Stubborn New England Needs Our Marcellus Shale Gas

Atlantic CoastJim Willis
Editor & Publisher, Marcellus Drilling News (MDN)

Russian LNG and oil are keeping stubborn New England suppied with energy but the real answer—Marcellus Shale gas—is but a hop, skip and pipeline away..

New England refuses to build new natural gas transmission pipelines to carry abundant, cheap, clean-burning Marcellus Shale gas to the region–and instead continues to rely on imported LNG from Russia and burning dirty fuel oil to generate electricity when the nights get really cold.

Is there any explaining the leftist mind? How does one explain insanity? Big Green, which has a tight hold on New England, professes they want to Save the Planet. And yet, they insist on policies that require the region to continue using one of the dirtiest and most inefficient forms of generating electricity–burning fuel oil. And their policies result in imported LNG from Russia, extracted from the environmentally sensitive Arctic region (see 2nd LNG Tanker with Russian Gas Coming to Boston?!). Yet New England refuses to allow a relatively short pipeline to get built from the Marcellus region. Maddening!

RBN Energy lays out how New England keeps the lights on and the furnace running in wintertime, in the following excellent post:

It’s so ironic. New England is only a stone’s throw from the burgeoning Marcellus natural gas production area, but pipeline constraints during high-demand periods in the wintertime leave power generators in the six-state region gasping for more gas. Now, with only minimal expansions to New England’s gas pipeline network on the horizon, the region is doubling down on a long-term plan to rely on a combination of gas liquefaction, LNG storage, LNG imports and gas-to-oil fuel switching at dual-fuel power plants to help keep the heat and lights on through those inevitable cold snaps. Today, we discuss recent developments on the gas-supply front in “Patriots Nation.”

Well, like it or not, the New England Patriots (11-5) are champions of the AFC East (again) and are in the playoffs for the 10th year in a row. Just as reliably, winter has come to Boston, Hartford, Providence and other big energy-consumption centers in the region. Nothing major yet in the way of snowstorms or frigid temperatures, but there’s been enough cold days and nights to serve as a reminder that while New England has sufficient gas pipeline capacity to meet the region’s needs for most of the year, its pipeline network can max out when the weather turns Siberian. When that happens, there typically isn’t enough pipeline gas available to power many of the gas-fired power-generation units.

As we’ve said in a number of blogs [I’m (Not) Shipping Up to Boston and Don’t Give Up On Us, among others], New England’s power sector in the past few years has been shutting down coal and oil-fired generation units and nuclear plants, and building new gas-fired units — and more renewables — to replace their capacity.

And, as Figure 1 shows, that trend is continuing; by 2025, ISO New England (ISO-NE), the electric grid operator, estimates that 56% of the generating capacity in the region will be fired by gas (green bar in center-right of Figure 1), up from 45% in 2018 (yellow bar) and only 18% in 2000 (orange bar), while the shares held by nuclear, oil-fired and coal-fired power plants in 2025 will fall to 10%, 16% and 0%, respectively.

Also, gas plants are running more frequently. In the distant past (pre-2010), plants fired by gas were typically used mostly during peak demand periods; now they often are replacing retired coal and nuclear plants that operated around the clock. In addition, gas units are being called upon to offset the variable output of solar facilities and wind farms.

New England

Figure 1. New England Generating Capacity by Fuel Type. Sources: ISO-NE and RBN

At the same time, New Englanders have been among the fiercest opponents of new gas pipelines and gas-pipeline expansions that would enable considerably more gas from the nearby Marcellus to flow into Connecticut, Rhode Island and Massachusetts in particular. Like many of the Patriots’ opponents, a number of these pipeline projects have been defeated or sidelined (for example, Kinder Morgan’s 1.2-Bcf/d Northeast Energy Direct and Enbridge’s 925-MMcf/d Access Northeast).

Only a few smaller projects have advanced, including the 70-MMcf/d Connecticut Expansion to Kinder Morgan’s Tennessee Gas Pipeline (TGP), and a 40-MMcf/d slice of Enbridge’s 133-MMcf/d Atlantic Bridge project (the other 93 MMcf/d will have to wait until at least 2020). So, while New England’s increasingly gas-dependent power generation sector needs a pipeline network with Rob Gronkowski proportions (for readers who are not football fans, “Gronk” — the Patriot’s hyper-muscular tight end –– is 6-foot-6 and weighs in at 265 pounds), what it’s got might instead be described as a 98-pound weakling.

To deal with that reality, ISO-NE for the past several years has been providing incentives to encourage the owners of dual-fuel (oil- or gas-fired) power plants to stockpile fuel oil onsite so they can switch away from pipeline gas during so-called Polar Vortex events like the ones that hit New England in the winter of 2013-14.

The grid operator — and overseer of the region’s competitive power market — also has been encouraging owners of generation units fired only by natural gas to convert them to dual-fuel operation and to build onsite oil-storage capacity. That approach has worked well — at least so far.

For example, during a long cold spell 12 months ago — it ran from December 26 (2017) through January 8 (2018) — New England’s power output from gas-fired plants dropped to only 24% (green slice in pie chart to the right in Figure 2), compared with 46% in the December 1-25 period (green slice in pie chart to left), while 27% of the region’s power was oil-fired, compared to only 0.3% in the weeks before the weather turned frigid (light blue slices). (Coal’s share — dark blue slices — tripled during the cold snap, from 2% to 6%.) And, oh yes, the lights stayed on.

