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NatGas Pipeline Shortage Still A Concern, ISO-New England Says

Pipelines are being built to carry natural gas away from the Marcellus and Utica shale producing areas, but not enough of them are designed to serve New England, a growing concern for a region increasingly reliant on natural gas, according to the region's grid operator.

The Independent System Operator of New England (ISO New England) "has immediate and growing concerns about the availability and flexibility of generating resources -- particularly natural gas and oil-fired resources -- to reliably serve the daily, round-the-clock demands of electricity consumers in New England," according to a draft of the ISO's annual Regional System Plan (RSP).

Of 30 proposed pipeline expansion projects under development across the Northeast, only six would bring either new or incremental pipeline capacity and access to additional natural gas supplies to New England, according to the RSP:

  • Portland Natural Gas Transmission System's Continent-to Coast project, combined with upstream expansion to provide more capacity on the TransCanada and Trans-Quebec and Maritimes pipelines (see Daily GPI, Dec. 3, 2013);
  • Spectra Energy Corp.'s Algonquin Incremental Market Project (see Daily GPI, Aug. 6);
  • Kinder Morgan's Connecticut Expansion Project (see Daily GPI, Aug. 14);
  • Kinder Morgan's Northeast Expansion Project (see Shale Daily, May 31, 2012);
  • Iroquois Gas Transmission's Wright Interconnection Project (see Shale Daily, Feb. 13); and
  • Spectra's Atlantic Bridge Project (see Daily GPI, Feb. 5).

The electric power system is the largest consumer of natural gas in New England, and "this dependence on the natural gas fuel-delivery system that has limited local storage, combined with the economic pressures experienced by gas- and oil-fired generating facilities to participate in the wholesale electricity markets while attempting to minimize operating costs, are causing persistent reliability concerns. These concerns, while possible year-round, are most acute during extended cold-weather periods when natural gas demand by LDCs [local distribution companies] is high," according to the plan.

New England turned to natural gas to fuel 42.8% of its capacity and 45.1% of its electric energy production in 2013, with oil (22.3% capacity, 0.9% electric energy), coal (7.2% capacity, 5.6% electric energy), nuclear (14.6% capacity, 33.2% electric energy) and a mix of hydro, pumped storage and renewable resources (13.1% capacity, 15.3% electric energy) all much smaller pieces of the fuel mix pie. "The high regional dependence on natural gas-fired generation has resulted in natural gas fuel prices typically setting the marginal price for wholesale electricity," ISO-New England said.

Gas has risen to dominance in the region's power generation sector as a result of the addition of new, efficient gas-fired units over the past 13 years, the displacement of less efficient oil-and gas fired units, and the relatively low price of gas. And the use of natural gas is expected to grow, reaching about 48% of New England's system capacity mix as early as 2017, ISO-New England said.

Natural gas consumption in Massachusetts averaged 390 Bcf per year between 1997-2012, good for 2-3% of total U.S. demand in each of those years. Overall, gas consumption in Massachusetts grew at a trend-line rate of 1.1% per year during that time period.

ISO-NE has schedule a public meeting to discuss the RSP in Boston Thursday (Sept. 11).

In January, the governors of six New England states called on ISO New England to provide technical support and assistance with necessary tariff filings for new electric and natural gas infrastructure (see Daily GPI, Jan. 23). In a letter to ISO New England CEO Gordon van Welie, the New England States Committee on Electricity, on behalf of the governors, asked for assistance as they request proposals for transmission infrastructure to deliver at least 1,200 MW and as much as 3,600 MW of electricity from clean energy sources into the grid, as well as to develop a funding mechanism to support investment in additional pipelines to bring natural gas from the Pennsylvania region into New England.

Officials at Massachusetts Municipal Wholesale Electric Co. last month said it would be a better deal for customers if the Ludlow, MA-based non-profit owned a new natural gas pipeline (see Daily GPI, Aug. 18).

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