Industry News

In the attached February 2005 Northeast Gas Association market update, infrastructure investment was one key area of focus. We feel this is a timely article for our customers to review, since it reflects our commitment to providing you a reliable supply of natural gas. As you will see, some work still needs to be done in order to meet future demand. However, we are confident infrastructure investments, already in place and those in the planning stages, will provide more than enough supply for New England through 2010 and beyond.

The following is an excerpt of that article. To read the full discussion, please visit www.northeastgas.org and in the industry information section, click on market trends.

Investment in Infrastructure

New pipeline infrastructure projects at the interstate pipeline level and infrastructure investments at the local distribution company level will be required to meet the projected demand for gas.

In December 2003 the Federal Energy Regulatory Commission (FERC) released a study prepared in consultation with the U.S. Department of Energy that concludes there is currently adequate natural gas pipeline infrastructure in New England but finds that additional facilities will be needed to meet the region’s future gas demand. The study says there is adequate natural gas infrastructure to meet demand through 2005, but it concludes that additional infrastructure will be needed to meet New England’s demand for natural gas through 2010. During peak periods of demand, the interstate pipeline system is operated at a very high load factor and is not able to fully access underground storage in New York and Pennsylvania. Construction of new pipeline capacity to these storage facilities and to expanded or newly constructed LNG import facilities would enhance New England’s natural gas infrastructure, the study notes.

In June 2004, the FERC convened a conference on Northeast energy infrastructure in New York City, focusing on electricity and natural gas. In announcing the conference, FERC stated: “There are gas transmission constraints in New England from all geographic directions, effectively isolating the region and calling for more pipeline capacity or reliance on Liquefied Natural Gas (LNG) import terminals, which often face local opposition. Further, New England has seen considerable construction of gas-fired electric generation without a corresponding addition of electric transmission capacity to get this energy to markets.”

As noted above, there are several new pipeline projects in development to help meet market needs. As well, there are plans to increase regional gas storage facilities, and to add new LNG import and regasification facilities. The Northeast gas market remains poised for a period of sustained growth to meet growing demand in all end-use sectors in all states of the region. This depends fundamentally however on new infrastructure investments, as well as greater access to new supplies.

The current “tightness” in the North American supply/demand balance reinforces the need for New England, New York and New Jersey to strengthen wherever possible the robustness of their natural gas systems and the diversity of their gas supply sources. To help support further development and market growth, the Northeast Gas Association (NGA) recommends the following:

	Support for increased pipeline capacity and deliverability into the Northeast to meet market demand and enhance system security and reliability
	Support for additional LNG supplies to meet market demand and enhance system security and reliability
	Support for increased natural gas resource development in the U.S.
	Support for greater efficiency measures in all energy forms
	Support for greater natural gas supply diversity into the region to enhance system security and reliability
	Support for the timely review of projects, and a streamlining of the regulatory process where possible, to enable projects to proceed in a timely manner

In summary, it is a challenging time but a time of opportunity for the natural gas industry in North America and the Northeast. The gas industry is responding with creative ideas, in terms of supply projects and efficiency initiatives, to meet the growing market demand for natural gas. Moving forward on these initiatives will require cooperation and commitment, with benefits for the regional economy and environment.

 

 

 

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