These constraints have caused real shortages, increased prices, and serious reliability concerns, and have forced energy users to rely on dirtier, more expensive oil for heating.
Despite pipeline constraints, New England has remained heavily dependent on natural gas to power the region and to set wholesale electricity prices since 2000 when it fueled approximately 15% of the power.
That percentage has since increased tremendously. Today, 40-50 percent of the region’s power supply comes from natural gas as the region has retired many of its coal and nuclear plants.
The abundance of natural gas that has been increased through fracking like at the Marcellus Shale, the largest natural gas-producing region in the United States, is one of the main reasons why natural gas continues to be a top fuel choice for new generators and has replaced less economic and clean power sources, such as coal. It accounts for close to one-fifth of the country’s total gas production and provides supply at low costs, allowing natural gas to continue to be the dominant fuel used to produce electricity.
A study funded by trade groups representing the oil and natural gas industries reported that the economic consequences associated with a failure to build natural gas and electricity infrastructure to serve New England’s energy needs will affect the region’s economy, employment, and disposable income.
Realizing the need, there have been several efforts to improve New England’s current infrastructure, with the proposals of many major natural gas pipelines. However, it has not been easy to build and improve energy infrastructure.
The major proposed natural gas pipelines that have been canceled or put on hold include Kinder Morgan’s Northeast Energy Direct and Spectra’s Access Northeast, which was canceled due to financial and political challenges. Also, the Northern Pass power line project, which was rejected in February by New Hampshire’s Site Evaluation Committee and would have imported low-cost hydroelectric power from Quebec to New England.
Since expanded infrastructure is vital for New England, efforts have not been abandoned. According to the U.S Energy Administration, there are many pipeline projects that have either been planned or are currently being carried out, which are expected to transport more natural gas into the region and prevent spikes in spot natural gas prices during the next several years.
By 2023, upgrades in the region are expected to add at least 350 million cubic feet of natural gas per day.
The largest of these pipeline upgrade projects, which submitted its application to the Federal Energy Regulatory Commission (FERC) on February 4, 2020, is the Iroquois pipeline’s Iroquois Enhancement by Compression Project. They have proposed to increase horsepower at three compression stations in New York and Connecticut and the pipeline will increase its capacity by 125 MMcf/d.
The Portland Natural Gas Transmission System is another large project that has been proposed. The Portland Xpress Project Phase III and the Westbrook Xpress Project Phase II are expected to add will add 63 MMcf/d of capacity in 2021 and will increase the volumes of natural gas imports that come from the TransQuébec in Canada and Martimes pipelines in Pittsburg and New Hampshire.
Additionally, Algonquin’s Atlantic Bridge Phase II project will add 92.7 MMcf/d of additional capacity into New England. It is planned to launch in 2020 or 2021 after the Weymouth compressor station in Massachusetts has been completed.
The Tennessee Gas Pipeline’s Station projects will also provide an additional 72 MMcf/d of capacity, which is expected to begin in 2020. The upgrade to compressor station 261 will add 2.1 miles of looping or a new pipeline and will be installed parallel to the existing pipeline on the site.
For now, natural gas appears to be the most economical solution for New England, despite capacity constraints. These upgrades will ease pipeline constraints in the region and will hopefully improve concerns about reliability and limit spikes in spot natural gas and electricity prices. However, the support of future infrastructure investments will be crucial in order to let New England maximize the benefits of natural gas.
In the meantime, we suggest that commercial or industrial businesses educate themselves on how to protect themselves from reliability concerns and high energy prices, despite pipeline constraints.
Be sure to check back for future updates on pipeline capacity in New England. If you have any questions, please do not hesitate to contact Patriot Energy.