Pipeline expansion effect could be short-lived: ISO-NE
Houston, 9 December (Argus) — The Algonquin Gas Transmission Incremental Market (AIM) natural gas pipeline expansion should ease concerns about natural gas supplies in New England this winter, but its impact will likely be short-lived, the region’s electric grid operator said.
New England’s natural gas infrastructure was not designed to serve demand for natural gas for both heating and power generation. On cold winter days, New England’s network of pipelines is near or at full capacity. Pipeline constraints lead to spot prices at Algonquin Citygates shooting to a record high of $75.24/mmBtu during extreme cold in January 2014, according to Argus data.
Algonquin’s 330mn cf/d (9mn m³/d) pipeline expansion began partial flows in the first week of November. The remainder of the project is expected to be completed this month, according to the US Energy Information Administration (EIA). The $972mn AIM expansion is the largest pipeline project since 2007 to transport gas into New England from outside the region, the EIA said.
The increased capacity factored into the Independent System Operator of New England (ISO-NE) assertion that its electricity supplies should be sufficient to meet demand this winter, particularly with the grid operator’s winter reliability program in place to incentivize gas and oil-fired power plants to procure fuel before winter begins.
But local distribution companies that sell gas to heating customers are expected to continue to expand their infrastructure to use up the expansion’s capacity. And the region is expected to lose 1,500 MW of coal- and oil-fired generation in spring 2017 that will be replaced primarily by gas-fired generation. No additional infrastructure to deliver or store natural gas is currently being developed, ISO-NE said.
Even before AIM came on line, deliveries on Algonquin were increasing steadily. Since 2010 the pipeline has been operating at capacity for increasingly longer portions of the winter season and higher levels of summer use, according to the EIA. Over the past several years, natural gas flows through the Stony Point, New York, compressor station have regularly reached their operating capacity throughout the year, even in non-winter months.