gas infrastructure and deliverability in new england...ms 2 next day strip prices, january 2014 tz6...
TRANSCRIPT
Understanding Our
Energy Distribution Systems:
Gas Infrastructure and
Deliverability in New England
Richard Levitan, [email protected]
March 5, 2014
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Agenda
Price Discovery During the Polar Vortex
New England’s P/L Infrastructure
• Marcellus shale E&P impact on supply / deliverability
• Decline in gas portfolio diversity -- pipeline economic
obsolescence
• Reduced LNG Imports
• Potential infrastructure expansion efforts
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Next Day Strip Prices, January 2014
TZ6 (non-NY) is VA/MB border to Linden, NJ
TZ5 is GA/SC to VA/MD border0
25
50
75
100
125
150
1/2
1/3
1/4
1/5
1/6
1/7
1/8
1/9
1/1
01
/11
1/1
21
/13
1/1
41
/15
1/1
61
/17
1/1
81
/19
1/2
01
/21
1/2
21
/23
1/2
41
/25
1/2
61
/27
1/2
81
/29
1/3
01
/31
Pri
ce (
$/M
MB
tu)
Transco-Z6 (NY)
0
25
50
75
100
125
150
1/2
1/3
1/4
1/5
1/6
1/7
1/8
1/9
1/1
01
/11
1/1
21
/13
1/1
41
/15
1/1
61
/17
1/1
81
/19
1/2
01
/21
1/2
21
/23
1/2
41
/25
1/2
61
/27
1/2
81
/29
1/3
01
/31
Pri
ce (
$/M
MB
tu)
Transco-Z6 (non-NY)
(High, Low, Weighted Average)
Source: ICE
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Next Day Strip Prices, January 2014
(High, Low, Weighted Average)
0
25
50
75
100
125
150
1/2
1/3
1/4
1/5
1/6
1/7
1/8
1/9
1/1
01
/11
1/1
21
/13
1/1
41
/15
1/1
61
/17
1/1
81
/19
1/2
01
/21
1/2
21
/23
1/2
41
/25
1/2
61
/27
1/2
81
/29
1/3
01
/31
Pri
ce (
$/M
MB
tu)
Chicago Citygates
0
25
50
75
100
125
150
1/2
1/3
1/4
1/5
1/6
1/7
1/8
1/9
1/1
01
/11
1/1
21
/13
1/1
41
/15
1/1
61
/17
1/1
81
/19
1/2
01
/21
1/2
21
/23
1/2
41
/25
1/2
61
/27
1/2
81
/29
1/3
01
/31
Pri
ce (
$/M
MB
tu)
Dominion-South
Source: ICE
0
25
50
75
100
125
150
1/2
1/3
1/4
1/5
1/6
1/7
1/8
1/9
1/1
01
/11
1/1
21
/13
1/1
41
/15
1/1
61
/17
1/1
81
/19
1/2
01
/21
1/2
21
/23
1/2
41
/25
1/2
61
/27
1/2
81
/29
1/3
01
/31
Pri
ce (
$/M
MB
tu)
Algonquin Citygates
0
25
50
75
100
125
150
1/2
1/3
1/4
1/5
1/6
1/7
1/8
1/9
1/1
01/
11
1/1
21/
13
1/1
41/
15
1/1
61/
17
1/1
81/
19
1/2
01/
21
1/2
21/
23
1/2
41/
25
1/2
61/
27
1/2
81/
29
1/3
01/
31
Pri
ce (
$/M
MB
tu)
TETCO-M3
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Chokepoints Across the Supply Chain into the NYFS
January 6-7, January 21-23, 2014
Source: Pipeline EBB Critical Notice postings
Force majeure, 1/7
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Pre-Shale and Post-Shale Gas Flow Patterns
Pre-Shale Flow Patterns Post-Shale Flow Patterns
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Wet and dry shale gas production
Major Dry Gas
Production Area
Major Wet Gas
Production Area
Sources: EIA, Pennsylvania State University Marcellus Center, Dominion
Resources, Pennsylvania Department of Conservation and Natural Resources
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0
2
4
6
8
10
12
Oct-
08
Jan
-09
Ap
r-0
9
Jul-0
9
Oct-
09
Jan
-10
Ap
r-1
0
Jul-1
0
Oct-
10
Jan
-11
Ap
r-1
1
Jul-1
1
Oct-
11
Jan
-12
Ap
r-1
2
Jul-1
2
Oct-
12
Jan
-13
Ap
r-1
3
Jul-1
3
Oct-
13
Ma
rcell
us
Pro
du
cti
on
(B
cf/
d)
Radical Change in Traditional Flows
Shale gas fundamentally altering traditional flows
• Long haul transportation from WCSB obsolete
• Marcellus gas supplanting gas from GoM and Canada
• Declining Sable Island production, uncertainty around
Deep Panuke
• Reversal of flow through
New York / Ontario
• LNG imports limited to
contract quantities,
periodic arbitrage
◦ Flexible cargoes to
EU or Asia
Source: Bentek Energy
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Interstate Pipelines Operating in New England
Algonquin
Granite State
Iroquois
M&N
PNGTS
M&N/PNGTS Joint Facilities
Tennessee
Interstate-Served Generator
LNG-Served Generator
LDC-Served Generator
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Interstate Pipelines Operating in New York
Algonquin
CNYOG
Columbia
Dominion
Empire
Iroquois
Millennium
NFG
Tennessee
Texas Eastern
Transco
Bluestone Gathering
Laser Gathering
Interstate-Served Generator
Intrastate-Served Generator
LDC-Served Generator
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LNG Import Terminals in New England
Algonquin
M&N
Tennessee
LNG-Served Generator
LNG Import Terminal
National GridService Territory
Boston
Mystic 8&9
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Northeast LNG Imports
0
5
10
15
20
25
2007 2008 2009 2010 2011 2012 2013
LN
G Im
po
rts
(B
cf)
Distrigas Canaport
Source: DOE Office of Fossil Energy, NEB
