New England natural gas officials and key distributors predict that the region will have ample gas supplies to meet this winter’s heating demand, even if the existing embargo on liquefied natural gas (LNG) tankers into Boston Harbor should remain in effect for a prolonged period.

The “big variables” will be how low the temperatures fall in New England this winter, and the timing of the cold weather, said Tom Kiley, president of the New England Gas Association (NEGA). If the cold weather should come in early December, forcing suppliers to draw down on their limited LNG supplies, then “it will become problematic,” he said. “But this probably won’t happen.”

Kiley noted that utilities and LDCs in New England are “carefully husbanding” their LNG supplies, knowing that there’s the real possibility that they won’t have access to LNG from Distrigas of Massachusetts LLC for weeks or months to come. The U.S. Coast Guard barred LNG shipments to Distrigas’ facility in Everett, MA, following the Sept. 11 terrorist attacks, citing safety and security concerns. The shipments will continue to be banned from the harbor until Distrigas, in cooperation with federal and state agencies, devises a security plan to protect surrounding communities from the impact of terrorist attacks on their tankers.

LDCs, deprived of their imported LNG, are incurring extra expense to have pipeline gas liquefied to put in storage, Kiley said, but the expenses are not major.

One trader estimated that about 300 MMcf/d of supply is currently out of the Northeast market because Distrigas has drained its LNG stocks. “They [Distrigas] issued a force majeure about one and a half weeks ago. They tried to keep their customers whole at first, but then realized that couldn’t be sustained. We’re on fragile grounds in the Northeast market if the LNG constraint continues into November,” the trader told Daily GPI.

“I am still hopeful and optimistic that Distrigas will re-open” to shipments at some point, Kiley told NGI. Distrigas, the Coast Guard and federal agencies refuse to say publicly when the LNG tanker shipments will resume in Boston Harbor. LNG is a major fuel in the New England market, providing as much as 25% of daily-peak gas supply during the winter, and 15% of supply on a year-round basis, according to NEGA. The Distrigas facility, which has storage potential of 3.5 Bcf and a sendout capability of 450,000 MMBtu/d by vapor, is considered a major contributor to that market.

KeySpan, the largest distribution customer of Distrigas, “fortunately had most of its LNG in storage before the embargo struck,” said Mike Connors, a spokesman for the company, which serves about 800,000 gas customers in eastern Massachusetts and New Hampshire. He noted that KeySpan schedules the refill of its LNG supply over a seven-month period. LNG accounts for only 4% of the company’s annual gas load, and is principally used to meet peak demand during “extremely cold” weather.

Bay State, which receives 15% of its winter supply from Distrigas, also is in good shape for the winter, making plans for alternative supplies from the major gas pipelines that serve New England, as well as looking at propane to supplement its load, said spokesman Don DiNunno.

“We would like Distrigas to come back obviously, but knowing the present situation, we have to prepare for winter demand,” he noted. Bay State and affiliate Northern Utilities serve 320,000 gas customers in Massachusetts, Maine and New Hampshire.

Pittsfield, MA-based Berkshire Gas, which has a “very small” peak shaving facility, is “largely unaffected” by the LNG shipment stoppage in Boston Harbor, said spokesman Christopher Farrell. “We expect to make it up with pipeline supplies. I think that’s pretty much the case with most companies. I think we’d all like to have it [Distrigas back] but without it, we’ll do just fine” this winter.

It is impossible at this point in time to get natural gas experts to go on record as to the disaster potential of LNG, but previous experience points to the possibility of a catastrophe going well beyond Sept. 11, if a tanker were breached in Boston Harbor.

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