Business

Distrigas says fuel deals should prevent future gas shortages

LNG importer also predicts contracts with utilities will head off price spikes in region

A big importer of liquefied natural gas said it has signed enough fuel contracts with utilities to potentially avert the natural gas shortages that have plagued the region in recent winters and sent energy costs skyrocketing.

Distrigas of Massachusetts LLC is expected to announce Monday its largest LNG contract in more than 25 years, a 10-year agreement with a utility to provide the region with billions of cubic feet of LNG to heat homes and generate electricity at power plants. Distrigas declined to identify the customer, but National Grid confirmed that it recently signed a contract with Distrigas, although the utility would not disclose the terms.

Advertisement

Carol Churchill, a spokeswoman for Distrigas, owned by GDF Suez, a French company, called the long-term agreement unprecedented, because utilities rarely sign LNG contracts beyond one or two years.

Distrigas now has contracts with several utilities to provide about 9.5 billion cubic feet of LNG to the region, or enough to heat nearly 100,000 homes a year, through the coming winter. That’s up 8 percent from last year and 19 percent from two years ago, when New England suffered a severe natural-gas shortage that spurred dramatic spikes in wholesale electricity prices during the winter of 2013-2014. Natural gas plants generate more than half of the region’s electricity.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

“Will we have a shortage of natural gas this winter? It looks like no,” said Churchill, whose company owns a giant LNG facility in Everett where LNG ships from around the world unload cargo.

Distrigas’s announcement appears aimed at sending a signal that LNG can fill the need for more natural gas in the region without building new pipelines. Distrigas officials have criticized plans by other energy companies to build multibillion-dollar pipelines to bring more natural gas into the region, largely from shale fields in Pennsylvania and other areas outside New England.

LNG is imported and can cost twice as much as natural gas produced domestically. But Churchill said a glut of LNG on world markets has lowered prices, and Distrigas has pegged its prices to the cost of domestically produced natural gas to compete.

Advertisement

Distrigas and other LNG providers, including Excelerate Energy of Texas, owner of an LNG terminal off the coast of Massachusetts, are credited with having provided enough fuel this past winter to avert the acute natural gas shortages and wholesale electric price spikes of two winters ago.

In a statement, National Grid acknowledged it recently signed an LNG agreement with Distrigas, but didn’t stipulate for how much fuel and for how long.

Ironically, National Grid has formed a partnership with Spectra Energy Corp. of Texas and Eversource Energy (formerly NStar and Northeast Utilities) to expand the Algonquin gas pipeline in the region. Known as Access Northeast, that project includes increasing the capacity of the Maritimes & Northeast line, which carries liquefied natural gas from ships anchored off Eastern Canada.

National Grid stressed that LNG is “nowhere near a complete answer” to the region’s need for more natural gas.

“We continue to believe that [pipelines] are necessary to provide New Englanders with increased access to natural gas,” the company said.

Eversource said LNG can address the region’s need for additional natural gas during peak demand months, but it’s not a long-term solution.

“Our proposed project, Access Northeast, focuses on existing cheaper US natural gas, to be transported via pipeline and available when needed most,” Eversource said.

Jay Fitzgerald can be reached at jayfitzmedia@gmail.com.
Loading comments...
Real journalists. Real journalism. Subscribe to The Boston Globe today.