gas infrastructure and deliverability in new england...ms 2 next day strip prices, january 2014 tz6...

Understanding Our

Energy Distribution Systems:

Gas Infrastructure and

Deliverability in New England

Richard Levitan, [email protected]

March 5, 2014

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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

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Next Day Strip Prices, January 2014

TZ6 (non-NY) is VA/MB border to Linden, NJ

TZ5 is GA/SC to VA/MD border0

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Transco-Z6 (NY)

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Transco-Z6 (non-NY)

(High, Low, Weighted Average)

Source: ICE

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Next Day Strip Prices, January 2014

(High, Low, Weighted Average)

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Chicago Citygates

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Dominion-South

Source: ICE

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Pri

ce (

$/M

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tu)

Algonquin Citygates

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29

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Pri

ce (

$/M

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tu)

TETCO-M3

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Chokepoints Across the Supply Chain into the NYFS

January 6-7, January 21-23, 2014

Source: Pipeline EBB Critical Notice postings

Force majeure, 1/7

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Pre-Shale and Post-Shale Gas Flow Patterns

Pre-Shale Flow Patterns Post-Shale Flow Patterns

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Wet and dry shale gas production

Major Dry Gas

Production Area

Major Wet Gas

Production Area

Sources: EIA, Pennsylvania State University Marcellus Center, Dominion

Resources, Pennsylvania Department of Conservation and Natural Resources

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0

2

4

6

8

10

12

Oct-

08

Jan

-09

Ap

r-0

9

Jul-0

9

Oct-

09

Jan

-10

Ap

r-1

0

Jul-1

0

Oct-

10

Jan

-11

Ap

r-1

1

Jul-1

1

Oct-

11

Jan

-12

Ap

r-1

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Jul-1

2

Oct-

12

Jan

-13

Ap

r-1

3

Jul-1

3

Oct-

13

Ma

rcell

us

Pro

du

cti

on

(B

cf/

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

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

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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

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Interstate Pipelines Operating in New York

Algonquin

CNYOG

Columbia

Dominion

Empire

Iroquois

Millennium

NFG

Tennessee

Texas Eastern

Transco

Bluestone Gathering

Laser Gathering


Intrastate-Served Generator


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LNG Import Terminals in New England

Algonquin

M&N

Tennessee

LNG-Served Generator

LNG Import Terminal

National GridService Territory

Boston

Mystic 8&9

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Northeast LNG Imports

0

5

10

15

20

25

2007 2008 2009 2010 2011 2012 2013

LN

G Im

po

rts

(B

cf)

Distrigas Canaport

Source: DOE Office of Fossil Energy, NEB

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Decline in East-End Supplies

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2007 2008 2009 2010 2011 2012 2013

LN

G Im

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rts (

Bcf)

Dis

trig

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en

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to A

lgo

nq

uin

(M

Dth

/d)

Distrigas LNG Imports

Distrigas Sendout to Algonquin

Algonquin Receipts from M&N

Source: DOE Office of Fossil Energy, Spectra Energy

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Constraints on West-End Supplies

0

200

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1,000

1,200

1,400

1,600

Jul-09

Oct-

09

Jan-1

0

Apr-

10

Jul-10

Oct-

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Jan-1

1

Apr-

11

Jul-11

Oct-

11

Jan-1

2

Apr-

12

Jul-12

Oct-

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Jan-1

3

Apr-

13

Jul-13

Oct-

13

Jan-1

4

Natu

ral

Ga

s V

olu

me

(M

Dth

/d)

Capacity Throughput

Source: Spectra Energy

Algonquin Southeast Compressor Station (NY/CT Border)

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LNG Facilities in New England

Algonquin

Granite State

Iroquois

M&N

PNGTS


Tennessee

LNG Import Terminal

LNG Satellite Tank

Augusta

Portland

Boston

Springfield

Hartford

New Haven

Providence

Concord

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LDCs Serving New England Generators

Algonquin

Granite State

Iroquois

M&N

PNGTS


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


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M&N Pipeline Facilities

Maine

Algonquin

Granite State

M&N

PNGTS


Tennessee

Compressor Station


New Hampshire

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Tennessee Pipeline Facilities in New England

Algonquin

Granite State

Iroquois

M&N

M&N / PNGTS Joint Facilities

Tennessee

Compressor Station


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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

Electric Grid Structures

NESEA BuildingEnergy 14

Understanding Our Energy Distribution Systems

March 5, 2014

Paul Peterson

www.synapse-energy.com | ©2013 Synapse Energy Economics, Inc. All rights reserved.

