Gas Infrastructure and Deliverability in New England

Size: px

Start display at page:

Download "Gas Infrastructure and Deliverability in New England"

Dina Tate
5 years ago
Views:

1 Understanding Our Energy Distribution Systems: Gas Infrastructure and Deliverability in New England Richard Levitan, March 5, 2014

2 Understanding Our Energy Distribution Systems Agenda Price Discovery During the Polar Vortex New England s P/L Infrastructure Marcellus shale E&P impact on supply / deliverability Decline in gas portfolio diversity -- pipeline economic obsolescence Reduced LNG Imports Potential infrastructure expansion efforts 1

3 Understanding Our Energy Distribution Systems Next Day Strip Prices, January 2014 Price ($/MMBtu) Price ($/MMBtu) 1/2 1/3 1/4 1/5 1/6 1/7 1/8 1/9 1/10 1/11 1/12 1/13 1/14 1/15 1/16 1/17 1/18 1/19 1/20 1/21 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/31 1/2 1/3 1/4 1/5 1/6 1/7 1/8 1/9 1/10 1/11 1/12 1/13 1/14 1/15 1/16 1/17 1/18 1/19 1/20 1/21 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/31 (High, Low, Weighted Average) 150 Transco-Z6 (NY) TZ6 (non-ny) is VA/MB border to Linden, NJ TZ5 is GA/SC to VA/MD border 150 Transco-Z6 (non-ny) Source: ICE

4 Understanding Our Energy Distribution Systems Next Day Strip Prices, January 2014 Price ($/MMBtu) Price ($/MMBtu) 1/2 1/3 1/4 1/5 1/6 1/7 1/8 1/9 1/10 1/11 1/12 1/13 1/14 1/15 1/16 1/17 1/18 1/19 1/20 1/21 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/31 1/2 1/3 1/4 1/5 1/6 1/7 1/8 1/9 1/10 1/11 1/12 1/13 1/14 1/15 1/16 1/17 1/18 1/19 1/20 1/21 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/31 Price ($/MMBtu) Price ($/MMBtu) 1/2 1/3 1/4 1/5 1/6 1/7 1/8 1/9 1/10 1/11 1/12 1/13 1/14 1/15 1/16 1/17 1/18 1/19 1/20 1/21 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/31 1/2 1/3 1/4 1/5 1/6 1/7 1/8 1/9 1/10 1/11 1/12 1/13 1/14 1/15 1/16 1/17 1/18 1/19 1/20 1/21 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/31 (High, Low, Weighted Average) 150 Algonquin Citygates 150 Chicago Citygates TETCO-M3 150 Dominion-South Source: ICE

5 Understanding Our Energy Distribution Systems Chokepoints Across the Supply Chain into the NYFS January 6-7, January 21-23, 2014 Force majeure, 1/7 4 Source: Pipeline EBB Critical Notice postings

6 Understanding Our Energy Distribution Systems Pre-Shale and Post-Shale Gas Flow Patterns Pre-Shale Flow Patterns Post-Shale Flow Patterns 5

7 Understanding Our Energy Distribution Systems Wet and dry shale gas production Major Dry Gas Production Area Major Wet Gas Production Area 6 Sources: EIA, Pennsylvania State University Marcellus Center, Dominion Resources, Pennsylvania Department of Conservation and Natural Resources

8 Understanding Our Energy Distribution Systems Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Marcellus Production (Bcf/d) Radical Change in Traditional Flows Shale gas fundamentally altering traditional flows Long haul transportation from WCSB obsolete Marcellus gas supplanting gas from GoM and Canada Declining Sable Island production, uncertainty around 12 Deep Panuke Reversal of flow through New York / Ontario LNG imports limited to contract quantities, periodic arbitrage Flexible cargoes to EU or Asia Source: Bentek Energy 7

9 Understanding Our Energy Distribution Systems Interstate Pipelines Operating in New England Algonquin Granite State Iroquois M&N PNGTS M&N/PNGTS Joint Facilities Tennessee Interstate-Served Generator LNG-Served Generator LDC-Served Generator 8

Understanding Our Energy Distribution Systems Interstate Pipelines Operating in New York Algonquin CNYOG Columbia Dominion Empire Iroquois Millennium

