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Demand high for US northeast gas lines -Enbridge

 


 

By Argus

 

NEW YORK
Petroleumworld 02 21 2019

Enbridge's Access Northeast natural gas pipeline expansion remains stalled, but demand for more gas capacity in New England remains robust, company executives said.

The Canadian midstream company in June 2017 halted the regulatory process for its proposed 984mn cf/d (25mn m³d/) Access Northeast expansion in New England, saying the region has gaps in its energy policy that prevent crucial natural gas projects from coming to fruition.

Enbridge chief executive Al Monaco last week stopped short of saying the company would resurrect the project, but he noted that New England demand continues to spike during times of cold weather and said the company is working with regulators and local politicians to "bring forward solutions to this problem."

Almost all of Enbridge's systems reached peak deliveries last year, with demand particularly strong on the Texas Eastern Transmission and Algonquin Gas Transmission lines in New England.

The company was able to renew contracts for more than 98pc of the pipeline revenue on its major systems.

"It's never been more clear that we need additional natural gas infrastructure, and nowhere is that more evident than in the US northeast," Monaco said.

The region is susceptible to price spikes during times of extremely cold weather as demand rises and pipeline constraints make spot gas scarce. This results in consumers "paying through the nose" for higher-priced peaking supply from oil generation and LNG imports, Monaco said.

Spot prices at Algonquin Citygates last year shot to a record above $83/mmBtu during an extreme cold snap.

"This is actually an unbelievable irony when the Marcellus is sitting right next door to this market," Monaco said, referring to the prolific shale formation in Appalachia.

December natural gas production from Appalachia topped 31.1 Bcf/d, according to the most recent data from the US Energy Information Administration (EIA). Regional output in December was up by 1pc from November and 16pc higher than a year earlier. The agency estimates output in January climbed to more than 31.3 Bcf/d.

The Access Northeast project would have expanded the existing Algonquin system and mostly used existing utility corridors, avoiding some of the permitting difficulties and local resistance with building an entirely new pipeline. Enbridge struggled to convince enough gas-fired generators to sign long-term contracts for firm capacity, as those generators prefer to rely on fuel oil as a backup during demand spikes rather than pay for pipeline capacity year-round. As a result, the company determined that funding the project would likely take regulatory action from state governments.

 

 


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