Port Ambrose

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.

The incremental pipeline capacity built to move more natural gas from the Marcellus to the New York City region over the past two or three years has reduced—but not eliminated--delivery constraints and wintertime gas-price premiums at the New York City pricing hub on Zone 6 of the Transco pipeline and other pipes feeding the area.  Given the Big Apple’s significant and growing gas demand, midstream companies are exploring whether to add still more pipeline capacity, and developer Liberty Natural Gas is lining up approvals for its proposed fix: an offshore LNG terminal that would inject gas when demand spikes. Today, we begin an examination of the economics of using LNG to supplement wintertime gas supplies, and how Greater New York might benefit from an LNG shot-in-the-arm.