New England

Figure 2. New England Generation Fuel Mix Before and After Cold Snap. Sources: ISO-NE and RBN

The catch with switching to oil-fired power (and coal) during periods of high demand for pipeline gas, though, is that even relatively limited use of fuel oil and coal can run afoul (so to speak) of state environmental rules — in Massachusetts, for example, dual-fuel plants generally cannot run on oil for more than 20 or 30 days per year. Plus, it can be tough to rebuild depleted stocks of oil during and immediately after winter storms.

That leads us to LNG. In part because New England has failed to significantly expand its gas pipeline network during the Shale Era, the region remains the only area of the U.S. that depends on imported LNG — and LNG produced and stored for winter use at more than 40 local liquefaction plants — for a sizable share of its peak gas needs.

In a report on regional fuel security issued last January (2018), ISO-NE determined that one of the most effective ways to mitigate New England’s lack of sufficient gas pipeline capacity would be to increase deliveries of LNG by ship (to the Everett LNG import terminal near Boston and the Canaport terminal in Canada’s New Brunswick province) and to produce more LNG in the region, all for use during high-demand periods.

The grid operator acknowledged that LNG stockpiles would be drawn down during these periods of rapid re-gasification and injection into the pipeline system. Also, ISO-NE said it can be challenging to replenish LNG supplies during winter events — LNG deliveries by ship could be set back by harbor icing, etc., and during cold snaps, there’s typically no pipeline gas available for in-region liquefaction plants to produce more LNG.

The bigger issue with securing spot cargoes is that the lead time required for contracting and shipping — at least two weeks — as well as attractive futures prices (see You Dropped a Bomb on Me for more on that dynamic).

Still, ISO-NE found that LNG — and particularly the Everett LNG terminal on Massachusetts’s Mystic River — can provide an important backstop.

The 48-year-old terminal receives LNG by ship (mostly from Trinidad & Tobago) and re-gasifies it to fuel two 700-MW units at Exelon Generation’s adjoining Mystic power station, and to inject into Boston-area gas pipeline systems. (Everett LNG can store the LNG equivalent of 3.4 Bcf of natural gas, and is connected to both Kinder Morgan’s TGP and Enbridge’s Algonquin Gas Transmission systems.) Exelon announced in March 2018 that (1) it had reached an agreement to acquire the Everett LNG facility (also known as Distrigas) to ensure continued reliable fuel supply to its Mystic power units, and (2) that it would retire the Mystic generation units at the end of May 2022 unless Exelon and ISO-NE could agree on an “out-of-market” arrangement that compensates Exelon for the energy security its LNG-backed power units provide.

ISO-NE then pursued such a deal with Exelon and, after some back and forth, in December 2018, secured Federal Energy Regulatory Commission (FERC) approval for a two-year contract that will keep Everett LNG and the Mystic power units in operation through at least May 2024.

Yet another effort to use LNG to help resolve the region’s gas-supply is Liberty Utilities’ Granite Bridge Project. The project, which is now before the New Hampshire Public Utilities Commission (PUC), will consist of a 27-mile, 16-inch-diameter gas pipeline between the TGP’s Concord Lateral and the Maritimes & Northeast/Portland Natural Gas Transmission System, and a liquefaction plant and LNG storage facility along the new pipeline’s route in Epping, NH.

Granite Bridge’s 200-foot-diameter, 150-foot-tall storage tank will have the capacity to hold the LNG equivalent of 2 Bcf of natural gas. Liberty, an LDC, will supercool and liquefy pipeline gas during the spring, summer and fall (when gas prices are presumably much lower), then re-gasify the LNG during the high-demand winter months to reduce the utility’s dependence on pipeline gas on days when gas prices spike — it also will free at least some pipeline capacity for others.

Our understanding is that Liberty has determined its approach will both increase gas-supply reliability and reduce its annual gas costs. The LDC expects to have regulatory approvals in hand by mid-2020, and to complete the project by mid-2023.

It may seem counterintuitive for a region located only a couple of hundred miles from one of the world’s largest gas plays to be turning to oil-fired generation and LNG to keep the heat and lights on during cold weather, but with the near-term prospects for big new gas pipelines into New England slim at best, that may be the only solution.

The best long-term solution for New England is a natural gas pipeline from the Marcellus. But we have a pretty easy short-term solution that would resolve the issue right now, this winter: Congress should revise (or repeal) the Jones Act, which would allow us to ship LNG from Cove Point, Sabine Pass and other facilities to Boston. Instead of importing LNG from Russia, Boston could use Marcellus gas shipped there as LNG.

Editor’s Note: Build the Constitution Pipeline and do it now! Let the DC Circuit Court of Appeals decision on Weymouth be the beginning of the end of stubborn New England resistance to what was once New England common sense.

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One thought on “Stubborn New England Needs Our Marcellus Shale Gas

  1. The problem is not as general as New England but much more specific in the obstruction of national infrastructure by NY and Andy Cuomo. NY has blocked the construction of major pipelines that would solve New England’s supply problem.

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