‘Time in New England’ to Plan for Gas Infrastructure Needs

The polar vortex events this past winter provided a jolting reminder to New England’s electricity sector that natural gas transmission infrastructure in the increasingly gas-dependent region needs further expansion. A comprehensive plan to ensure reliable electric supplies to Red Sox Nation for years to come is not yet in place, but more near-term fixes are being implemented and the elements of a long-term plan—new gas pipelines and new hydroelectric imports chief among them--are taking shape. Today we provide an update on gas-electric issues in New England.

When we last spent Time in New England, in our Please Come to Boston series, we described the five pipelines that provide virtually all of the region’s gas: the Tennessee Gas Pipeline (TGP), the Algonquin Gas Transmission (AGT) line, and the Iroquois Gas Transmission (IGT) line from the west through New York State, and the Maritimes & Northeast Pipeline (MNP) and the Portland Natural Gas Transmission (PNGT) from the east and north through New Brunswick and Quebec, respectively. We also discussed how, despite continuing efforts to expand gas transmission capacity into New England from New York and the Marcellus, the region’s electric generators still suffer from inadequate gas transmission capacity. The shortfall is specific; that is, it only occurs during long cold snaps (like the polar vortices) when the vast majority of pipeline capacity into the region is used by local distribution companies (LDCs) to provide gas for business and residential space heating.

">

“SURVIVING THE FLOOD OF LIGHT CRUDE OIL”

  A JOINT CONFERENCE PRESENTED BY

RBN ENERGY AND TURNER, MASON & COMPANY

Why are refineries limited in the portion of light crude that can be run?  What are the current limits on light crude runs?  If U.S. refineries cannot absorb all of this volume and it cannot be exported, where will all this light crude go?    These questions and many more will be addressed at this conference, to be held August 19-20 in Houston.  More information on Surviving the Flood here.

The catch (as we described in Polar Vortex Spurs Catch-22 Workaround), is that new pipeline capacity isn’t easily built without firm, long-term commitments, and generators in New England’s competitive power market are not incentivized to make those commitments to pipeline capacity they may only need occasionally. The region’s gas pipeline shortcomings became all too apparent during unusually frigid weather in January and February 2013 and again in January and February 2014. Gas for space heating clogged pipelines into the region, leaving precious little gas to power combined-cycle units and peakers. As a result, both gas and electricity prices spiked. Figure #1 shows data since 2008 provided by ISO- New England with both gas (orange line, right axis) and electricity (blue line, left axis) prices spiking in 2013 and 2014. From January 1 to February 18, 2014 this year, gas prices at Algonquin Citygate averaged $22.53/MMBtu--a record since the US Energy Information Administration (EIA) started tracking data 13 years ago.

To access the remainder of ‘Time in New England’ to Plan for Gas Infrastructure Needs you must be logged as a RBN Backstage Pass™ subscriber.

Full access to the RBN Energy blog archive which includes any posting more than 5 days old is available only to RBN Backstage Pass™ subscribers. In addition to blog archive access, RBN Backstage Pass™ resources include Drill-Down Reports, Spotlight Reports, Spotcheck Indicators, Market Fundamentals Webcasts, Get-Togethers and more. If you have already purchased a subscription, be sure you are logged in For additional help or information, contact us at info@rbnenergy.com or 888-613-8874.