Regional Gas Market UpdatePresentation to:
ISO-NE Planning Advisory Committee
Tom KileyNortheast Gas Association
April 20, 2016Westborough, MA
Continued on NGA web site…
http://www.northeastgas.org/about-nga/antitrust-guidelines2.
About NGA
Non-profit trade association
Local gas utilities (LDCs) serving New England, New York, New Jersey, Pennsylvania
Several interstate pipeline companies
LNG importers (Distrigas, Repsol) and LNG trucking companies
Over 300 “associate member” companies, from industry suppliers and contractors to electric grid operators
www.northeastgas.org 3.
4.
New Members from Pennsylvania
421,822 customers 213,089 customers 501,352 customers
498,931 customers 612,000 customers 8,000 customers
Issues
The Recent Winter
Natural Gas Supply Trends
Proposed Regional Infrastructure
Regulatory Issues
5.
Winter Summary…in Brief
• 18% warmer than average
• One very cold weekend, Feb. 13-14, with many new records – but brief
• Storage levels remain high
• Low prices for consumers1400 2400 3400 4400
New Eng. ActualNew Eng. Normal
Mid-Atl. ActualMid-Atl. Normal
Source: U.S. NOAA
Heating Degree Days,Nov. 2015 - Feb. 2016
6.
New England Gas Utilities Set New Sendout Record, 2-14-16
• Gas LDC sendout of 4 Bcf on Feb. 14, 2016 (a Sunday) – new record
• Gas LDC design day for this winter was 4.5 Bcf, reflecting system growth
• 2013/14 winter design day collectively was 4 Bcf
7.
Spot Price Less Volatile than Previous Winters
Chart: U.S. EIA, April 2016
8.
LNG Imports
• Annual imports still lower compared to 2005-2011 period, but winter injections remain valuable.
Source: U.S. EIA, 4-16
9.
Changing Differential,Gas vs. Oil
10.
Natural Gas Supply Trends
11.
Source: U.S. EIA, 7-14
Marcellus Shale Production
Source: U.S. EIA, 4-16
12.
Current Storage Levels,Post-winter
Source: U.S. EIA, April 2016
As of 4-1-16 As of 4-10-14
U.S. Total (Bcf) 2,480 847
5-year average 1,606 (+54%) 1,684 (-50%)
East U.S. only 434 310
5-year average 298 (+46%) 700 (-56%)
EIA, 4-12-16: “The estimated end-of-March inventory level this year is the highest end-of-season level on record, slightly above the previous record, set in 2012. March 2016 was much warmer than normal, and the milder weather limited inventory withdrawals. Looking ahead to the start of next winter, EIA forecasts inventories to be 4,112 Bcf at the end of October 2016, which would be the highest level on record to begin the heating season.”
13.
Short-Term Price Outlook: EIA
Source: U.S. EIA, April 2016
EIA, 4-12-16:“The Henry Hub natural gas spot price averaged $1.73/MMBtu in March, a decline of 26 cents/MMBtu from the February price. Warmer-than-normal temperatures through most of the winter, record inventory levels, and production growth have contributed to sustained low natural gas prices. Monthly average Henry Hub spot prices are forecast to remain lower than $3.00/MMBtu through December 2016. Forecast Henry Hub natural gas prices average $2.18/MMBtu in 2016 and $3.02/MMBtu in 2017.”
14.
Proposed Infrastructure
15.
Projects are Advancing out ofNortheast Production
Source: U.S. EIA, 2-16 16.
17.
A Number of Proposals
Map: FERC presentation to NECPUC, 6-15 18.
Algonquin Incremental Market (AIM) Project: Spectra Energy
Regional Supply
Map and info: Spectra Energy
19.
Purpose:Provide growing New England demand
with access to abundant regional natural gas supplies
Project Scope:Providing ~340 MMcf/d of additional
capacity to move Marcellus production to Algonquin City GatesCapEx: $1 BCustomers (15 year terms): LDC Affiliates of UIL Holdings,
Eversource, National Grid, NiSource City of NorwichMiddleboroughProject Status:Received FERC certificate, Mar. 3,
2015Under construction In-service 2H16
Facilities: Take up segments of 26” pipeline and replace with 42”; one segment
of 36” loop; reinforcement of existing laterals; construction of new lateral Horsepower additions and modifications at 5 existing compressor
stations New meter station installations and modifications to existing meter
stations
AIM: Examples of Facility Construction in CT
Photos: Spectra Energy 20.
