yes, we believe so, but new capacity will be needed (and several projects are in the pipeline)...
TRANSCRIPT
Yes, We Believe So,But New Capacity Will Be
Needed (And Several Projects Are
in the Pipeline)
Massachusetts Electric Restructuring RoundtableFebruary 16, 2001
Thomas M. Kiley, President
The New England Gas Association
“Will There Be Enough Gas to Fully Support Electricity Generation
in New England?”
The Report
With so much generation in the region choosing gas, addresses impact on gas and electricity systems Energy systems are increasingly linked
– Study raises questions about infrastructure for multiple systems – electric, gas, oil – and how they inter-relate Agree that additional pipeline capacity will be needed to meet future power generation demand Need for ongoing communication – as in this forum today and others
NEGA’s Discussion Points Today
Study’s assumptions on pipeline capacity do not include several proposed system enhancements – undervaluing likely pipeline capacity growth
Uncertain of study’s assumptions about total electric system capacity
Dismayed by misimpressions conveyed about “gas shortages”
1985 1990 1998 2000
0
0.5
1
1.5
2
2.5
3
3.5
Bcf/day
Daily pipeline capacity today is about 3.6 billion cubic feet per day (Bcf/d).
In last 3 years, pipeline capacity has grown by 800,000 MMCf/d, or 29%
Region’s Pipeline Capacity Growth
New Pipeline Supply - PNGTS
Completed February 1999• 292 miles of 24” and 30” pipe, U.S. side• Interconnects with TransCanada system• $500 million investment• Initially 178 MMcf/d; now 230 MMcf/d
New Pipeline Supply – Maritimes & Northeast
Completed December 1999• 205 miles of 24” and 30” pipe, U.S. side• Supplies from Sable Offshore• $1.2 billion investment, total pipeline• 400 MMcf/d
New Supply Project – Atlantic LNG
New $1 billion liquefaction plant, Trinidad & Tobago• First deliveries to New England, May 1999• For calendar year 2000, as of 9/00, Distrigas had imported 60 Bcf from Trinidad, 11 Bcf from Algeria• 240 MMcf/d• Growing interest in LNG by many companies
Distribution System Growth
Continued investments by LDCs in system expansion & maintenance• New pipelines mean new service areas• 2 new LDCs in Maine
Distrigas of Mass. Everett marine terminal
1999 imports: 96 Bcf, more than double ’98 levels
3.5 Bcf of storage Interconnections to Algonquin
& Tennessee systems Recently increased system’s
daily vapor sendout to 450,000 MMBtu/d
LNG provides about 25% of region’s peak day supply
New contracts with power plants
Distrigas LNG Terminal
ME
NH
VT
MA
CTRI
Vermont Gas System
Portland Natural GasTransmission System Maritimes & Northeast
Pipeline
Iroquois GasTransmission System
Tennessee GasPipeline / El Paso
Algonquin GasTransmission / Duke
The Regional Transmission System
Cabot LNG /Distrigas
Miles of pipe:
Transmission –1,879
Distribution –32,120
ME
NH
VT
MA
CTRI
Androscoggin Energy, Jay,
157 MWs
Maine Independence,
Veazie, 520 MWs
Bucksport Energy, 174 MWs
Rumford Power,
265 MWs
Berkshire Power,
Agawam, 276 MWs
Tiverton, 265 MWs
Recent Gas Power Plants on N.E. Grid
Bridgeport, 540 MWs
Dighton, 178 MWs
Over 2,300MWs of newgeneration has been added
New Capacity Will Be Needed
Over 20,000 MWs of new units are proposed in the region, according to ISO listing
Report considers bandwidth of 7-11,000 MWs of new gas units in 2001-2005 timeframe
To meet new load demand, report states that new gas pipeline capacity will be needed. NEGA concurs.
Report includes in its modeling analysis several proposed projects but not others. This assumption is key. NEGA believes these others projects are likely and will contribute both to meet supply needs and help alleviate system bottlenecks as identified in the report.
Proposed Enhancements, New England / New York Systems, 2002-2003
Duke / Algonquin:• HubLine• Islander East (with KeySpan)
Duke / Maritimes & Northeast:• M&NE Phase III Expansion
El Paso / Tennessee:• Eastern Express New England• Connecticut/Long Island Lateral
Iroquois:• Eastchester
Included / Not Included
Included
Tennessee’s “Eastern Express 2000” (in 2001 model)
Iroquois’ “Eastchester” (in 2003 model)
Not Included
Tennessee’s “Eastern Express New England”
Duke’s “HubLine”
Maritimes & Northeast’s “Phase III Expansion”
See report pages vi-vii; 45-48. Also does not include Distrigas’ sendout capability in pipeline capacity (see p. ix).
