Don’t rely on foreign LNG

Utility execs call for pipeline expansion, gas storage

IT WAS JUST PAST MIDNIGHT during the winter of 2013. Winter Storm Nemo was barreling down on our region with fierce intensity, and demand for heat and electrical power strained New England’s energy system nearly to the point of failure. A senior executive with ISO-New England, the organization charged with keeping the lights on, said, “…it was a close call.”

It doesn’t take much to connect energy to your family’s security. Warmth, light, hot and cold food, and physical security: all are quickly in jeopardy without reliable energy, 24/7, 365 days a year. If you’ve been through a major storm, you know how quickly this security can be put at risk.

Close calls on cold winter nights, and customers’ record-high electricity bills this winter, have put New England at the center of the reliable, affordable energy discussion. Every day, people are talking about new infrastructure to make New England’s energy systems more reliable, clean, efficient, and affordable – not just for average consumers, but for employers so they can create and maintain jobs.

Our region has made great strides in the shift to cleaner, money-saving energy as homeowners and power generators switched to domestic natural gas. And as more solar and wind power comes online, quick-starting natural gas power plants will help maintain energy reliability by jumping in rapidly when the wind stops and clouds hide the sun.

New England, however, still does not realize all the savings and reliability benefits of the tremendous natural gas supplies in neighboring states. New England energy prices are consistently higher than the rest of the continental US and energy shortages pose risks at critical times.

Some say that liquefied natural gas, or LNG, is the solution for those critical, high-demand days.

We agree – but to a point.

LNG is a great solution to supply natural gas on peak demand days. LNG, however, doesn’t have to come from a ship or from distant foreign ports such as Yemen. New England can rely on existing land-based LNG, fed by cheaper US natural gas, to be transported via pipeline, stored, and called upon when needed most.

Why did New England see enormous price spikes during the now-infamous polar vortex days of 2013-14? Yes, it was a cold winter. But why didn’t more LNG tankers show up to help keep prices down and make sure we had the low-cost energy we need?

First, you can’t turn a ship like that on a dime. We’re not talking about the rudder, although that is also a long-held truism of seafarers on big ships. We’re talking about financial markets. When LNG ships are getting paid much more for their natural gas in other countries than they would in the US, the choice is simple. They won’t sail to New England just to keep us warm; they’ll set course for the highest bidders in foreign lands. It would take more than a few dimes to turn those ships around.

Second, even if LNG importers wanted to suddenly appear because they think New Englanders will pay them attractively high prices, they still couldn’t get ships here fast enough to react to a cold spell predicted many days in advance.

More foreign LNG tankers did show up in 2014-2015. Why? World prices were lower, and New England was one of the world’s highest bidders, so the region became attractive once again. Even with the additional imported LNG, wholesale electricity prices in New England increased 175 percent from December 2014 to February 2015.

What’s the answer? A natural gas pipeline expansion combined with enhanced land-based LNG storage for peak demand days. We can expand existing facilities to get gas to key electricity plants when it needs to be there. ICF International estimates that New England consumers could have saved $2.5 billion if such upgrades were in service during the winter of 2013-14.

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We can’t let our energy security ride on either the waves of the high seas or those of the often more volatile international energy markets. Let’s give New England the assurance of a reliable, flexible, and domestic natural gas supply – priced at US rates – to keep us warm on the coldest nights.

Michael Ausere is vice president of Eversource, Stan Blazewicz is vice president of National Grid, and Richard Paglia is vice president of Spectra Energy. The three companies are the codevelopers of Access Northeast, a proposed project to expand existing natural gas pipelines and land-based LNG facilities in New England.