New England Natural Gas Market ‘Not Taking Full Advantage of Available …

September 15, 2014 - storage organizer

Winter Snow Storm Hammers Northeastern U.S.

When temperatures plummeted opposite a Northeast final winter, mark healthy gas prices along a Eastern Seaboard spiked to eye-popping levels causing many to call for additional tube capacity. However, as is mostly a box with appetite issues, a conditions is some-more formidable than it might initial seem and constructing costly long-term tube ability might not be a best approach to residence a issue.

Breaking Energy recently spoke with Guy Braden, Senior Vice President of Commercial Operations for GDF Suez Gas North America, a auxiliary of GDF Suez North America forward of his arriving remarks during a North American Gas Forum holding place in Washington DC Sep 28-30.

The GDF Suez auxiliary owns and operates a Everett LNG depot in Massachusetts that serves Boston and a surrounding region. The depot is versed with 2 LNG storage tanks with a total ability of 3.4 billion cubic feet, or 42 million gallons. Gas is delivered around interconnecting comforts of 2 widespread healthy gas pipelines – Algonquin Gas Transmission and Tennessee Gas Pipeline Company – that in spin bond to internal placement networks.

Addressing a Peaking Problem with Baseload Capacity

The problem in New England is a marketplace is good granted via many of a year and normal annual tube ability use is on a low side, explained Braden. The supply conditions disincentives vast consumers like appetite generators to enter long-term contractual agreements – that would radically need them to take long-term bets on healthy gas prices – and rather source gas from a mark market, so profitable a going rate that has been historically low in new years. However, when intensely cold continue moves in and heating direct spikes, gas consumers intersect on a mark marketplace pushing adult direct and prices.

“There is sufficient ability to accommodate a needs of a market…so we generally consider this speak of building large tube infrastructure is regulating a baseload resolution to residence a peaking problem,” Braden told Breaking Energy. He contends improved formulation can assistance assuage a problem. “The folks who unequivocally need gas are a appetite generators and they have no cost-recovery resource to secure LNG or tube ability in advance” Braden said.

The weather-related risk is substantial and compounds a problem from an mercantile standpoint. “It’s a unsure tender since if we line adult several [LNG] cargoes to move into a marketplace and have a comfortable winter and prices tumble detached afterwards have problem.”

“There is a lot of storage between a dual informal LNG terminals and we work with LDCs [local placement companies] to supply storage. We can move some-more ships in yet that’s rather unsure since it’s such a skinny marketplace and there are stronger markets elsewhere. …There’s an inability with people who need that rise supply to secure it,” he added.

Talks are underway with appetite generators and a eccentric complement user about pity a risk compared with securing supply that can be used during durations of impassioned demand. Companies recompense a reward for a choice to entrance supply during cold snaps so they are not gratified to mark marketplace volatility. The ISO is operative on a module to assistance honestly share a cost of those choice premiums.

But work contingency still be finished to iron out a details. “The suspicion is to recompense holders of LNG contracts that go new during finish of winter. This leaves a lot of risk on a generators that has done them demure to enter into a program,” pronounced Braden. If these issues can be worked out, however, regulating LNG and existent infrastructure could be an easier, some-more cost-effective resolution than constructing new tube capacity, he contends.

Braden will plead this emanate in fact during his NAGF presentation. “I’m going to speak about how LNG is still applicable in a New England market. We consider it’s a right resolution for a winter peaking issue. The genuine problem in New England ironically is caused by low-priced gas – low prices empty a pool for non-gas dismissed generation. My display will uncover that a solution is there.”

Other Important Industry Trends

Natural gas prices and altogether sensitivity have been historically low for a past several years amid sepulchral prolongation and sincerely fast demand. Industry observers and analysts are now doubt how longer-term supply/demand dynamics will impact gas prices.

“We’ve been in such an abounding supply mode and producers are observant we need markets so we can get a cost behind up. The doubt is how will direct respond? We’ve seen petrochemical and production entrance behind formed on low-cost gas. Will we see a travel market?” Braden asked.

There is a box to be done for healthy gas vehicles for that there is flourishing support, yet there are hurdles to building out that marketplace as good – large infrastructural investment and long-term cost doubt among them. On a other hand, a sea marketplace is of sold seductiveness and a space Braden pronounced he watches closely.

The grade to that a US will trade LNG is another emanate receiving lots of attention. In fact, a Department of Energy customarily greenlit dual some-more trade projects this week.

“There’s lots of trade speak and we consider there will be singular volumes of exports from a US. we tend to side with a projections of about 6bcf/d. Probably not many some-more than what’s underneath construction right now,” pronounced Braden. “There’s a lot of LNG that will be constructed and it is not clear tellurian direct will be there. You customarily need to demeanour during a mark price. In Asia it’s $10 right now that is a distant cry from where it was, yet some of that’s continue related.”

The biggest risk with courtesy to US LNG exports is that investors spend billions of dollars on liquefaction infrastructure customarily to find themselves though markets. Long-term contracts are customarily a exigency for building these projects, that is meant to extent that risk, yet tellurian supply/demand and cost vagaries will always exist.

“If you’re in this attention prolonged adequate we see these cycles. The appetite business has left from bang to bust many times.”

The North American Gas Forum, function Sep 28-30 in Washington D.C. will concentration on supply-demand dynamics in a North American and tellurian gas markets and residence many of a pivotal issues that are a priority for leaders in a industry. A first-class orator choice with 45+ speakers and 7 US Congressmen are some of a highlights of a forum. For some-more information greatfully revisit or hit a organizer.

Breaking Energy is a North American Gas Forum media partner.

Breaking Energy provides entrance to news, analysis, suspicion leadership, anxiety materials and discussions about a day’s many critical appetite marketplace trends. Breaking Energy participants stay forward of violation news, attend in high-profile events and suffer entrance to a executive heart of a attention village as it transforms in response to fast-moving changes in appetite politics and regulation, deals with financial hurdles and leads technological advances.

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