Shale natural gas produced in the Northeast will supply more than 80% of the physical gas going to New York City by 2025, according to ICF International.

The shale bounty from the Marcellus, and increasing supplies from the Utica and other unconventional formations, “will displace supplies from the region’s traditional sources of gas, the Gulf Coast and Canada,” said researchers in a new forecast. “The growth in Marcellus Shale natural gas production has major implications for the Northeast in general and New York City in particular.”

The report, which was commissioned by New York City, was unveiled Monday by Mayor Michael Bloomberg. The report comes on the heels of an opinion piece in support of safe hydraulic fracturing by Bloomberg and unconventional drilling pioneer George Mitchell, which appeared in last Friday’s Washington Post (see Shale Daily, Aug. 28).

State regulators are said to be close to finalizing updated regulations that may allow a moratorium to be lifted on unconventional drilling (see Shale Daily, June 14).

The report by ICF analyzed how New York City and the Northeast could be impacted by shale gas growth. Researchers also provided a life-cycle analysis of greenhouse gas emissions from heating fuels to provide context for the city’s regulations that require certain heating oils to be phased out in favor of “cleaner” fuels such as natural gas.

According to the study, “Marcellus Shale gas production will have a significant effect on pipeline flows across the United States and in the Northeast. With large resources so close to markets, shale gas development in the Northeast will displace supplies from the region’s traditional sources of gas, the Gulf Coast and Canada.”

Close to 57% of New York City’s energy use today is fueled by natural gas, “either directly through on-site combustion to heat and cool buildings, or indirectly through the use of gas at power plants to generate electricity,” said ICF. Two local distribution companies (LDC) serve New York City, Consolidated Edison Co. of New York Inc. (ConEd) and National Grid USA (NGrid). In 2009, they delivered about 462 Bcf of gas or an average of 1.3 Bcf/d to their customers, the report noted.

“The New York LDCs have substantial capacity on long-haul transmission pipelines into the region. By using the supply capacity on these transmission lines, supplemented by peak- shaving facilities on their systems, the LDCs are able to meet peak-day sendout in the city of approximately 2.5 Bcf/d.”

As regional gas supplies and demand “continue to evolve and shift over time, there are likely to be significant changes in inter-regional pipeline flows,” according to ICF’s base case. ICF use the U.S. Census Regions, with New York City in the Middle Atlantic, where the Marcellus Shale is located.

“First, the growth in Marcellus Shale gas production in the Middle Atlantic Census Region will displace gas that once was imported into that region from other regions…from points north (Canada), west (Ohio) and South (West Virginia and North Carolina).

“In effect, the Middle Atlantic Census Region becomes a major producer of gas and consumers there, including New York City, will use more gas from within the region and less from outside the region. The latter is an important point: gas will continue to flow into the Middle Atlantic Census Region from other regions, just at lower levels. Gas will continue to flow through the Middle Atlantic Census Region into New England, some of which will be Marcellus production, but also gas from the other sources (Canada, the south and southwest).”

According to ICF, a total of 7.3 Bcf/d of new pipeline capacity “is projected in or near the Marcellus Shale production areas through 2014. Of this, 2.3 Bcf/d is directly connected to Marcellus Shale production and another 2.6 Bcf/d moves gas further downstream to congested markets near the East Coast, including the New York City region..”

About 1 Bcf/d “would improve movement of gas to export points located near Niagara to carry gas into Canada. Another 2.9 Bcf/d of generic expansions are assumed between 2018 and 2027 to support market growth, for a total of 10.2 Bcf/d of added pipeline infrastructure.”