, but I just -- I don't really want to give a partial answer. So, we think that there is a lot of different ways to accomplish what we want to accomplish. And let's just leave it at that. When we have something more specific, we'll talk to you about it. And I think it will be sooner than later, hopefully, so.
Craig Shere -- Tuohy Brothers -- Analyst
Great. Thank you.
Operator
Thank you. And I am showing no further questions at this time. And I would like to turn the conference back over to Mr. Wes Edens for any further remarks.
Wesley R. Edens -- Chief Executive Officer and Chairman
Great. No real closing remarks. Thanks for all the questions this morning, and thanks for the interest and calling in. And we look forward to talking to you, hopefully, at the end of October. Right, Chris? So, great. Thanks so much.
Christopher S. Guinta -- Chief Financial Officer
Thanks.
Operator
[Operator Closing Remarks]
Duration: 69 minutes
Call participants:
Alan Andreini -- Head of Investor Relations
Wesley R. Edens -- Chief Executive Officer and Chairman
Brannen McElmurray -- Chief Development Officer
Sam Abdalla -- Vice President, Projects Development
Jake Suski -- Director of Zero
Christopher S. Guinta -- Chief Financial Officer
Alonso Guerra-Garcia -- Scotiabank -- Analyst
Devin Ryan -- JMP Securities LLC -- Analyst
Ryan Levine -- Citigroup -- Analyst
Igor Levi -- BTIG, LLC -- Analyst
Martin Malloy -- Johnson Rice & Company -- Analyst
Benjamin Nolan -- Stifel, Nicolaus & Company -- Analyst
Sean Morgan -- Evercore ISI -- Analyst
Marc Solecitto -- Barclays Bank -- Analyst
Craig Shere -- Tuohy Brothers -- Analyst
