The Mighty Algonquin – Supplying (New England Natural Gas) to The Eskimos

This winter the Northeast US is being blasted with record cold weather. As a result, daily natural gas prices in both New York and New England have spiked more than $30/MMBtu above the US benchmark at Henry Hub, LA. But the average price you’ll pay for natural gas in the region will likely depend on whether you root for the New York Giants or the New England Patriots. With their dismal records and embarrassing mistakes, it’s not easy being a Giants (or Jets) fan these days. But on average – thanks to new gas pipeline capacity added this past fall, natural gas prices in New Jersey and New York have remained less volatile relative to US benchmark Henry Hub, LA than prices in New England. That is because the six-state region continues to suffer from woefully inadequate gas transmission infrastructure. Today we begin a two-part analysis of the still-stalled effort to deliver more supplies to gas-hungry New England.

After 19 years of natural gas production from the waters off the Canadian Maritime provinces, ExxonMobil, operator of the Sable Offshore Energy Project (SOEP), shut down production there, effective January 1, 2019. The closure further limits gas supply options for the already supply-constrained Maritimes and New England regions. Will the shutdown put even more stress on the already overtaxed gas pipeline system in New England? And will it spur increased flows of Western Canadian gas into northern New England and Canada’s Maritime provinces? Today, we continue our series examining the potential impacts of SOEP’s demise on New England gas markets.

The polar vortex events this past winter provided a jolting reminder to New England’s electricity sector that natural gas transmission infrastructure in the increasingly gas-dependent region needs further expansion. A comprehensive plan to ensure reliable electric supplies to Red Sox Nation for years to come is not yet in place, but more near-term fixes are being implemented and the elements of a long-term plan—new gas pipelines and new hydroelectric imports chief among them--are taking shape. Today we provide an update on gas-electric issues in New England.