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Decline in East-End Supplies
0
5
10
15
20
25
30
35
40
45
50
0
50
100
150
200
250
300
350
400
2007 2008 2009 2010 2011 2012 2013
LN
G Im
po
rts (
Bcf)
Dis
trig
as S
en
do
ut
to A
lgo
nq
uin
(M
Dth
/d)
Distrigas LNG Imports
Distrigas Sendout to Algonquin
Algonquin Receipts from M&N
Source: DOE Office of Fossil Energy, Spectra Energy
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Constraints on West-End Supplies
0
200
400
600
800
1,000
1,200
1,400
1,600
Jul-09
Oct-
09
Jan-1
0
Apr-
10
Jul-10
Oct-
10
Jan-1
1
Apr-
11
Jul-11
Oct-
11
Jan-1
2
Apr-
12
Jul-12
Oct-
12
Jan-1
3
Apr-
13
Jul-13
Oct-
13
Jan-1
4
Natu
ral
Ga
s V
olu
me
(M
Dth
/d)
Capacity Throughput
Source: Spectra Energy
Algonquin Southeast Compressor Station (NY/CT Border)
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LNG Facilities in New England
Algonquin
Granite State
Iroquois
M&N
PNGTS
M&N/PNGTS Joint Facilities
Tennessee
LNG Import Terminal
LNG Satellite Tank
Augusta
Portland
Boston
Springfield
Hartford
New Haven
Providence
Concord
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LDCs Serving New England Generators
Algonquin
Granite State
Iroquois
M&N
PNGTS
M&N/PNGTS Joint Facilities
Tennessee
Bangor Gas
Berkshire Gas
Columbia Gas of MA
Connecticut Natural Gas
Maine Natural Gas
National Grid (Boston Gas)
National Grid (Colonial Gas)
National Grid (Narragansett)
Southern Connecticut Gas
Yankee Gas
LDC-Served Generator
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M&N Pipeline Facilities
Maine
Algonquin
Granite State
M&N
PNGTS
M&N/PNGTS Joint Facilities
Tennessee
Compressor Station
Interstate-Served Generator
New Hampshire
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Tennessee Pipeline Facilities in New England
Algonquin
Granite State
Iroquois
M&N
M&N / PNGTS Joint Facilities
Tennessee
Compressor Station
Interstate-Served Generator
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Concluding Thoughts
Loss of New England’s P/L portfolio diversity heightens economic
and operational risks
High basis and volatile gas prices likely here to stay until pipeline
enhancements alleviate congestion along traditional pathways into
the region
Existing ISO wholesale market design does not induce genco
commitments for firm transportation
Bulk power security during the winter is derived largely from oil
• Many oil generation plants at the local level are at-risk for retirement
• Combined cycle, gas turbine, and steam turbine generators on oil
cannot sustain the provision of ancillary services
Electric Grid Structures
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Understanding Our Energy Distribution Systems
March 5, 2014
Paul Peterson
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Synapse Energy Economics
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• Consulting firm in Cambridge Massachusetts with
a staff of 30 people
• Issues– Electric industry restructuring & utility rate cases
– Wholesale markets, ISOs, and RTOs
– System Planning and resource development
– Environmental impacts of power industry
• Clients– State Consumer Advocates and Utility Commissions
– Public Interest and Environmental groups
– EPA and DOE
– RTO stakeholders
Energy Intensity
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Trends
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Relative US Energy & GDP Growth since 1949
0
2
4
6
8
10
12
14
16
18
1949 1959 1969 1979 1989 1999 2009
19
49
= 1
.00
Electricity
GDP
All Energy
Energy (Non-Elec)
Population
Declining energy intensity
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US Historic Energy Intensity
0
2
4
6
8
10
12
14
16
18
20
1949 1959 1969 1979 1989 1999 2009
All
Energ
y k
Btu
/$
0
40
80
120
160
200
240
280
320
360
400
Ele
ctr
icity
MW
h/M
$
All Energy/GDP Electricity/GDP
Electric machines
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Three elements to power system
– Supply (resources)
– Demand (loads)
– Wires (T&D systems)
Inter-connected electric systems are the
largest machines ever engineered
– 24/7 balancing of supply and demand
– Cascading effect of disruptions
– Controls for local systems
North American electric machines
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New England grid
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New England Grid
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Planning issues
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Peak Load– Summer: MW needed for summer peak day