10 Understanding Our Energy Distribution Systems Interstate Pipelines Operating in New York Algonquin CNYOG Columbia Dominion Empire Iroquois Millennium NFG Tennessee Texas Eastern Transco Bluestone Gathering Laser Gathering Interstate-Served Generator Intrastate-Served Generator LDC-Served Generator 9

11 Understanding Our Energy Distribution Systems LNG Import Terminals in New England Mystic 8&9 Boston Algonquin M&N Tennessee LNG-Served Generator LNG Import Terminal National Grid Service Territory 10

12 Understanding Our Energy Distribution Systems Northeast LNG Imports LNG Imports (Bcf) 25 Distrigas Canaport Source: DOE Office of Fossil Energy, NEB

13 Understanding Our Energy Distribution Systems Decline in East-End Supplies Distrigas Sendout to Algonquin (MDth/d) LNG Imports (Bcf) Distrigas LNG Imports Distrigas Sendout to Algonquin Algonquin Receipts from M&N Source: DOE Office of Fossil Energy, Spectra Energy 0

14 Understanding Our Energy Distribution Systems Constraints on West-End Supplies Natural Gas Volume (MDth/d) Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Algonquin Southeast Compressor Station (NY/CT Border) 1,600 1,400 1,200 1, Capacity Throughput Source: Spectra Energy

15 Understanding Our Energy Distribution Systems LNG Facilities in New England Augusta Concord Boston Portland Algonquin Granite State Iroquois M&N PNGTS M&N/PNGTS Joint Facilities Tennessee LNG Import Terminal LNG Satellite Tank Springfield Hartford Providence New Haven 14

Understanding Our Energy Distribution Systems LDCs Serving New England Generators Algonquin Granite State Iroquois M&N PNGTS M&N/PNGTS Joint Facilities Tennessee Bangor Gas Berkshire Gas Columbia

16 Understanding Our Energy Distribution Systems LDCs Serving New England Generators Algonquin Granite State Iroquois M&N PNGTS M&N/PNGTS Joint Facilities Tennessee Bangor Gas Berkshire Gas Columbia Gas of MA Connecticut Natural Gas Maine Natural Gas National Grid (Boston Gas) National Grid (Colonial Gas) National Grid (Narragansett) Southern Connecticut Gas Yankee Gas LDC-Served Generator 15

17 Understanding Our Energy Distribution Systems M&N Pipeline Facilities Maine New Hampshire Algonquin Granite State M&N PNGTS M&N/PNGTS Joint Facilities Tennessee Compressor Station Interstate-Served Generator 16

18 Understanding Our Energy Distribution Systems Tennessee Pipeline Facilities in New England Algonquin Tennessee Granite State Compressor Station Iroquois Interstate-Served Generator M&N M&N / PNGTS Joint Facilities 17

19 Understanding Our Energy Distribution Systems Concluding Thoughts Loss of New England s P/L portfolio diversity heightens economic and operational risks High basis and volatile gas prices likely here to stay until pipeline enhancements alleviate congestion along traditional pathways into the region Existing ISO wholesale market design does not induce genco commitments for firm transportation Bulk power security during the winter is derived largely from oil Many oil generation plants at the local level are at-risk for retirement Combined cycle, gas turbine, and steam turbine generators on oil cannot sustain the provision of ancillary services 18

Electric Grid Structures NESEA BuildingEnergy 14 Understanding Our Energy Distribution Systems March

21 Synapse Energy Economics Consulting firm in Cambridge Massachusetts with a staff of 30 people Issues Electric industry restructuring & utility rate cases Wholesale markets, ISOs, and RTOs System Planning and resource development Environmental impacts of power industry Clients State Consumer Advocates and Utility Commissions Public Interest and Environmental groups EPA and DOE RTO stakeholders Synapse Energy Economics, Inc. All rights reserved. NESEA BuildingEnergy 14 20

24 All Energy kbtu/$ Electricity MWh/M$ Declining energy intensity US Historic Energy Intensity All Energy/GDP Electricity/GDP Synapse Energy Economics, Inc. All rights reserved. NESEA BuildingEnergy 14 23

25 Three elements to power system Supply (resources) Demand (loads) Wires (T&D systems) Electric machines Inter-connected electric systems are the largest machines ever engineered 24/7 balancing of supply and demand Cascading effect of disruptions Controls for local systems Synapse Energy Economics, Inc. All rights reserved. NESEA BuildingEnergy 14 24

North American electric machines www.synapse-energy.

