Charles Fox, deputy chief of staff for New York Gov. George Pataki, on Thursday disclosed that the state will soon issue regulations detailing the framework on how to site liquefied natural gas (LNG) facilities in the Empire State.
“The state is under a legislative requirement to promulgate regulations for siting LNG facilities and we’re going to be coming out with out some regulations in the near term — probably the next month or so — that lay out a framework on how to site LNG facilities in the state,” Fox told a FERC-sponsored conference held in New York City examining the energy infrastructure issues in the Northeast.
“I think from an energy perspective, LNG is a great idea,” Fox said. “It allows us to access the world market and play different regions off against each other and get great prices for gas.”
However, Fox foresees “incredible siting battles” related to LNG facilities. “If we have this much trouble laying electric cable, I can only imagine what would happen if we were to try and site an LNG terminal.”
Fox, one of several panelists addressing infrastructure issues related to New York City, declined to “stake out a position” on any particular project, but said that LNG is “an alternative that the economics demand we take a very serious look at.”
A report recently issued by the Center for Management Analysis (CMA) at the C.W. Post Campus of Long Island University in Brookville, NY, concludes that in order to serve continuing gas demand growth in the already constrained New York City area, the state and city must reconsider current regulatory obstacles to the expanded use of LNG (see Daily GPI, April 30).
Meanwhile, Ed Krapels, director of energy development services at Energy Security Analysis Inc. (ESAI), told the conference that while the Northeast does indeed need LNG, he also warned that the region could, in fact, actually lose an LNG terminal in Boston.
“I hope not, but you never know [given] the way that events of the last two years have transpired. I believe that our friends at KeySpan are going to develop a terminal in Rhode Island — God willing — but I don’t think Maine and Massachusetts are going to allow an LNG terminal to be built,” he added.
“We can all argue about whether that’s true or not, but I live in Massachusetts and I find it almost inconceivable to think that we would get one there,” the consultant said. “So I’m looking at a future in which either New Brunswick or Nova Scotia are going to be called upon — relied upon — to build an LNG facility, which raises a lot of very interesting gas pipeline and infrastructure issues for the folks of Maritime.”
Krapels said that the development of LNG in the United States “is full of unanticipated consequences.” LNG pricing is “going to be more and more important in determining national gas prices to a degree that what happens to gas happened to oil 25 years ago. It is a process in which world events will increasingly influence national price.”
ESAI has estimated that by 2015, “20 to 30% of the gas flowing through the Henry Hub will be imported.” Nevertheless, “it’s the resource we need, so we should promote and accelerate development of a Northeast LNG terminal.”
Krapels thinks that state regulators must become accustomed to LNG as a baseload resource. “There is no choice.” Also, gas utility resource planning processes “might need to be more centralized than they are today. We may need an RTO [regional transmission organization] of natural gas for planning purposes.”
During the New York City panel, FERC Chairman Pat Wood asked a NiSource executive what types of issues will affect the ability to expand non-LNG gas supplies into the New York and New England regions in the coming years.
“In looking at the pipeline infrastructure needed to serve these markets, obviously making a large capital investment requires some security of the revenue stream,” said NiSource’s Carl Lavander. “To put it bluntly, the level of capital needed to build a major pipeline expansion or new pipeline extension simply cannot happen unless there’s someone there willing to make a commitment for some portion of the volume for some term sufficient to satisfy the financial requirement.”
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