To solve some of New England's energy woes, pipelines, LNG importers and power generators need to stop fighting one another, according to one energy industry veteran.
"So far the three sectors seem to be fighting with each other all the time, saying 'we can do it if the other guys just go away,'" said Rick Smead, managing director at the analytics and consulting firm RBN Energy LLC. "And that's got to stop."
"The right answer is a triad of pipeline capacity, alternative fuels and LNG," Smead said in his June 5 keynote address to the LDC Gas Forum Northeast in Boston.
Smead said each of the three has issues. Pipeline expansion projects have to be the right size to get more gas into the region in winter without being too big or too expensive when considering year-round needs. Oil can only be used as an alternate fuel in limited quantities before it runs into air quality standards and logistical problems getting it where it needs to be. And LNG is expensive to buy on the international market and store for a long time.
"If everybody works with each other to find that optimal mix," Smead said, "that combination should ultimately work out here."
The discussion of New England's gas-delivery infrastructure is complicated by the fact that it is usually only stretched during cold weather. "All you need to do is have global warming continue and not have any winter, and you're going to be OK," Smead told his New England audience. "But that's probably not what you would call a strategy."
Major proposed pipeline projects, Kinder Morgan Inc.'s Northeast Energy Direct and the Spectra Energy Partners LP-led Access Northeast projects have had trouble finding customers ready to commit. "There is a lot of opposition, of course, and a lot of politics," Smead said, "but at the end of the day the big pipes have fallen for economic reasons, not political reasons."
A big part of the problem in attracting pipeline customers is a New England market that pushes power generators away from the higher-priced firm transportation contracts that support such projects. The generators instead rely on cheaper interruptible transportation capacity made available by firm shippers like gas utilities when there is no cold snap or other large draw on the pipeline.
"It's a very difficult economic framework, and it probably doesn't work without some degree of socialization, the way electric transmission is treated," Smead said.
Spectra, Eversource Energy and National Grid USA continue to work on Access Northeast, saying New England needs the added gas transportation capacity. After his presentation, Smead said he thought some form of the project would go forward.
"I think there's a high-enough priority up here that something will get worked out at some point," he said. "I believe it, or something that looks like it, will keep moving forward."