Several large-scale gas pipeline expansions targeting the New England and New York City markets have been sidelined in the past year, either due to insufficient financial backing or the challenges of regulatory rigmarole in the region. But in recent weeks, a couple of smaller-scale projects along existing rights-of-way have managed to cross the finish line, allowing incremental gas supplies to trickle into the region. The new pipeline capacity will provide natural gas utilities and power generators in the region with greater access to additional gas supplies from the nearby Marcellus Shale this winter. Today, we look at recent capacity additions and their potential impacts.
The last time the U.S. Northeast had exceptionally cold weather — during the Polar Vortex winter of 2013-14 — natural gas prices in New England spiked to nearly $25/MMBtu. That’s a long way from the $80-$100 premiums the region used to see prior to the Shale Revolution, but still an impressive premium, considering Marcellus/Utica shale gas production had reached upwards of 14 Bcf/d by then. So why the high prices? Well, there simply wasn’t enough transportation capacity to get the gas to the utilities serving those densely populated markets. Since then, Northeast gas production has nearly doubled, and the New England-New York region has been adding new gas-fired generating capacity, driven by a big push to reduce emissions. Additionally, nuclear, coal and older oil-fired power plants are aggressively being shuttered. In other words, the New England-New York region has become increasingly dependent on gas-fired power. But pipeline capacity additions to bridge gas supply and demand have been slower to come. That’s not to say there haven’t been some meaningful additions.
We summarized some of the past project successes in Another Gassy Day in New York City and Knockin’ On New York’s Door. In the fall of 2013, there was Williams’s 250-MMcf/d expansion of eastbound capacity on Transco’s mainline and Leidy systems (the Northeast Supply Link project); Kinder Morgan’s 636-MMcf/d Northeast Upgrade expansion of Tennessee Gas Pipeline’s (TGP) 24-inch-diameter 300 Line; and Spectra Energy’s (now Enbridge) 800-MMcf/d New Jersey-New York Expansion project on Texas Eastern Transmission Co. (TETCO) and Algonquin Gas Transmission (AGT). And in spring 2015, Transco continued expanding with the 264-MMcf/d Woodbridge Delivery Lateral to feed Competitive Power Ventures’ (CPV) new 725-MW, gas-fired, combined-cycle power plant in Woodbridge Township, NJ, just across the border from Staten Island (one of New York City’s five boroughs); and the Northeast Connector and Rockaway Delivery Lateral combo, which expanded Transco’s reach into Brooklyn and Queens.
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