I Need You - Gas Pipeline-Constrained New England Keeps Lifelines to Fuel Oil and LNG

It’s so ironic. New England is only a stone’s throw from the burgeoning Marcellus natural gas production area, but pipeline constraints during high-demand periods in the wintertime leave power generators in the six-state region gasping for more gas. Now, with only minimal expansions to New England’s gas pipeline network on the horizon, the region is doubling down on a long-term plan to rely on a combination of gas liquefaction, LNG storage, LNG imports and gas-to-oil fuel switching at dual-fuel power plants to help keep the heat and lights on through those inevitable cold snaps. Today, we discuss recent developments on the gas-supply front in “Patriots Nation.”

Well, like it or not, the New England Patriots (11-5) are champions of the AFC East (again) and are in the playoffs for the 10th year in a row. Just as reliably, winter has come to Boston, Hartford, Providence and other big energy-consumption centers in the region. Nothing major yet in the way of snowstorms or frigid temperatures, but there’s been enough cold days and nights to serve as a reminder that while New England has sufficient gas pipeline capacity to meet the region’s needs for most of the year, its pipeline network can max out when the weather turns Siberian. When that happens, there typically isn’t enough pipeline gas available to power many of the gas-fired power-generation units.

As we’ve said in a number of blogs [I’m (Not) Shipping Up to Boston and Don’t Give Up On Us, among others], New England’s power sector in the past few years has been shutting down coal and oil-fired generation units and nuclear plants, and building new gas-fired units — and more renewables — to replace their capacity. And, as Figure 1 shows, that trend is continuing; by 2025, ISO New England (ISO-NE), the electric grid operator, estimates that 56% of the generating capacity in the region will be fired by gas (green bar in center-right of Figure 1), up from 45% in 2018 (yellow bar) and only 18% in 2000 (orange bar), while the shares held by nuclear, oil-fired and coal-fired power plants in 2025 will fall to 10%, 16% and 0%, respectively. Also, gas plants are running more frequently. In the distant past (pre-2010), plants fired by gas were typically used mostly during peak demand periods; now they often are replacing retired coal and nuclear plants that operated around the clock. In addition, gas units are being called upon to offset the variable output of solar facilities and wind farms.