Synapse Energy Economics

www.synapse-energy.com | ©2013 Synapse Energy Economics, Inc. All rights reserved. NESEA BuildingEnergy 14 20

• 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

Energy Intensity


Trends


Relative US Energy & GDP Growth since 1949

0

2

4

6

8

10

12

14

16

18

1949 1959 1969 1979 1989 1999 2009

19

49

= 1

.00

Electricity

GDP

All Energy

Energy (Non-Elec)

Population

Declining energy intensity


US Historic Energy Intensity

0

2

4

6

8

10

12

14

16

18

20

1949 1959 1969 1979 1989 1999 2009

All

Energ

y k

Btu

/$

0

40

80

120

160

200

240

280

320

360

400

Ele

ctr

icity

MW

h/M

$

All Energy/GDP Electricity/GDP

Electric machines


Three elements to power system

– Supply (resources)

– Demand (loads)

– Wires (T&D systems)

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

North American electric machines


New England grid


New England Grid


Planning issues


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– Resource adequacy (thermal loads on wires)

– Security dispatch (voltage, stability and daily operation)

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

New England grid


Traditional operation of power grids– Day-ahead forecast of hourly loads (weather)

– Day-ahead commitment of generation

– 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

Energy load

(1980-2009)


New England Weather Normal Net Energy for Load

80000

90000

100000

110000

120000

130000

140000

1980 1985 1990 1995 2000 2005 2010

Ne

t En

erg

y fo

r Lo

ad, G

WH

Weather Normal Net Energy for Load

Declining slope to flat


New England Weather Normal Net Energy for Load, 1981-2010,

Excluding 1991-1993 and 2008-2009 Recession Years

80000

90000

100000

110000

120000

130000

140000

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Net

En

erg

y f

or

Lo

ad

, G

Wh

3481 GWh

2344 GWh

561 GWh

ISO-NE RSP12 annual energy (GWh)Weather Normal History 1991-2011 and Forecast 2012-2021


Northeast Energy Efficiency Partnerships2005 estimate of EE potential


Existing and New EE Strategies Can Offset ISO

Forecasted Energy Requirements (GWH) and Beyond

100,000

105,000

110,000

115,000

120,000

125,000

130,000

135,000

140,000

145,000

150,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GW

h

ISO GWh Forecast (w/out DSM)

1.2% Avg. Annual Increase at

Actual Energy Requirement (2003)

Addt'l EE Can Offset Growth

Total Achievable Energy Savings Potential

-1.38% Avg. Annual ReductionTotal EE

Potential in

2013 Can

Reduce

Energy Req.

to 1993 Level

New England Grid


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

New England Grid


2013 New England market changes


• Change timing of Day Ahead Market (gas)

• Expand use of daily reoffer period

• Winter 2013-2014 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)

FERC December 17, 2013 40

CAISO Duck Curve


Traditional representation of loads


Loads with more Variable Energy Resources


Future structure


Interconnected Grid with more DG

– Enhanced reliability

– Greater efficiency

– Lower cost

Completely distributed grid?

Role of storage?

Net-zero energy buildings?

Carbon policy?

EPRI, The Integrated Grid, February 2014, for background

Elements of persuasion


• Reliability– the grid will be unstable if . . .

• Economics– unnecessary costs will be imposed if . . .

• Fairness– these resources/customers will be harmed if . . .

• Policy– the public interest will be ignored if . . .

All four = success

NESEA BuildingEnergy 14 45

Contact Info


[email protected]

802-387-5105

FERC, December 17, 2013 46

mailto:[email protected]



gas infrastructure and deliverability in new england...ms 2 next day strip prices, january 2014 tz6...

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