The election of new governors in Massachusetts, New Hampshire and Rhode Island and an independent study commissioned by the Massachusetts Department of Energy Resources provides the impetus to resume discussions on much-needed pipeline infrastructure. Strengthening New England’s pipeline system will help ensure that clean, affordable abundant natural gas is reliably delivered to the region’s consumers.
In his inaugural address earlier this month, Massachusetts Governor Charlie Baker captured the essence of the problem facing New England. “Families and businesses across New England are being hit with unprecedented increases in their energy and electric bills,” Baker said. “At exactly the same time energy prices across the rest of the country are falling. This increase is being driven in large part by inadequate delivery systems, the result of poor planning and coordination.”
Because of insufficient pipeline infrastructure in New England, natural gas prices in the spot market topped out at $77.60 per million British thermal units (MMBTU) during the coldest days of the early months of 2014. Meanwhile, just a couple hundred miles away in Pittsburgh, consumers were able to buy natural gas for $4.30 per MMBTU. And during this mild winter, we are still witnessing significant price disparities between the two regions. The answer is simple: New England is infrastructure constrained and we must act to solve this pressing problem.
Read Breaking Energy coverage of this issue here.
Governor Baker’s remarks came on the heels of an independent report released by his predecessor Deval Patrick that found that insufficient pipeline capacity has led to increased electricity prices especially during peak winter months when greater demand for natural gas can stress the region’s existing infrastructure.
The 118-page Massachusetts Department of Energy Resources study projects that without action through 2019, electric generators will have insufficient natural gas supply and thus face significant price increases. In order to solve this problem, Massachusetts would have to build between 0.6 and 0.9 billion cubic feet a day in new infrastructure. To put this in context, Massachusetts consumed about 1.8 bcf/d in January 2014.
Over the past several years, the shale gas revolution has transformed America’s energy future. As we have shifted from an era of energy scarcity to a sustainable era of energy abundance, our nation’s vast supplies of natural gas are positively affecting various market segments from power generation to transportation to manufacturing.
Already, the U.S. leads the world in natural gas production, and we are on track to double production levels by 2035. The essential challenge to our energy and economic security is no longer whether we have enough gas to meet our needs, but rather will we take advantage of our abundant natural gas resources. Strengthening our pipeline and storage infrastructure systems will help us make significant progress in meeting this challenge. The good news is that New England’s governors seem poised to take action.
“Massachusetts now has a governor who wants to work with us,” Maine Governor Paul LePage said in his inaugural address earlier this month. “We are already talking with him about increasing natural gas supply to our region. We need it here as soon as possible so we can help all Mainers.”
In New Hampshire, Governor Maggie Hassan used her inaugural address to highlight the energy challenges facing her state’s consumers and businesses. “We must achieve the affordable energy future that has eluded our state for too long,” Governor Hassan said. “We already know that this winter our families and businesses are seeing spikes in their electricity bills due in large part to the shortage of natural gas pipeline capacity.”
If New England’s governors address this growing problem, they will be following the lead of other regions throughout the United States. Last March, the INGAA Foundation released its latest infrastructure study, co-sponsored by ANGA, forecasting that an estimated $640.9 billion will need to be spent on U.S. and Canadian midstream crude oil, natural gas, and natural gas liquids infrastructure through 2035 to ensure an efficient delivery system for our energy markets.
This massive midstream investment will create 432,000 jobs, add $885 billion to U.S. and Canadian economies, and provide more than $300 billion in federal, state and provincial taxes. These investments are already well underway.
In September 2014, Dominion, Duke Energy, Piedmont Natural Gas and AGL Resources announced their intentions to build the 550-mile Atlantic Coast Pipeline, which will transport Marcellus and Utica natural gas from West Virginia southeast to Virginia and North Carolina. This is just one important example of the many projects that will continue to strengthen America’s energy security.
Across the country, shale gas abundance is creating exceptional resilience, helping to make a compelling case for the increased use of natural gas, and to grow confidence that access to reliable natural gas supply is here for the long term. We welcome New England’s reemergence in meeting this energy challenge and we stand ready to assist in this important endeavor
Frank J. Macchiarola is Executive Vice President of America’s Natural Gas Alliance, an industry trade organization.
