The operator of one of the country’s only working liquefied natural gas import terminals claims to have an answer to the notorious and complex electricity needs plaguing New England: more LNG.
Frank Katulak, president and chief executive of GDF Suez Gas North America, said during an interview yesterday that New England policymakers and other market participants have been too focused on building new, costly pipelines to ship cheap Marcellus Shale gas into the energy-starved Northeast and have not directed enough attention to existing LNG import infrastructure.
The real crunch time for the region is prior to 2018-19, when market changes that will impose penalties and incentives to ensure generators perform in tight fuel scenarios take effect, Katulak said.
No pipeline will be built before that time to answer the region’s needs — but LNG will be there, he said.
“To say, ‘I want to build a pipeline,’ you won’t get a pipeline until 2018 anyways under the best scenario,” Katulak said. “Really, we think the question should be, what can we do now to get to that point?”
Currently, New England is implementing a voluntary program that encourages generators to shore up LNG and oil for the coming winter months. Longer term, the region is focused on possible pipeline proposals.
One proposal for the area is Kinder Morgan Inc.’s 180-mile natural gas pipeline from New York to Massachusetts, a project already being met with criticism from adjacent property owners and environmentalists (EnergyWire, July 14).
Another proposal is Spectra Energy Corp.’s $3 billion plan to upgrade New England’s challenged pipeline network, an expansion that would add 1 billion cubic feet of capacity to — and ultimately connect — Spectra’s Algonquin and Maritimes pipelines, allowing gas to flow to New England’s gas-fired generators (EnergyWire, Sept. 17).
But Katulak said the focus should be on Suez’s Everett Marine Terminal in the Boston area, the oldest operating import terminal in the country, which supplies about 20 percent of the region’s annual natural gas demand. Suez also has storage to accommodate 3.5 billion cubic feet of gas. Katulak said there is extensive LNG storage in New England and nearby offshore, including offshore LNG facilities that have been sitting idle for years.
“There is lots and lots of infrastructure that can be used if need be,” Katulak said. “The question is how you use the infrastructure you have for those 20 or 30 or 40 days a year.”
The Everett terminal is a remnant of an era when the United States was poised to import large amounts of natural gas — a push that never materialized and has even flip-flopped as the country is now poised to push for large-scale LNG export.
Katulak said Suez is more than willing to ramp up imports of LNG from Trinidad and Tobago and Yemen to fuel generators that ran short last winter when the extreme subfreezing temperatures during the polar vortex triggered gas price spikes in New England and crippled sensitive equipment across the region. The polar plunge forced more than 17,700 megawatts of generating capacity in the Northeast to shut down at one point.
But Katulak’s proposal, which he presented to staff of Federal Energy Regulatory Commission Chairwoman Cheryl LaFleur and Commissioner Norman Bay this week, is one of many playing into a larger, complex — and stalled — process in New England over how to ensure power plants have enough fuel to survive such drastic cold snaps.
Discussions in the region began in December 2013 when governors from six states announced they would work with the region’s grid operator, ISO New England, and the New England Power Pool, made up of interests of hundreds of participating buyers and sellers of electric power in the region. Also participating in the discussions is the New England States Committee on Electricity (NESCOE), representing the collective interests of the region’s six governors and the clearinghouse for discussion of their plan.
The aim is to find ways to diversify supplies of gas and electricity in the region “while ensuring that the benefits and costs of transmission and pipeline investments are shared appropriately” among their states. Governors from Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont signaled support (EnergyWire, Aug. 11).
Despite those efforts, New England has been unable to craft a comprehensive, long-term solution to ensure adequate supplies of natural gas for power generation and enough new transmission to import electricity to areas of high demand. The problem has been made worse with New England generators leaning toward natural gas as the fuel of choice without inking long-term contracts with suppliers, instead turning to costly spot markets when demand spikes.