Pipeline developers and New England states are running out of options to install pipeline capacity that could serve the region's growing natural gas-fired power plant fleet.
Power plants in the region largely depend on pipelines built to serve local gas utilities and have avoided signing contracts for their own firm pipeline capacity. Instead, they buy gas on the spot market, where prices spike each winter, or switch to costly fuel oil. This has left New England with high gas and electricity prices, despite its proximity to low-cost shale resources in Pennsylvania.
Wholesale natural gas prices in Boston over the past two winters averaged $6.19/mmBtu, 35pc higher than in New York City and 348pc higher than in northeast Pennsylvania.
New England's six state governors in late 2013 began exploring how to solve this issue, an effort that relied in part on new pipelines. But nearly three years later, legal difficulties and other challenges to proposed pipeline projects have started to pile up. This has frustrated pipeline companies that have already spent millions of dollars laying the groundwork for pipelines that might never be built.
"If New England is not going to be hospitable to pipelines, pipeline companies will redirect their resources to other markets where they can build the pipeline capacity," trade group Interstate Natural Gas Association of America (INGAA) president Donald Santa said.
Kinder Morgan in April canceled its 1.3 Bcf/d Northeast Energy Direct pipeline because it said it had not received enough contracts from power plants to make the project viable. The 628mn cf/d Constitution pipeline was delayed the same month after New York denied the pipeline a key permit over environmental concerns, although the project's developers are challenging the denial in court.
The latest setback came on 17 August when the top court in Massachusetts found that a plan that would allow local electric utilities to sign contracts for pipeline capacity conflicted with a law that deregulated the state's electric market. Spectra Energy, which hoped the plan would support its 900mn cf/d Access Northeast expansion of the Algonquin pipeline, is reevaluating the "path forward" for the project.
"It leaves everybody involved with a high degree of uncertainty as to how the region is going to be able to add pipeline capacity," said Carl Gustin, a consultant for the energy industry-backed New England Coalition for Affordable Energy.
That court ruling has left a dwindling number options left for states to spur new pipeline capacity. New England states last year already abandoned a plan to pay for pipelines through the region's electric grid because of concerns about its legality. One remaining option would be for Massachusetts to change its laws to support new pipelines, although state lawmakers this year strongly opposed a bill that would have done that.
"It seems politically unlikely in Massachusetts at least," Conservation Law Foundation clean energy and climate program director Greg Cunningham says. The environmental group opposes new pipelines and wants the state, instead, to invest in more renewables and energy efficiency, while making greater use of its existing natural gas infrastructure.
Natural gas producers say it is becoming increasingly difficult to build pipelines anywhere in the US. Natural Gas Supply Association president Dena Wiggins expects manufacturers and other energy users will become more vocal in their public support for pipelines, as a counterweight to environmental groups pushing to block infrastructure.
"The groups who oppose these pipelines are very well organized, very well funded. They are relentless," Wiggins said.
Pipeline developers also plan to expand their outreach to consumers on the benefits of pipelines. INGAA's Santa said the industry needs to "redouble our efforts" to make the case about the environmental and consumer benefits of additional pipelines.
