Despite forecasts of slower regional economic and population growth, the Northeast is expected to consume one-third more natural gas over the next 20 years just to fuel the string of power generation facilities that are planned for the region, an official with the Energy Information Administration (EIA) said last Thursday.

Gas-fired generation will be “clearly the driver” behind the region’s growth in demand, Scott Sitzer, director of the EIA’s Coal and Electric Power Division, said at a FERC-sponsored conference on the Northeast energy infrastructure in New York City. He estimated that gas’ share of the New England generation market will grow to 30% by 2020 from its current 9%. The market currently is dominated by coal, steam and nuclear, which represent about 75% of generation supply. He anticipates that coal will capture “very little” of the new generation capacity to be added, and that there will be a “slight decline” in nuclear power.

Some energy executives questioned the wisdom of generators relying so heavily on a single source of fuel for their plants in the years ahead. Others had doubts about how many of the proposed gas-fired generation plants for the Northeast market would actually materialize, with one noting that developers who were “pretty bold” about their plans six months ago are now “running for the hills” in the wake of the Enron Corp. scandal.

Sitzer said about 23 gas-fired combined cycle and turbine facilities are expected to be built in the Northeast-Mid Atlantic region, and they will be able to meet all of the anticipated increase in electric demand for the region (31 gigawatts) over the next 20 years. About two-thirds of the facilities will be built in the Mid-Atlantic region, while the balance will be split between New York and New England, he noted, adding that a “good chunk” of the capacity will be constructed within the decade. These facilities will boost gas demand by about 1.3 Tcf/d over the next two decades, he estimated.

“…We expect the adjustments in gas markets to accommodate this level of growth are going to be very challenging,” Sitzer told conference attendees.

Canadian gas imports and liquefied natural gas (LNG) will supply much of the generation-fueled rise in demand, given that the Northeast market is located far from U.S. production basins, Sitzer said. The EIA anticipates that nationally there will be will about a 1.6 Tcf increase annually from Canada over the next 20 years, and about 700,000 Bcf from LNG imports — a “very large portion” of which will flow into the Northeast.

“We don’t expect any new LNG import terminals to be built,” Sitzer said, but expansions are anticipated. He singled out the Distrigas terminal near Boston, MA, which he noted will double its capacity, and Williams’ Cove Point facility, which he said will see “some growth.”

Sitzer said pipeline deliveries into the Northeast, which were at 3.3 Tcf in 2000, are projected to grow 25% in the years ahead with incremental supplies coming “almost entirely” from Canada. Pipeline capacity into New England is likely to double by 2020, he noted, while the Mid-Atlantic will see a rise of about 10% to 5.5 Bcf.

As for wellhead prices, he predicts that the average will be about $3.25/Mcf by 2020, an increase over the currently depressed level.

At the same time, the EIA anticipates that electricity prices in the Northeast, which currently are 2-4 cents higher than the national average, will fall within the next two decades. “We expect to see a decline as new competition helps to reduce costs, new more efficient gas-fired generating technologies come into play, and coal costs continue to decline,” Sitzer said.

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