This year’s bone-chilling winter brought something quite unexpected to some in the energy market, as Director of Energy and Resources, Karim Rahemtulla, forecasted.
Short-term overconsumption briefly sent natural gas prices through the roof, and supplies dwindled across the country.
But one region of the country in particular – the Northeast – was faced with more than the short-term problems of a shortage and price hike.
The Northeast was slapped in the face with the reality that there’s not sufficient pipeline infrastructure to provide it with the mega-energy pull it draws in the colder season…
This is probably because not one new pipeline infrastructure has been introduced in over 40 years.
But it was the short-term effects of a polar vortex that sent politicians scurrying…
Northeast’s Pipeline Problem
The head of the U.S. Department of Energy, Ernest Moniz, said in late January that he will call for a review of New England’s natural gas shortage.
No need to – the problem isn’t a tough one to figure out.
Natural gas consumption in the Northeast has grown more than 20% in the last decade, and not one new pipeline has been built. Current pipelines are stuffed and can carry no more supply.
Luckily, one of the top natural gas fields in the country, the Marcellus Shale, is less than 100 miles away from some areas of the region.
The Marcellus holds about a quarter of the country’s natural gas – nearly 32 trillion cubic feet (tcf)… It just needs the infrastructure to get somewhere.
The City That Never Sleeps… Also Never Waits
New York City, for one, understands the problem and has begun to address it, leading the way to a solution in the Northeast.
The city estimates that by 2030, northeastern gas fields (mainly Marcellus) will supply 90% of its growing natural gas needs.
On November 1, the first large NYC natural gas transmission pipeline in 40 years opened.
This 15-mile extension of an existing pipeline into Manhattan was built by Spectra Energy (SE). The $1.2-billion pipeline is carrying 800 million cubic feet (mcf) a day of natural gas. That’s enough to heat two million additional homes.
Always ahead of the curve, NYC has spurred these projects to action far sooner than their fellow Northeastern counterparts. There are over 10 other pipeline projects in the works to bring much-needed natural gas to New England and the mid-Atlantic regions, among them:
- The Constitution Pipeline to upstate New York. It will carry 650 mcf/day. Williams Companies is involved, this time in a joint venture with Cabot Oil & Gas (COG), Piedmont Natural Gas (PNY) and WGL Holdings (WGL).
- The Leidy Southeast Project in the Philadelphia/New Jersey region that will carry 525 mcf/day. The Algonquin Incremental Market Project encompasses areas of New York, Rhode Island, Connecticut and Massachusetts and will carry 342 mcf/day.
All of the added pipeline capacity will allow an additional two billion cubic feet a day (bcf/day) of natural gas to flow from the Marcellus to the Northeast by 2018.
Paying attention to the companies involved in the Northeast region’s first wave of pipeline increase will be a good gauge for what’s to follow on a larger scale.
The pipeline companies, including WMB and SE, are obvious beneficiaries… as the pipelines are completed and the gas begins flowing.
Stay tuned for more of my reports on pipeline development in the Northeast to boost your portfolio and keep you at the forefront of the global resource chase.
And “the chase” continues,