Projects are Moving through the Process Now
The inclusion of several of these projects, as they proceed, will mean new supplies and increased capacity.
These projects are proceeding on schedule, as planned, under regulatory review.
Planned to meet market demand and conditions. Timely approval is key. Agree with report: “Any facility improvement that
results in increased liquidity at Dracut would likewise improve electric system reliability across New England” (p. xi).
Uncertainty About Electric System Capability/Assumptions
Would be interested in further information on electric assumptions - missing sense of total electric system capability in 2003-2005: gas units are presented somewhat in a vacuum.
The issue of constraint on peak, Winter 2003: – What is the total system capability? – What is the status of non-gas units? – What is the assumption for units on scheduled maintenance/ unplanned
outages, etc.? – What is the dispatch model/ process? – How much attrition of existing capacity occurs and when? – What about transmission ties: HQ, NB, etc.?
Reference gas: 2005 summer peak, 25,213 MWs, 2005 winter peak, 22,252 MWs (p. 34); High case: 2005 summer peak, 26,986 MWs, 2005 winter peak, 23,961 MWs (p. 34)
NEPOOL’s projected net generating capacity for this summer, 2001, is 27,100 MWs, with forecasted peak of 23,650
Misimpressions Conveyed on “Shortages” & “Crisis” Report’s cover letter states: “Against the backdrop of skyrocketing
commodity gas costs and the power crisis in California, New England’s growing dependence on natural gas for power generation is genuine cause for concern” (Levitan, 1-29-01)
News reports in wake of ISO press conference of Feb. 5 conveyed sense of looming crisis in the region – and pending “choice” between gas heat and power.
The Boston Globe, 2-6-01: “Study sees gas heat, electric shortages…Some New England consumers could go temporarily without heat or electricity during the winter of 2003 because the pipeline system may not be able to keep homes and power plants supplied with natural gas on peak winter days, according to a study released yesterday by the operator of the region’s power grid.”
This is incorrect.
LDC Reliability is Confirmed
Report itself makes clear several times that LDC supplies to firm customers are not at risk:
“When constraints arise, LDCs will be served as well as the minority of merchant generators who have lined up firm long-haul entitlements in their own name. Under the pipelines’ rigid scheduling priority systems, LAI does not envision the increased demand for natural gas for merchant generation having an injurious effect on the reliability of service for New England’s LDCs.” (p. ix)
“New England’s LDCs have nothing to worry about during times of constraint…[Gas] utilities remain obligated to serve. Therefore, gas utilities in New England cannot afford to “roll-the-dice” on the release of firm capacity rights when residential and commercial customers would otherwise be at risk.” (p. 14)
Natural Gas & Power Generation
Natural gas is the fuel of choice for new generation in New England and the U.S.
» Lower heat rate» Higher efficiency» Operating and maintenance performance» Lower emissions
Primary Energy Consumption,
New England vs. U.S. (%)
127
51
96
18
7
22
39
24
0
10
20
30
40
50
60
Natural Gas Petroleum Coal Nuclear Hydro &Biomass
Percentage
N.E. U.S.
Source: U.S. Energy Information Administration
Changing Electric Generation Fuel Mix: 1980 - 1999
Source: ISO New England
Pe
rce
nta
ge
Natural Gas
Purchases
Hydro
Oil
Nuclear
Coal
1999: Gas is 16% of mix
Projected Gas Market Growth
Residential
Commercial
Industrial
Electric Generation
0
200
400
600
800
1000
1200
1994 1995 1996 1997 2000 2005 2010 2015
Tri
llio
n B
tu
GTI projects 3.4% annual growth in New England over the next 15 years, led by electric generation
Annual Growth Rate:Residential: 1.1%Commercial: 1.7%Industrial: 3.5%Electric: 7.4%
Source: Gas Technology Institute (GTI)
Greater Communication
NEGA supports report’s call for greater communication among energy systems
Last June NEGA held a workshop on gas power plants, looking at the issue of “will there be enough gas?” Participants included ISO NE, pipelines, Distrigas, LDCs, power generators, consultants, state government agencies
Consensus that supply will be there to meet need, assuming new pipeline capacity
Recommendation for greater communication on scheduling protocols, etc.
Summary
Natural gas industry has made substantial infrastructure investments in recent years in New England
Study’s assumptions on pipeline capacity do not include several proposed system enhancements – undervaluing likely pipeline capacity growth
Agree that additional pipeline capacity will be needed to meet future power generation demand
Misimpression on “shortages” regrettable Need for ongoing communication