Connecticut Expansion Project:Kinder Morgan / TGP
Project Scope: Providing 72 MMcf/d of
additional capacity to meet utility demand
Customers:UIL Holdings (CT Natural
Gas & Southern CT Gas) Eversource (Yankee Gas)
Project Status: FERC issued final approval,
Mar. 2016 Planned In-Service Date
– November 2016
Source: Kinder Morgan
21.
Pending / Future Projects
22.
Year Project Company2016 Salem Lateral Algonquin/Spectra
2016 New Market Dominion
2016/2017 Garden State Expansion Williams
2017 Constitution Cabot/Williams
2017 Wright Interconnect Iroquois
2017 Northern Access National Fuel
2017 Valley Lateral Millennium
2017 C2C PNGTS
2017 South to North Iroquois
2017 Atlantic Bridge Spectra
Future Projects (cont’d)
23.
Year Project Company2017 New York Bay Expansion Williams
2017 Ramapo Expansion Millennium
2017/18 PennEast NJ LDCs, Spectra
2018 Northeast Energy Direct Tennessee/Kinder Morgan
2018 Access Northeast Spectra, Eversource, Nat’l Grid
2018 2018 Project PNGTS
2018 Eastern System Upgrade Millennium
Gas LDCs are committing to infrastructure investments
Gas utilities are investing in proposed pipeline projects – to meet future utility demand.
Over 1 billion cubic feet per day of new capacity –New England gas LDCs’ contract commitments.
24.
New England Governors’ Energy Initiatives
Photo: Hartford Courant, April 2015
Starting in Dec. 2013, several joint statements expressing concern over region’s high energy (electric) costs and impacts on economy and energy reliability.
NESCOE 2014 concept for regional electric tariff for pipeline investment – did not advance.
States pursuing multi-state “clean energy RFP,” and individual state regulatory/legislative actions on electric tariffs and pipeline investments.
25.
Current State Processes
26.
State Process
Connecticut • Public Act 15-107, enacted 6-15• DEEP released draft gas capacity RFP, 3-9-16• Comments on draft due at end of March
Maine • Legislature enacted energy bill, 6-13, with provision for possible state investment in gas pipeline capacity up to 200 MMcf/d
• PUC still investigating
Massachusetts • DPU issued policy decision in DPU 15-37, 10-15, finding that it has legal authority to review and approve contracts filed by Electric Distribution Companies (EDCs) for pipeline capacity.
• State’s 2 largest EDCs – Eversource and National Grid – issued joint RFP for gas capacity, 10-15
• Eversource and National Grid separately filed for 20-year transportation agreements on behalf of EDC customers, 1-16, requesting DPU response by 10-16
New Hampshire • PUC staff report in Sept. 2015 concluded “that the Commission may hold that NH EDCs have authority to enter into gas capacity contracts for the benefit of gas-fired generators…”
• Eversource filed for gas transportation contract on behalf of EDC, 2-16
Rhode Island • Office of Energy Resources (OER) issued RFP for consulting services, 11-15, to advise on potential interstate gas capacity & infrastructure contracts which may be filed pursuant to Affordable Clean Energy security (ACES) Act.
Regulatory Initiatives
27.
Northeast States Lead U.S. in Gas Efficiency Investments
9 Northeast states = $536 million investment in 2014
Equal to 37.5% of U.S. total of $1.4 billion
Source: ACEEE, “2015 State Energy Efficiency Scorecard”, released Oct. 201528.
System Safety & Public Awareness
• Congress considering pipeline safety bill re-authorization.
• Operator qualification.
• Pipeline safety.
• Public awareness.
29.
• Aug. 2015: Obama Administration announced regulations to cut methane emissions• Among goals is to “reduce leaks from
well sites, gathering and boosting stations, and compressor stations…”
• Dec. 2015: COP21 Summit, Paris
• Aliso Canyon underground storage leak, near L.A.
• Mar. 2016: Canada & U.S. announce joint plant to reduce methane emissions – main focus on production sector.
Methane emissions from natural gas systems in MA have declined by 50% since 1990, according to MA EEA’s recent GHG assessment report. Natural gas sector in MA = 1.3% of total state GHG emissions.
30.
Environmental Issues – GHG, Methane
Questions?
30.31.