Maritimes, Algonquin Plan to Expand New England Pipes
With energy prices rising at an alarming rate, there's no better
time than the present to launch expansion projects for gas pipeline
infrastructure. Maritimes & Northeast Pipeline and Algonquin
Gas Transmission did just that last week, filing applications with
the Federal Energy Regulatory Commission to build related pipeline
extensions designed to bring Sable Island gas to the greater Boston
area, including a couple new power plants.
The projects, which together cost about $270 million, would
include an extension of the Maritimes system in a southeastern
direction through several Massachusetts counties to the coast where
it would connect with the proposed Algonquin line. Algonquin would
then continue the route offshore and down the coastline through
Boston Bay to Weymouth on the south side of Boston Harbor. The two
projects are expected to be in service in November 2002.
"Access to new supplies of natural gas is essential to keep pace
with the growing market," said Tom O'Connor, president of M&N
Management, manager of Maritimes & Northeast Pipeline, which
brings Atlantic Canadian gas to the Northeast from the Sable
Offshore Energy Project offshore Nova Scotia. "Maritimes' expansion
will provide greater energy security and reliability for all
consumers in the Northeast. Additionally, as gas-fired electric
generating plants are built, electricity will be produced more
efficiently and cleanly."
The $140 million Maritimes project, called the Phase III
expansion, would include 24 miles of 30-inch diameter pipeline and
one mile of 24-inch diameter pipe, extending from Methuen, MA to
Beverly, MA. About 76% of the proposed Maritimes extension route
would be in or adjacent to existing right of way owned by New
England Power Co, the pipeline company said.
Although Maritimes did not file any new contracts for service to
support the project, it said its existing shippers support the plan
because the new extension capacity will be available for use by all
of them at the same recourse rates they currently pay. Maritimes
also told the Commission it expects markets to develop along the
line after it goes into service in a way similar to what occurred
along its 100-mile Phase II project. It does not intend to roll in
the cost of the Phase III project at this time but may seek to do
so at a later date. The new Maritimes facilities would be capable
of transporting 360,000 Dth/d.
The new Beverly delivery point would become a primary delivery
point for all Maritimes shippers, and the cost of transportation
would be the same (capped at $0.715/Dth) as for delivery to
Maritimes' other primary delivery point at its connection with
Tennessee Gas in Dracut, MA.
The $130 million Algonquin extension project, called HubLine,
would include a 30-mile, 24-inch diameter offshore pipeline
extending from the terminus of Maritimes Phase III to Algonquin's
existing facilities in Weymouth along with ancillary facilities
onshore. Additionally, a five-mile, 16-inch diameter lateral
pipeline is proposed to Deer Island in Boston Harbor. Algonquin
said it chose the offshore route to avoid the difficult
environmental and landowner hurdles of a land route.
"The proposed route was selected to minimize impacts to the
environment, landowners and the greater Boston community," said
Robert Evans, president of Duke Energy Gas Transmission, parent
company of Algonquin. "In the coming months, we will continue to
review the route and solicit input from people interested in the
project so we can construct the pipeline safely and in strict
compliance with all environmental regulations."
The project has significant market support through long-term
contracts for firm transportation capacity from Duke affiliate
Texas Eastern (80,000 Dth/d), Sithe Power Marketing (140,000
Dth/d), Southern Energy Kendall LLC (35,000 Dth/d), Southern
Connecticut Gas (20,000 Dth/d) and Providence Gas (500 Dth/d).
"Energy consumers are demanding more and more natural gas," said
Evans. "Local distribution companies continue to grow their markets
through conversions and service area expansions, new and more
efficient gas-fired electric generating plants are being built and
existing power plants are converting to gas."
Sithe and Southern plan to use their capacity to serve new power
plants while CNG and Providence plan to serve simple residential,
commercial and industrial demand growth within their local
distribution services territories. Texas Eastern plans to use its
leased capacity to provide its own shippers with firm hourly swing
rights and other imbalance management services. The services and
additional flexibility are expected to reduce Tetco's reliance on
operational flow orders. Tetco also filed an application this week
for its lease of the proposed Algonquin expansion capacity.
The projects' sponsors also included a number of studies to
support their extensions. Dr. Susan Tierney of Lexicon Inc. and
Wayne Oliver of Navigant Consulting performed a market/benefits
study of the Phase III and HubLine projects, concluding they would
provide substantial benefits to Massachusetts residents and the New
England gas market as a whole. The projects represent "an example
of the type of gas delivery infrastructure that the New England
region needs to enable the continued development of competitive
energy markets and to achieve the region's objective of improving
its air resources through reduced emissions of various air
pollutants," the study concluded.
Maritimes and Algonquin also found support in a recent
Department of Energy (DOE) report, which concluded greater gas
pipeline infrastructure in the region would help reduce demand
surges and high prices for fuel oil. The DOE's Office of Natural
Gas and Petroleum Import and Export Activities recently noted in
its Second Quarter Report 2000 that gas demand in New England has
grown by more than 67% in the last 10 years and will require
continued infrastructure expansion to support further growth.
Maritimes & Northeast, a 650-mile gas pipeline traversing
Atlantic Canada and the northeastern United States, is owned by
affiliates of Duke Energy (37.5%), Westcoast Energy (37.5%),
ExxonMobil (12.5%) and NS Power Holdings Inc. (12.5%).