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New York City's NatGas Infrastructure Upgrades Said Critical

A year-long study of New York City's energy infrastructure has found that upgrades to natural gas services are critical for the city to prepare for huge supply and demand growth over the next two decades.

The study by ICF International, released by Mayor Michael Bloomberg, analyzed the city's gas infrastructure and future needs and provided an outlook for the region's natural gas market. ICF also reviewed the life-cycle of greenhouse gas (GHG) emissions of fuel oil, natural gas and biofuels as part of the city's sustainability plan, PlaNYC, which was enacted in 2007 to reduce emissions by 30% by 2030.

New York City's current natural gas system infrastructure operates "near its limits during peak periods," according to ICF. "Additional gas supply and infrastructure upgrades are needed to meet rising demands, particularly as city buildings make mandatory conversions from heavy heating oil to cleaner fuels." ICF also found that producing, transporting and using gas would result in 20% fewer GHG emissions than heavy heating oil.

"Natural gas is a low-cost, low-emissions fuel that makes good economic and environmental sense," said Bloomberg. The ICF study "confirms its importance to New York City's reliable, clean energy future and demonstrates that with responsible, well-regulated development, we can make the investments that both improve our air quality and save lives."

According to the study, "Marcellus Shale gas production will have a significant effect on pipeline flows across the United States and in the Northeast. With large resources so close to markets, shale gas development in the Northeast will displace supplies from the region's traditional sources of gas, the Gulf Coast and Canada. By the end of the forecast period, ICF believes that over 80% of the physical gas going to New York City will be shale gas from nearby areas."

Close to 57% of the city's energy use today is fueled by natural gas, "either directly through on-site combustion to heat and cool buildings, or indirectly through the use of gas at power plants to generate electricity," said ICF. "Two large gas local distribution companies (LDC) serve New York City, Consolidated Edison Co. of New York Inc. (ConEd) and National Grid USA (NGrid). In 2009, they delivered about 462 Bcf of gas or an average of 1.3 Bcf/d to their customers...

"The New York LDCs have substantial capacity on long-haul transmission pipelines into the region. By using the supply capacity on these transmission lines, supplemented by peak- shaving facilities on their systems, the LDCs are able to meet peak-day sendout in the city of approximately 2.5 Bcf/d."

New York City last year enacted laws to phase out certain types of fuel heating oil. Existing boilers by 2015 are required to upgrade using natural gas and/or heating oil grade No. 2 or residential fuel oil No. 4 (see NGI, May 21). About 10,000 buildings -- or just 1% of the city's building stock -- burn fuel oil, but they produce more annual soot pollution than all the cars and trucks on the road, according to the mayor's office.

"Without taking into account the impact of gas conversions stemming from the city's heavy oil regulations, both LDCs expect growth in their peak-day sendout requirements of about 1.1% per year, as well as growth in total deliveries of less than 1% per year," said ICF. "Both LDCs will require pipeline capacity and distribution facility enhancements to meet growing winter peak-day demand."

The average per-day impact of the potential conversions "represents a 16% increase and the peak-day impact represents a 30% increase," said the ICF forecast. "The conversions would constitute a 58% increase in peak-day load for ConEd and a 6% increase in peak-day load for NGrid. Lesser conversion levels would result in smaller, but still significant, increases in LDCs' peak-day requirements."

Researchers concluded that the conversion growth to natural gas, when added to other growth forecasts by the LDCs, would require additional upstream gas supply capacity, including new pipelines, along with infrastructure improvements within the LDCs' service territories to meet peak-day responsibilities.

"While we expect that conversions from heavy oil will take place over the next decade, which may moderate their short-term impact on gas supply system needs, locally and upstream, the length of the implementation term does not change the overall conclusion regarding the effects of conversions to natural gas and the associated system needs."

ICF's report comes on the heels of an opinion piece co-authored by Bloomberg with unconventional drilling pioneer George Mitchell, which was published in the Washington Post (see related story). The duo offered their unqualified support and a big financial boost for "common sense" hydraulic fracturing (fracking) regulations, just days ahead of expected new guidelines for New York state drillers that is expected to be issued by New York Gov. Andrew Cuomo's administration.

The billionaire mayor's Bloomberg Philanthropies is providing a $6 million grant to the Environmental Defense Fund (EDF) to help secure stringent rules in 14 states that today account for most of the gas reserves accessible through unconventional drilling, or about 85%. The Cynthia and George Mitchell Foundation also committed $1.6 million to the effort, with $400,000 specifically designated for the EDF to help institute new or improved regulations for unconventional drilling.

Increased gas production in the Northeast, i.e., the Marcellus Shale, has reduced prices across the United States and is displacing pipeline imports to the Northeast from the Gulf Coast and Canada, ICF's report said. According to researchers, around 30% of the gas supply reaching New York City today is derived from regional shale deposits and that amount is expected to grow to 80% by 2025.

The city "has benefited from increased domestic gas supplies over the past few years in the form of cleaner air, fewer greenhouse gas emissions and lower energy costs," said New York City Energy Policy director Sergej Mahnovski. "Gas has displaced more polluting fuels in the power sector and many building owners are converting boilers from heavy fuel oil to natural gas. Modernizing regional gas infrastructure -- if done responsibly -- will help achieve our public health goals while improving reliability and promoting economic growth."

The report "specifically focused on greenhouse gas emissions from the entire life-cycle of natural gas -- from extraction, transmission and distribution, to combustion in boilers," said Bloomberg. "The study found that the use of natural gas leads to approximately 40% less GHG emissions than coal used in power plants and 20% less than conventional fuel oil used in boilers."

ICF noted that work is being done to estimate GHG emissions from shale gas production. "The collection of better data on these emissions will allow for better characterization of the emissions. There are also federal and proposed state regulations that would require reductions of these emissions starting in 2012. Such regulations will result in life-cycle emissions for shale gas that are lower than those calculated" by researchers.

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