Please Come to Boston: New England’s Ongoing Gas-Supply Dilemma

report coverNew England faces unique energy-supply challenges. The six-state region, with a population of about 15 million, is only hours away from the heart of the dry Marcellus natural gas production area in northeastern Pennsylvania, and generally views gas as an important part of its energy future. However, the existing gas pipeline infrastructure into and through New England lacks the capacity the region needs to ensure adequate gas supplies—especially during high-demand winter cold snaps. Worse yet, its competitive electricity market, whose power-generation participants account for a significant portion of overall gas demand, has failed to provide incentives for generators to lock in long-term, firm gas pipeline capacity. As a result, efforts by midstream companies to expand existing pipelines and build new, “greenfield” pipelines to deliver more gas to New England have been stymied by a lack of firm commitments from shippers.

In this Drill Down report, we examine New England’s energy challenges in depth, beginning with the rapidly increasing role natural gas is playing in regional power generation, industrial use, and commercial and residential space heating. The report also discusses the effects that New England’s seasonal gas-delivery shortcomings have had on gas and electric prices; the quandary posed by the electric sector’s lack of incentives for investing in firm pipeline capacity; the ongoing efforts by governors, ISO New England, midstream companies, LDCs and electric distribution companies (EDCs) to encourage new pipeline development; and the roles that oil and imported liquefied natural gas (LNG) have played—and may continue to play--in helping to meet New England’s energy needs. In addition, the report describes in detail proposed enhancements to the region’s gas pipeline infrastructure. The report concludes with a look ahead—a summary of how New England’s energy sector is likely to evolve over the next five to 10 years.

Included with this Drill Down report are interactive graphics using RBN’s new Pipeline GIS mapping tool, designed to help you better understand how the pipelines into and through New England relate to each other. Pipeline GIS is a web-based system that integrates regional energy infrastructure into one or more “GIS windows”, and allows the user to zoom, scroll and select/deselect different objects for viewing.

Report highlights include:

  • Natural gas demand in New England has been rising, but the region's existing gas pipeline infrastructure continues to fall short, especially during winter peaks.
  • The region is close to the booming Marcellus center of gas production but appears unable to take full advantage of those supplies.
  • Pipeline constraints are causing major price spikes--for natural gas and for electricity-and encouraging a sense of urgency.
  • Efforts to add gas pipeline capacity are hindered by tough regulations, regional and local activism, electric-market rules, and who-pays-for-it questions.
  • Solutions to break through pipeline-development logjams are in the works, but new pipeline capacity won't be the only answer.

Please Come to Boston: New England’s Ongoing Gas-Supply Dilemma is the fourth of RBN Energy’s Drill Down report series, a suite of twelve reports coming from RBN during 2015 covering many of the key issues expected to impact the markets for crude oil, natural gas and natural gas liquids.

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