– Winter: MW needed for winter peak day
– Daily: MW needed for each daily peak
Energy– MWH needed to meet total annual demand
Reliability Needs– Resource adequacy (thermal loads on wires)
– Security dispatch (voltage, stability and daily operation)
System operations
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Energy to meet forecast load in each hour– Day Ahead, adjusted by a reliability review
– Real Time
Reserves to be available for contingencies– 10 minute
– 30 minute
Dispatch instructions to fine tune/balance – Voltage
– Regulation to fine tune the balance
Capacity to meet annual peak load
New England grid
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Traditional operation of power grids– Day-ahead forecast of hourly loads (weather)
– Day-ahead commitment of generation
– Real-time management of generation by operators
Evolving operation of power grids– Day-ahead offers by Supply and Load
– Day-ahead dispatch schedule includes instructions to
both Supply and Load
– Real-time balancing based on offers
Supply and load are variable/manageable
Energy load
(1980-2009)
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New England Weather Normal Net Energy for Load
80000
90000
100000
110000
120000
130000
140000
1980 1985 1990 1995 2000 2005 2010
Ne
t En
erg
y fo
r Lo
ad, G
WH
Weather Normal Net Energy for Load
Declining slope to flat
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New England Weather Normal Net Energy for Load, 1981-2010,
Excluding 1991-1993 and 2008-2009 Recession Years
80000
90000
100000
110000
120000
130000
140000
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Net
En
erg
y f
or
Lo
ad
, G
Wh
3481 GWh
2344 GWh
561 GWh
ISO-NE RSP12 annual energy (GWh)Weather Normal History 1991-2011 and Forecast 2012-2021
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Northeast Energy Efficiency Partnerships2005 estimate of EE potential
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Existing and New EE Strategies Can Offset ISO
Forecasted Energy Requirements (GWH) and Beyond
100,000
105,000
110,000
115,000
120,000
125,000
130,000
135,000
140,000
145,000
150,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
GW
h
ISO GWh Forecast (w/out DSM)
1.2% Avg. Annual Increase at
Actual Energy Requirement (2003)
Addt'l EE Can Offset Growth
Total Achievable Energy Savings Potential
-1.38% Avg. Annual ReductionTotal EE
Potential in
2013 Can
Reduce
Energy Req.
to 1993 Level
New England Grid
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New England Grid
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ISO New England DG forecast
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Interim forecast for 2014 System Plan
– DG forecast working group (DGFWG)
– Focus on solar PV
– Developing state inventories
Complete forecast for 2015 System Plan
– Other DG, including CHP
– Refinement to solar PV
Operational issues are a concern
New England Grid
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2013 New England market changes
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• Change timing of Day Ahead Market (gas)
• Expand use of daily reoffer period
• Winter 2013-2014 fuel purchases (gas)
• Increase quantity of operating reserves
• Increase frequency of higher reserve prices
• Update shortage event trigger (30 min)
• Refer non-performing generators to FERC
• FCA-8 retirements and scarcity
• FCA-9 design changes (proposed)
FERC December 17, 2013 40
CAISO Duck Curve
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Traditional representation of loads
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Loads with more Variable Energy Resources
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Future structure
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Interconnected Grid with more DG
– Enhanced reliability
– Greater efficiency
– Lower cost
Completely distributed grid?
Role of storage?
Net-zero energy buildings?
Carbon policy?
EPRI, The Integrated Grid, February 2014, for background
Elements of persuasion
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• Reliability– the grid will be unstable if . . .
• Economics– unnecessary costs will be imposed if . . .
• Fairness– these resources/customers will be harmed if . . .
• Policy– the public interest will be ignored if . . .
All four = success
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Contact Info
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802-387-5105
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