Natural Gas Pipeline Congestion is Squeezing Energy Managers

May 6, 2016 By Ken Silverstein

natural gas pipelinesIf opponents of Kinder Morgan’s $3.3 billion pipeline project have their way, federal regulators will throw out its application to build the 412-mile line. A group called PLAN-NE is asking the Federal Energy Regulatory Commission to deny the line that would run through Massachusetts and New Hampshire.

Corporate energy managers have a stake in this debate. Their job in part is to find access to fuels that burn cleaner and that are less expensive than the alternatives. The natural gas infrastructure in the Northeast is congested and the additional capacity would make room for an expected future supply. Getting it built, though, is problematic — as it is for all kinds of energy projects.

The argument, generally, is that the lines cross sensitive environmental areas and disrupt the lives of ordinary citizens. They furthermore want more wind and solar projects that they say is cleaner and more affordable.

Those are the arguments that PLAN-NE is making, which wants the federal energy monitor to deny the project and to never again revisit it. That’s not likely, given the regulators propensity to Okay infrastructure that it deems to be in the interest of communities and businesses.

What’s more likely, is that the commission will ask the pipeline developer — Kinder Morgan — to get together with stakeholders and to come up with an alternative path. Presumably, that was done ahead of time. But if the two sides could not reach any agreement, they may need a push from a regulator that will make those decisions for them.

As for Kinder Morgan, it has suspended work on the highly controversial Northeast Energy Direct project. Kinder is not the only pipeline operator getting sidetracked in the Northeast. Consider:

— Central New York Oil and Gas Co.’s MARC Pipeline was finally approved by federal regulators in 2013 to deliver 550 million cubic feet per day of natural gas.

— And Spectra Energy is also fighting it out to complete its Algonquin pipeline that would start in Pennsylvania and run through New York. Local citizens say that the line is destroying their quality of life.

We have more natural gas in this country than we know what to do with,” says the American Natural Gas Alliance.”

“What’s needed are aggressive regional approaches that expand pipelines so that affordable gas supplies can get where they are in demand,” it adds. “All parties must come together on a way to commercially develop pipelines. This will ensure that there aren’t bottlenecks that can cause New England prices to be disconnected from the stable and affordable prices being enjoyed by other regions around the country.”

The end result is that during cold spells — and when the northeastern region is burning more natural gas for heating — prices skyrocket. Witness what happened in 2013 winter freeze out and prices shot up more than fourfold. Natural gas provides at least 52 percent of the energy in the Northeast.

At present, 2.5 million miles of existing natural gas pipelines exist in the United States, according to the National Transportation Safety Board. With the share of natural gas used to fuel power plants expected to keep rising, gas producers are saying that between 29,000 and 62,000 miles of new pipeline is needed over the next 25 years.

The U.S. Energy Information Administration says that natural gas consumption reached nearly 73 billion cubic feet per day in 2014, or an increase of 1.7 percent from 2013. That’s led by the industrial sector, it says, adding that the power sector’s usage increased to about 23 billion cubic a day in 2015. The reason: cheaper natural gas and the retirement of some coal plants.

Energy managers won’t get involved in the politics and the lobbying. But they — and their companies — will feel the effects of the decisions made by regulators.

 

Ken Silverstein is editor-in-chief of Business Sector Media, publisher of Environmental Leader and Energy Manager Today.

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