Boston

The 1,413-MW Mystic Generating Station, a longtime workhorse for New England, shut its doors for good May 31. Located in Charlestown, MA, on the north side of Boston, Mystic is adjacent to the Everett LNG terminal, which supplied 100% of Mystic’s natural gas for several decades. The power plant’s closure meant the Everett terminal might also be history. However, the Massachusetts Department of Public Utilities (DPU) recently approved new contracts that will keep Everett LNG open for at least six more years. In today’s RBN blog, we’ll discuss the combined impact of Mystic’s demise and Everett’s stay of execution, how the region has handled this summer’s heat wave, and what could be in store for next winter. 

The Everett LNG import terminal, a mainstay of Boston’s gas grid, is expected to close by the end of May 2024, raising questions about future gas supply in New England. The terminal’s closure is closely tied to the imminent loss of its biggest customer, the 1,413-MW Mystic generating station — the region’s largest fossil-fuel plant. Constellation Energy, which owns both the Everett terminal and the Mystic power plant, has said it can’t keep Everett open next year when the Mystic plant closes unless another gas purchaser takes its place. In today’s RBN blog, we’ll address the impacts of Everett’s potential demise on New England in the short term and on regional gas supply during future polar vortex events.

It’s no secret that a long list of pipeline projects have been proposed to help move natural gas out of the Northeast production areas. But if you were a Marcellus or Utica producer, how would you decide whether you were interested in new capacity that hadn’t been proposed or built yet? Of course, pipeline companies have armies of engineers, cost estimators, and market analysts to bring one of these monster projects to fruition. But for anyone else, particularly in the early stages, how do you even know it’s a reasonable idea? For anyone testing a concept, you need a way to ballpark some scenarios for a new pipe. We’ve been running a blog series on our RBN Pipeline Economics Estimation Model, a quick, rule-of-thumb “sanity test” for new capacity. Today, we wrap up our walk-through of the model, with a real-world example to gauge the accuracy of the model, and then with a discussion on how the model can be used to measure economies of scale in picking the minimum volume you probably need for a new pipeline.

New and expansion natural gas pipeline projects have been part and parcel of the shale production boom in the U.S. Northeast. In fact, Northeast gas production could not have reached anywhere near its current level and become a major natural gas supplier to the U.S. without the substantial addition of takeaway capacity out of the Marcellus/Utica shale areas. At the same time, the competition among pipeline developers jockeying to be in the right place at the right time has been fierce. And now, low natural gas prices and uncertainty about future production growth have only increased the competition---not all projects will make it to in-service. The risks are higher for big pipeline projects, but so are the stakes. These days, the overall risk tolerance among shippers and investors is low, especially among producers. So if you’re a producer, how can you make sure you don’t end up on the wrong side of a transportation deal? In today’s blog, we continue our walk-through of the RBN Pipeline Economics Estimation Model.  We’ll follow up in a later installment with a real-world test and other ways to use the model.

We’ve spent a lot of time here in the RBN blogosphere discussing the trials and tribulations of natural gas producers in the Marcellus and Utica shales who are “trapped behind the pipe,” unable to get sufficient takeaway capacity to move supply to market (both within and outside the U.S. Northeast region) where they could get a higher price for their gas. Pipeline companies have ponied up billions of dollars to build lots of pipe to alleviate these constraints and much more investment is planned. Of course, those pipelines and their committed shippers hope that the investment will pay off long-term – that the economics for building the pipe will justify the cost.   The pipeline will have scores of engineers, lawyers and accountants to figure that out.  But what if you just want to make a quick-and-dirty estimate of the economics?  Well, there is a way. In today’s blog, we walk through the factors you need to consider when your boss runs in and asks, “Hey—what would it cost to move gas there in a new pipe?”