Gas pipeline delays most notable 2016 trend: NGA
An increase in public opposition to oil and natural gas infrastructure, regulatory delays and, in some cases, a lack of customer interest led to delays and cancellations of a few regional natural gas pipeline expansions this year. This year the 628mn cf/d (17mn m?/d) Constitution pipeline was denied a key water permit by the state of New York, and Kinder Morgan canceled its 1.3 Bcf/d Northeast Energy Direct pipeline because it had not received enough contracts from power plants to make the project viable.
The industry group's 2016 Statistical Guide, released this week, cited Dominion Transmission's New Market project and Tennessee Gas pipeline's Connecticut expansion as projects that, like Constitution, received federal certificates but encountered delays at the state level.
Possible delays and cancellations of northeast projects have worked to discourage producers and constrain northeast production growth, BTU Analytics said in October. "No projects can be taken for granted these days," the energy analysis and consulting firm said.
Only a few system enhancements were placed into service this year, including Spectra Energy's 330mn cf/d Algonquin Incremental Market project and its 111mn cf/d Salem lateral. Vermont Gas System is also completing its Addison Natural Gas project to extend its service for 41 miles (66km) southward.
The region remains constrained at several points on its natural gas system, especially into New England and southern New York and Long Island. Two gas utilities in Massachusetts are not allowing new customers on certain parts of their systems because of inadequate pipeline capacity, the NGA report said.
Securing contract commitments in New England also remains a challenging market issue as the largest consuming sector, power generation, is constrained by the complex economic structure of its wholesale electricity market.
New England's six state governors in late 2013 began exploring how to solve this issue, but last year the states abandoned a plan to pay for pipelines through the electric grid because of legal concerns. And in August a top court in Massachusetts found that a plan that would allow local electric utilities to sign contracts for pipeline capacity conflicted with a law that deregulated that state's electric market. The court ruling leaves few options for other states in the region hoping to spur pipeline expansions.
The association expects the northeast US region to continue to rely on LNG as a stopgap during times of extreme cold weather and pipeline restrictions. The Boston area received an LNG cargo today, equivalent to 2.8 Bcf of gas, likely because of forecasts for below-normal temperatures over the weekend and early next week.
UGI in Pennsylvania has LNG storage facilities that are able to respond to high load and an LNG tanker truck-loading terminal. And South Jersey Gas just added liquefaction capability in 2016, the report said. The state of Maine recently solicited bids for proposals to provide additional LNG storage in the state. And some businesses and institutions in New England have opted for natural gas delivered by truck, the report said.