If New England’s interstate natural gas pipelines remainunchanged, transport constraints are likely to arise during winter2003, affecting more than 1,700 MW of gas-fired electricitygeneration in the region, according to a new study conducted by ISONew England (ISO-NE) and Levitan & Associates. Consequently,constraints could intensify by winter 2005, with capacityshortfalls potentially affecting up to 3,200 MW of gas-firedelectricity production.

The results of the study were announced yesterday by ISO-NE CEOWilliam W. Berry at a news conference in Boston. Berry assured theconference that the New England region is not likely to be anotherCalifornia, but that interstate pipeline infrastructure would needto beÿadded to ensure reliability for electric generation in thenear future.

New England’s interstate pipelines currently transport fuel for23% of the power plants across New England. ISO-NE forecasts thatwithin the next five years, gas-fired generation could feasiblyaccount for more than 40% of the region’s electricity generation.

The study found that the region’s pipeline infrastructure, inconjunction with Distrigas’ LNG vaporization capability, issufficient to meet anticipated gas transportation requirements forgas utility and generation loads in all summer, fall and springseasons through 2005, but winter as soon as 2003 may not be asbright.

“These findings concern us,” said Stephen G. Whitley, ISO-NE’svice president of system operations. “The findings provide aguideline for the electric and gas industries to assure thatsupplies are delivered to meet the needs of the consumer in thecoming years. One of the most obvious recommendations is for thesegas-fired plants to have dual fuel burning capabilities and back-upfuel capability.” ISO New England points out that dual-fuelcapabilities are not currently a requirement for new power plantsin the region due to recent issues associated with back-up fuelsthat include environmental, storage and delivery concerns. “It isclear we must begin to address these concerns as soon as possible,”Whitley added.

Of New England’s major interstate pipelines, including IroquoisGas Transmission System, Tennessee Gas Pipeline, Algonquin GasTransmission Co., Maritimes and Northeast Pipeline and PortlandNatural Gas Transmission System, Algonquin, and to a lesser extent,Tennessee, already are filled “tight-as-a-drum” during the criticalwinter months of November through March, the study said. Withadditional generators vying for more gas to fuel their plants, it’seasy to see how transportation constraints, or bottlenecks, couldform in the near future.

The study shows that 1,500 MW of new generation has come onlinein New England over the past two years, with another 2,000 MWexpected to be in service by year-end 2001. By last count, there iscurrently more than 6,700 MW under construction throughout thesix-state region, all of which have natural gas listed as thereprimary fuel source.

Levitan & Associates also formed a number of possible mockscenarios including pipeline closures and peak winter weather, toforecast how the region would be affected and how the remaininginfrastructure would hold up.

The study also found that continued supplements from liquifiednatural gas (LNG) are essential for the future. With LNG enjoying aresurgence of late, it’s no wonder that it has also played anincreasingly significant role in the Mid-Atlantic states and NewEngland. There are 48 LNG facilities in the Northeast, with themajority of them being “satellite” facilities that possess onlystorage and vaporization capabilities, as opposed to full-serviceLNG plants that provide local distribution companies (LDCs) withliquefaction capability. Currently, LNG in the region has 14,435MMcf of storage capacity and 1,388 MMcf/d of deliverability. TheLNG storage facilities are used by LDCs to supplement pipelinesupplies during winter peak demand periods.

Another indicator that New England needs more pipeline capacitycan be found in demand statistics. The region’s demand for naturalgas grew significantly over the last decade, even in the face ofmoderate recent winters. “Since 1990, the compound annual growthrate has been 3.9%. This rate has no doubt been tempered by thesignificantly warmer-than-normal temperature conditionscharacteristic of several of the last five winters,” the studysaid. “In 1997, total gas delivered to New England’s consumersreached 630 Bcf, or 1.73 Bcf/d on average. This average representsabout 45% of the total pipeline delivery capability comprised byAlgonquin, Tennessee, Iroquois, M&N and PNGTS. Warm wintersdecreased 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 isadequate, New England must expand its gas pipeline infrastructure,put “more iron in the ground,” and form better communicationsbetween the natural gas and electric power industries, so thatpower plants in the region will have up-to-date information on thestatus of gas transport and delivery into the region.

The report also projected that the use of natural gas to fireplants will increase from 16% in 1999 to about 45% by 2005, andthat without new capacity, shortages in 2005 may occur not only onpeak days, but also throughout the 60-day peak heating season.

The joint study revealed two probable solutions: constructingnew pipeline capacity in the region and requiring new gas-firedplants to have back-up fuel capabilities such as fuel oil. Many ofthe constraint mitigating measures offered by the study includedthe addition of compression at various points along the pipelineinfrastructure. To follow up on the back-up fuel possibilities, NewEngland would have to delve into the air permit laws. Recent stateissued air permit laws range from “an outright ban on the use ofback-up fuel to restrictions on use during the summer ozoneseason,” the study said.

When conducted, the study assumed that an ample natural gassupply will be available to supply New England’s needs. “NewEngland’s natural gas supply sources have, and are expected toincrease,” said Whitley. He noted that this assumption includesimports from Canada and liquified imports from Africa and theCaribbean. The study also assumed that electricity usage will growbetween 1.5% and 2.4% in the region, with new gas-fired generationof 6,000 to 11,000 MW coming online by 2005.

The results of the study were presented to the New England PowerPool (NEPOOL) Participants Committee in the beginning of Januaryand submitted to the NEPOOL Reliability for further review. The NewEngland Gas Study in its entirety is available at on NE-ISO’s website at www.iso-ne.com.

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