Plans to expand natural gas pipeline in New England bring opportunities
Reducing energy costs for New Hampshire businesses is critical to increasing their competitive position in the region and beyond. Natural gas could be a significant part of the answer.
Last year, New England’s wholesale electricity prices fell by nearly 23 percent, partly as a result of low natural gas prices. More than half of New England’s electric energy output is now being generated from natural gas and, with recent discoveries of large domestic shale gas deposits in Pennsylvania, Ohio and West Virginia, there is potential for even more savings. As coal plants are retired and oil prices skyrocket, natural gas will likely continue to bring some needed relief to New Hampshire businesses burdened by historically high energy costs.
The question is: How much relief?
With five interstate gas pipelines serving New England, New Hampshire appears well-positioned to take greater advantage of this plentiful, less costly and cleaner-burning fuel. Yet ISO New England’s president recently told the U.S. Senate Energy and Natural Resources Committee that pipeline constraints for the region’s electric generators may prevent us from taking full advantage of shale gas deposits to the west and south. ISO-NE predicted that until additional pipeline capacity is built in the region, price spikes from constrained capacity -- similar to those experienced this past winter -- would likely continue.
Even though New England’s electricity market design does not currently provide appropriate incentives for gas generators to make the long-term, firm commitments required for pipeline infrastructure investments -- a problem that ISO-NE acknowledges and is trying to remedy -- interstate pipeline companies still appear willing to take the plunge toward expanding capacity into the region at the same time that restructured power markets continue to develop and expand.
Several projects worth watching include recent proposals by Spectra Energy, Tennessee Gas Pipeline Company (TGP) and Portland Natural Gas Transmission System (PNGTS). The proposals would expand existing natural gas pipelines and increase incremental capacity deeper into the region and into New Hampshire.
Because the new capacity would create the potential for expanding local natural gas distribution directly to businesses, along with more reliable supplies to electric generators, New Hampshire’s industrial and commercial sectors will want to pay close attention to their progress.
Spectra, which operates the Algonquin Gas Transmission pipeline system, is in the early planning phase of the proposed Algonquin Incremental Market (AIM) project. The existing pipeline brings western and southern natural gas supplies to New Jersey, New York, Connecticut and Massachusetts. The expansion would follow the path of the existing pipeline but would increase capacity by 20-25 percent, with a slated expansion capacity of 450,000 dekatherms per day starting in 2016.
The AIM project is expected to ease natural gas capacity constraints in the region, helping to reduce the risk of regional price spikes. An open season is under way to allow for firm service requests from interested parties.
Second, TGP’s proposed Northeast Upgrade Project would bring an added 636,000 dekatherms per day to the Northeast. The most significant aspect of the project for New Hampshire is the proposed 171-mile loop of mostly new pipeline across northern Massachusetts to Dracut, with three legs reaching north into Keene, Jaffrey and New Ipswich in New Hampshire.
According to TGP, there has been significant interest, with about 500,000 dekatherms per day in firm commitments already received. The anticipated time frame for completion of construction and service is between 2017 and 2018.
Third, the proposed PNGTS Continent to Coast (C2C) Expansion Project would access northern gas supplies by way of the TransCanada pipeline and add incremental capacity between Pittsburg, N.H., and Westbrook, Maine. The increase would roughly double current capacity to an anticipated range of 300,000 to 350,000 dekatherms per day.
Because the existing pipeline travels through Groveton and Berlin in New Hampshire, the increase in capacity brings with it potential for increased economic development. An upstream expansion of the TransCanada pipeline would be needed for the C2C project to go forward but, depending on project economics, timing of regulatory approvals and other factors, the in-service date could be as early as 2016.
In the meantime, energy firms are exploring construction of more compressed natural gas facilities in New Hampshire, allowing for direct transport of natural gas to businesses seeking to switch from oil or propane for production or heating purposes.
With natural gas consumption projected to increase substantially over the next few decades to its low cost, reliability and low emissions compared to other fossil fuels, policymakers will be pressed to quickly remove barriers to bringing abundant natural gas supplies into New England markets and to New Hampshire’s commercial, industrial and retail customers.
Facilitating increased pipeline capacity and expansion could create opportunities for significant savings in energy costs, business expansion, job creation and local distribution enhancements, at the same time that renewable energy sources continue to be developed.
“If you build it, they will come.”
Maureen D. Smith, a member of the Energy and Environmental Practice Group at the Concord law firm of Orr & Reno, can be reached at firstname.lastname@example.org.