Maine eyes buying LNG storage, pipeline capacity
OREANDA-NEWS. September 26, 2016. Maine is soliciting bids for construction of an LNG production and storage facility to help meet peak winter gas demand with plentiful Marcellus shale gas.
The state is also considering acquiring capacity on a gas pipeline expansion that would serve New England.
Under a 2013 state law meant to reduce energy costs, the Maine Public Utilities Commission (PUC) can contract for as much as 200mn cf/d (5.7mn m?/d) of pipeline transportation capacity, at a maximum cost of \\$75mn/yr. The PUC can pass on the costs to gas and electricity customers, but any decision by the PUC must be approved by the governor.
The law was amended this year to allow the PUC to also contract for LNG storage capacity to be built in the state at a cost not exceeding \\$25mn/yr. The state's combined cost for pipeline and LNG storage capacity cannot exceed \\$75mn/yr.
Due to pipeline constraints and a lack of underground gas storage in New England, winter gas prices in the region can be significantly higher than the rest of the country. Prices in Maine are among the highest, as the state relies on Canadian gas and imported LNG from two pipelines to meet virtually all its demand.
One is the 690-mile (1,110km) Maritimes & Northeast (MNE) pipeline connecting offshore Canadian production and the Canaport LNG import facility to the Algonquin system in Massachusetts. The other is the 295-mile Portland Natural Gas Transmission System (PNGTS) that connects the Canadian gas grid with the US section of MNE.
Sparsely populated Maine accounts for about 9pc of gas consumption in New England and only has one small LNG peakshaving plant, with capacity of about 10mn cf/d.
The Maine PUC on 14 September issued a request for proposals for construction a new LNG peakshaving facility in the state. Proposals are due by 14 October, and the PUC must sign a contract for up to \\$25mn/yr of capacity by 1 June 2017.
On 1 September a venture called Maine Energy Storage asked the PUC to approve spending \\$25mn/yr to buy capacity at one of its two proposed peakshaving facilities, either in Brewer along the MNE pipeline or in Rumford along PGNTS. Either facility would have storage capacity of 1.3 Bcf/d. Instead, the PUC initiated an open bidding process.
Also on 14 September, the PUC said it would negotiate to acquire 9pc of the capacity on the planned Access Northeast pipeline expansion, which would add as much as 900mn cf/d of northward capacity along Spectra's Algonquin and MNE systems.
But it is unclear if the project will materialize, as last month a top Massachusetts court ruled that utility in that state companies cannot use ratepayers to finance gas pipeline construction.
If the project does not move forward, the Maine PUC said it would negotiate for capacity on TransCanada's C2C project, which would roughly double capacity on the 162mn cf/d PNGTS system, providing additional access to Marcellus and western Canadian gas.
The Maine governor's office said it does not know if it will approve a capacity contract because the details have not yet been worked out.