Two new natural gas pipelines will bring some relief to New England, but only one will be completed and in service in time for the 2016-2017 winter.
Part of Spectra Energy Partners LP’s (NYSE: SEP) $972 million Algonquin Incremental Market (AIM) project went into service in November following approval from the Federal Energy Regulatory Commission on Oct. 28, the U.S. Energy Information Administration (EIA) said. The system, complete except for the crossing of the Hudson River in Pomfret, Conn., is capable of moving 245 million cubic feet per day (MMcf/d) of its total capacity of 342 MMcf/d.
Like many projects, AIM has attracted protests. Residents of numerous communities along the route have raised concerns about safety as part of a strategy that Matthew Hoza of BTU Analytics LLC calls “pipeline purgatory.” The objective of national level environmental activists, he told Bloomberg, is to join with local citizens to wrap up projects in ceaseless litigation on the state level.
Spectra’s other project, the $63 million Salem Lateral, is complete but not expected to be used until June 2017. The 1.2-mile pipeline connects the Algonquin Gas Transmission system to the Salem Harbor Station power generation plant.
AIM, the largest pipeline project to transport gas into New England since 2007, will help offset the loss of LNG into the region as other demand centers elbow into that market. Last week’s spot prices for LNG in Asia were the highest since mid-2015, Reuters reported. LNG shipments have also decreased as long-term contracts have expired, the EIA said.
Deliveries into New England on the Algonquin Gas Transmission pipeline have grown since 2010 even though the line’s capacity has remained flat. That’s because it has operated at capacity for longer during winter and at higher levels during the summer. The Stony Point, N.Y., compressor station operates at peak capacity throughout the year, even during non-winter months. Spectra received FERC approval in June 2015 to expand the station’s capacity.
Natural gas prices at Algonquin Citygate, which is the benchmark for Boston, typically experience volatility as a result of the region’s pipeline constraints. During winter 2015, prices reached $25/MMBtu, the EIA said.
Joseph Markman can be reached at jmarkman@hartenergy.com or @JHMarkman.
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