29 Peak Load Summer: MW needed for summer peak day Winter: MW needed for winter peak day Daily: MW needed for each daily peak Energy MWH needed to meet total annual demand Reliability Needs Planning issues Resource adequacy (thermal loads on wires) Security dispatch (voltage, stability and daily operation) Synapse Energy Economics, Inc. All rights reserved. NESEA BuildingEnergy 14 28

30 System operations Energy to meet forecast load in each hour Day Ahead, adjusted by a reliability review Real Time Reserves to be available for contingencies 10 minute 30 minute Dispatch instructions to fine tune/balance Voltage Regulation to fine tune the balance Capacity to meet annual peak load Synapse Energy Economics, Inc. All rights reserved. NESEA BuildingEnergy 14 29

31 Traditional operation of power grids Day-ahead forecast of hourly loads (weather) Day-ahead commitment of generation New England grid Real-time management of generation by operators Evolving operation of power grids Day-ahead offers by Supply and Load Day-ahead dispatch schedule includes instructions to both Supply and Load Real-time balancing based on offers Supply and load are variable/manageable Synapse Energy Economics, Inc. All rights reserved. NESEA BuildingEnergy 14 30

32 Net Energy for Load, GWH Energy load ( ) New England Weather Normal Net Energy for Load Weather Normal Net Energy for Load Synapse Energy Economics, Inc. All rights reserved. NESEA BuildingEnergy 14 31

33 Net Energy for Load, GWh Declining slope to flat New England Weather Normal Net Energy for Load, , Excluding and Recession Years GWh GWh GWh Synapse Energy Economics, Inc. All rights reserved. NESEA BuildingEnergy 14 32

35 GWh Northeast Energy Efficiency Partnerships 2005 estimate of EE potential Existing and New EE Strategies Can Offset ISO Forecasted Energy Requirements (GWH) and Beyond 150, ,000 ISO GWh Forecast (w/out DSM) 1.2% Avg. Annual Increase at 140, ,000 Addt'l EE Can Offset Growth 130, ,000 Actual Energy Requirement (2003) 120, , , , ,000 Total Achievable Energy Savings Potential -1.38% Avg. Annual Reduction Total EE Potential in 2013 Can Reduce Energy Req. to 1993 Level Synapse Energy Economics, Inc. All rights reserved. NESEA BuildingEnergy 14 34

39 ISO New England DG forecast Interim forecast for 2014 System Plan DG forecast working group (DGFWG) Focus on solar PV Developing state inventories Complete forecast for 2015 System Plan Other DG, including CHP Refinement to solar PV Operational issues are a concern Synapse Energy Economics, Inc. All rights reserved. NESEA BuildingEnergy 14 38

41 2013 New England market changes Change timing of Day Ahead Market (gas) Expand use of daily reoffer period Winter fuel purchases (gas) Increase quantity of operating reserves Increase frequency of higher reserve prices Update shortage event trigger (30 min) Refer non-performing generators to FERC FCA-8 retirements and scarcity FCA-9 design changes (proposed) Synapse Energy Economics, Inc. All rights reserved. FERC December 17,

Traditional representation of loads www.synapse-energy.

Loads with more Variable Energy Resources www.synapse-energy.

45 Interconnected Grid with more DG Enhanced reliability Greater efficiency Lower cost Completely distributed grid? Role of storage? Net-zero energy buildings? Carbon policy? Future structure EPRI, The Integrated Grid, February 2014, for background Synapse Energy Economics, Inc. All rights reserved. NESEA BuildingEnergy 14 44

46 Reliability the grid will be unstable if... Economics unnecessary costs will be imposed if... Fairness Elements of persuasion these resources/customers will be harmed if... Policy the public interest will be ignored if... All four = success Synapse Energy Economics, Inc. All rights reserved. NESEA BuildingEnergy 14 45