New England Faces Pipeline Constraints As Early as Winter 2003
If New England's interstate natural gas pipeline system remains unchanged, transportation constraints are likely to arise during winter 2003, affecting more than 1,700 MW of gas-fired electricity generation in the region, according to a new study conducted by ISO New England (ISO-NE) and Levitan & Associates. Consequently, constraints could intensify by winter 2005, with capacity shortfalls potentially affecting up to 3,200 MW of gas-fired electricity production.
The findings of the study were announced last week at a news conference in Boston by William W. Berry, ISO-NE's CEO. Berry assured the conference that the New England region was not likely to become another California, but that interstate pipeline infrastructure would need to be added to ensure reliability for electric generation in the near future.
New England's interstate pipelines currently transport fuel for 23% of the power plants across New England. ISO-NE forecasts that within the next five years, gas-fired generation could feasibly account for more than 40% of the region's electricity generation.
The study found that the region's pipeline infrastructure, in conjunction with Distrigas' LNG vaporization capability, is sufficient to meet anticipated gas transportation requirements for gas utility and generation loads in all summer, fall and spring seasons through 2005, but winter as soon as 2003 may not be as bright.
"These findings concern us," said Stephen G. Whitley, ISO-NE's vice president of system operations. "The findings provide a guideline for the electric and gas industries to assure that supplies are delivered to meet the needs of the consumer in the coming years. One of the most obvious recommendations is for these gas-fired plants to have dual fuel burning capabilities and back-up fuel capability." ISO New England points out that dual-fuel capabilities are not currently a requirement for new power plants in the region due to recent issues associated with back-up fuels that include environmental, storage and delivery concerns. "It is clear we must begin to address these concerns as soon as possible," Whitley added.
Of New England's five major interstate pipelines, Algonquin, and to a lesser extent, Tennessee, already are filled "tight-as-a-drum" during the critical winter months of November through March, the study said. With additional generators vying for more gas to fuel their plants, it's easy to see how transportation constraints, or bottlenecks, could form in the near future.
Thomas M. Kiley, president of The New England Gas Association (NEGA), weighed in on the report. "The study underscores the need for new pipeline capacity to meet growing demand for natural gas in the region, particularly for electric generation," said Kiley. "Several new pipeline projects have been proposed for delivery of additional gas supplies to the region in the next few years. NEGA urges approval of proposed projects to meet the region's demand."
NEGA said that while Tennessee's recently completed Eastern Express 2000, and Iroquois Gas Transmission's proposed Eastchester project were good starts, the group advised that a number of other proposed projects be looked into. NEGA proposed a handful of projects that would increase reliability and deliverability including: Tennessee's Eastern Express New England; Duke Energy's Hubline project; and Maritimes and Northeast's Phase three expansion. NEGA also recommended two New England to Long Island pipeline projects proposed earlier this month, Tennessee's Connecticut-Long Island Lateral project and Duke Energy's and Keyspan's Islander East project (see NGI, Feb. 5).
The NE-ISO study shows that 1,500 MW of new generation has come online in New England over the past two years, with another 2,000 MW expected to be in service by year-end 2001. By last count, there is currently more than 6,700 MW under construction throughout the six-state region, all of which have natural gas listed as their primary fuel source.
The study found that continued supplements from liquified natural gas (LNG) are essential for the future. With LNG enjoying a resurgence of late, it's no wonder that it has played an increasingly significant role in the Mid-Atlantic states and New England. There are 48 LNG facilities in the Northeast, with the majority of them "satellite" facilities that possess only storage and vaporization capabilities, as opposed to full-service LNG plants that provide local distribution companies (LDCs) with liquefaction capability. Currently, LNG in the region has 14,435 MMcf of storage capacity and 1,388 MMcf/d of deliverability. The LNG storage facilities are used by LDCs to supplement pipeline supplies during winter peak demand periods.
Another indicator that New England needs more pipeline capacity can be found in demand statistics. The region's demand for natural gas grew significantly over the last decade, even in the face of moderate recent winters. "Since 1990, the compound annual growth rate has been 3.9%.
This rate has no doubt been tempered by the significantly warmer-than-normal temperature conditions characteristic of several of the last five winters," the study said. "In 1997, total gas delivered to New England's consumers reached 630 Bcf, or 1.73 Bcf/d on average. This average represents about 45% of the total pipeline delivery capability comprised by Algonquin, Tennessee, Iroquois, Maritimes & Northeast and Portland Natural Gas Transmission. Warm winters decreased total gas usage in 1998 and 1999 to 575 Bcf (1.58 Bcf/d) and 585 Bcf (1.60 Bcf/d), respectively."
The study recommended that to ensure future gas capacity is adequate, New England must expand its gas pipeline infrastructure, put "more iron in the ground," and form better communications between the natural gas and electric power industries, so that power plants in the region will have up-to-date information on the status of gas transport and delivery into the region.
The report also projected that the use of natural gas to fire plants will increase from 16% in 1999 to about 45% by 2005, and that without new capacity, shortages in 2005 may occur not only on peak days, but also throughout the 60-day peak heating season.
The joint study revealed two probable solutions: constructing new pipeline capacity in the region and requiring new gas-fired plants to have back-up fuel capabilities such as fuel oil. Many of the constraint mitigating measures offered by the study included the addition of compression at various points along the pipeline infrastructure. To follow up on the back-up fuel possibilities, New England would have to delve into the air permit laws.
Recent state issued air permit laws range from "an outright ban on the use of back-up fuel to restrictions on use during the summer ozone season," the study said.
When conducted, the study assumed that an ample natural gas supply will be available to supply New England's needs. "New England's natural gas supply sources have, and are expected to increase," said Whitley. He noted that this assumption includes imports from Canada and liquified imports from Africa and the Caribbean. The study also assumed that electricity usage will grow between 1.5% and 2.4% in the region, with new gas-fired generation of 6,000 to 11,000 MW coming online by 2005.
The results of the study were presented to the New England Power Pool (NEPOOL) Participants Committee at the beginning of January and submitted to the NEPOOL Reliability for further review. The New England Gas Study in its entirety is available at on NE-ISO's website at www.iso-ne.com.
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