New York City

It’s no secret that the political and regulatory environments for new pipeline development in New York and the New England states are notoriously challenging. That reputation has been reaffirmed recently, as several natural gas pipeline projects targeting the region have been sidelined by permitting delays or denials. As a result the region continues to experience gas transportation constraints and price spikes during peak demand periods. But midstreamers have had some success penetrating the New York City metropolitan market (including the Lower Hudson Valley, Long Island and northern New Jersey), which may bode well for the handful of projects currently looking to serve the area. Today, we review recent and planned capacity additions into The Big Apple and its greater metro area.

As we stated in Part 1 of this series, New York City will need increasing amounts of natural gas as it continues its shift from oil-fired power plants and oil-based space heating. New gas pipeline capacity to and through the Big Apple has been added as recently as May 2015, but the nation’s largest city still faces wintertime gas-delivery constraints that cause costly spikes in gas and power prices. Given the challenges of adding new pipeline capacity in one of the most densely populated parts of the U.S., developer Liberty Natural Gas is planning an offshore liquefied natural gas terminal that by late 2018 would inject gas into the city’s existing pipeline network on an as-needed basis. Today, we continue our look at the economics of using imported LNG to supplement gas supplies in the Northeast.

Big changes are coming to the markets for natural gas, NGLs and crude oil. Even though production volumes are holding their own – despite 60% fewer rigs running, the days of month-after-month record increases in production are behind us, at least for a while.  But what about all that infrastructure that has been and continues to be built?  Billions of dollars are going into pipelines, processing plants, petrochemical plants, terminals, storage, etc. based on a much higher production growth scenario than now looks likely.  So what happens next?  That issue is the theme of a new RBN conference scheduled for July 23rd in New York City called State of the Energy Markets, and is the subject of today’s blog – also an advertorial for the conference.

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.

The hopes of Marcellus gas suppliers to move more of their product east are playing out in very different ways in metropolitan New York City and in New England. New pipelines to deliver gas from Pennsylvania, West Virginia and Ohio to the Big Apple and its environs already are installed and operating, easing the metro area’s supply crunch and shrinking regional price “basis”. But plans to expand gas-transmission capacity to New England are stalled, and some gas users there are facing another potentially supply-constrained expensive winter. Today we begin a new series looking at why—for the foreseeable future at least--it’s better to be a gas user in New York City than Boston.

Last Friday (July 19th, 2013) temperatures in New York City rose to 100 degrees Fahrenheit for the second day in a row. At 4:00 PM that day the New York Independent System Operator (NYISO) recorded a new State record peak power demand of 33,956 MW.  In New York City (known as “Zone J”) real time power prices jumped as high as $1485/MWh. Today we examine the power price volatility.

Northeast regional interstate pipeline companies are coming to terms with significant supply growth expected between now and 2017. Companies that traditionally delivered natural gas to the Northeast from outside the region are busy reconfiguring their assets.

In two previous postings in this series we examined the major infrastructure projects being developed by interstate natural gas pipelines in response to the growth of Northeast natural gas production in the Marcellus shale.  We reviewed projects developed by Tennessee Gas Pipeline (TGP), and then Spectra Energy (see TGP and Spectra). This time we look at the projects being pursued by Williams Companies through it Transcontinental Gas Pipeline Company (Transco) and its Master Limited Partnership (MLP) Williams Partners. 

<p>We just finished up the hottest July on record. Very high temperatures cause air conditioning demand to go ballistic. System operators struggle to generate enough power to satisfy peak load and call on expensive “peaker” generation units that set a high market price for power.</p>