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Spectra and Northeast Utilities announce New England energy reliability solution

World Pipelines,

Spectra Energy Corp, Spectra Energy Partners and Northeast Utilities today announced details of the Access Northeast project, designed to reliably meet growing demand for natural gas in New England while providing environmental and economic benefits to the region. This project will help deliver increased, guaranteed daily supplies of natural gas to consumers, as well as enhanced service on peak days for strategic natural gas fuelled electric generation plants, to address New England’s reliability concerns and reduce costs paid by the region’s electric and gas consumers.

The gas pipeline expansion project will enhance the Algonquin and Maritimes pipeline systems, using existing routes to minimise effects on communities, landowners and the environment. The project will be scalable to meet growing needs by expanding access to clean, abundant and affordable natural gas, and will be capable of reliably delivering in excess of 1 billion ft3 of natural gas per day to serve the region's most efficient power plants and meet increasing demand from heating customers.

“Spectra Energy is excited to offer this unique solution with Northeast Utilities, one that calls for collaboration and cooperation with key New England natural gas providers in order to customise a scalable project around existing assets,” said Greg Ebel, Spectra Energy’s chairman, Chief Executive Officer and President. “We’ve had a very positive response from natural gas asset holders as the region comes together for a solution. This is another step in our commitment to improving power system reliability, reducing electric costs to make the region more economically competitive, and protecting New England’s quality of life by minimising environmental and community impacts.”

Access Northeast, originally outlined by Spectra Energy in a June 27, 2014, letter to the New England States Committee on Electricity (NESCOE), is estimated to cost roughly US$ 3 billion and has an anticipated in-service date of November 2018. Spectra Energy and NU will be equal partners in the project, with the option of additional investors joining in the future. The two companies will work with electric and gas industry representatives, including ISO-NE and NESCOE, to establish the levels of firm natural gas supply required to ensure both generation reliability and LDC demand growth.

Tom May, NU chairman, President and Chief Executive Officer, said the project will address a critical energy supply challenge in New England. Over the past 15 years, natural gas-fired generation has grown from serving 15% of New England’s annual electric requirements to serving approximately half. At the same time, tens of thousands of New England homes and businesses have converted to natural gas heating, while pipeline capacity into the region has not grown. In the bitterly cold first quarter of 2014, gas demand for heating customers rose significantly, leaving much less gas available for electric generation. Older coal and oil plants filled in the gap, forcing prices to skyrocket and at a cost to the environment. The addition of this project into the region will enable new, efficient gas generation, which emits up to 50% less carbon than older oil and coal plants, to operate much more frequently during cold winter weather.

“This new partnership with Spectra Energy will benefit our customers, drive costs down and help take a substantial step toward solving the looming energy crisis in New England,” said May. “Last winter, the New England electric market reached a critical point, as lack of access to natural gas capacity cost customers dearly. New England wholesale electricity costs were nearly double compared to the previous year, largely due to pipeline constraints. These challenges will remain the same for the next several years, and our customers will feel the effects, if we do not act. We recognise that a portfolio of investments will be needed to address this challenge and we intend to deliver a reliable solution to customers with this project.”

Historically, New England’s pipeline capacity has been built for average daily usage while relying on supplemental facilities for high demand times. Spectra Energy and Northeast Utilities will partner with interconnecting pipeline and regional storage facilities to enhance grid reliability at peak demand times and augment existing pipeline facilities within existing right of ways.

Spectra Energy and Northeast Utilities’ collaborative proposal includes:

  • Scalable expansion of existing pipeline infrastructure, which is attached to approximately 60 percent of ISO-NE’s natural gas generation capacity.
  • Partnering with existing regional storage assets to provide firm services to electric power plants with guaranteed natural gas supplies on peak days and to enable rapid response to sudden changes in power output.
  • An environmentally-responsible approach that will minimize impact by using existing asset footprints.
  • Additional Algonquin and Maritimes delivery points for local distribution companies (LDCs) to access diverse, low-cost natural gas resources where necessary.

This expansion will complement Spectra Energy’s previously announced Algonquin Incremental Market (AIM) and Atlantic Bridge projects. Spectra Energy’s AIM expansion project will begin to de-bottleneck the pipeline system by the winter of 2016-2017, helping to enhance reliability and reduce natural gas price volatility in New England. AIM is underpinned by long-term commitments from gas utility companies across southern New England. Atlantic Bridge’s proposed in-service date is November 2017, and it will be similarly supported by gas utilities. Access Northeast will provide needed additional firm supplies, delivered directly to the power generators, to address electric reliability. The project will also allow local natural gas distribution companies to request new access points and lateral pipelines for additional capacity.

Adapted from press release by Hannah Priestley-Eaton

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