Pipeline opponents say LNG is underutilized
As battle intensifies over pipelines, some assert imports can sate growing natural gas appetite
Opponents of proposed natural gas pipelines that would crisscross Massachusetts may have a new ally: a multinational importer of liquefied natural gas.
As Governor Charlie Baker tries to organize a summit of New England governors to address regional energy needs — including the hotly contested issue of building natural gas pipelines — Distrigas of Massachusetts LLC says its LNG facility in Everett is more than capable of meeting the rising demand for natural gas. Officials at Distrigas, owned by France’s GDF Suez, question the need for two multibillion-dollar pipeline projects proposed by other energy suppliers and vehemently opposed by neighbors and environmental groups.
“We already have the infrastructure in place,” Frank Katulak, chief executive of Distrigas, said of his company’s Everett Marine Terminal, where giant LNG ships from around the world dock and convert their cargo into natural gas for distribution across the region. “We absolutely are an alternative to new pipelines. There’s no need for major changes or new fees to pay for new pipelines.”
Distrigas’s Everett terminal, company officials said, is running at about 50 percent capacity, despite a 60 percent increase in LNG shipments this year.
But pipeline companies and utilities backing them contest Katulak’s assertion that LNG can fully alleviate supply shortages caused by pipeline constraints, which limit how much natural gas flows into New England from shale fields in Pennsylvania and other states. At best, other energy suppliers say, the LNG from the port is a “backup” source for the increasing number of residents who rely on gas to heat homes and power plants that use it to generate electricity.
Some energy suppliers also note security risks associated with LNG shipments into Boston Harbor, where a team of heavily armed security personnel are deployed in boats and along shorelines every time an LNG tanker steams into the harbor. In the past, law enforcement officials have been concerned about potential terrorist attacks.
But Distrigas’s credibility as an additional source of energy grew this winter when increased LNG imports were credited with helping avert natural gas shortages during this winter’s extreme cold and record-breaking snow.
In recent years, similar conditions combined with limited pipeline capacity to create strong demand, short supplies, and soaring costs for natural gas in New England. Higher natural gas costs, in turn, drove wholesale electricity prices higher because most electricity here is generated with natural gas.
Heading into this winter, generators jacked up electricity prices by as much as 40 percent in anticipation of natural gas shortages, which were passed on to consumers by utilities. But those natural gas shortages and electricity price spikes did not happen this winter, partly due to increased LNG shipments.
Greg Cunningham, director of the clean energy program at the Conservation Law Foundation, a Boston environmental group, said LNG imports can meet peak demand for natural gas. Cunningham questioned the need for most new pipelines, noting that the price of LNG has plunged by about 50 percent in recent months and should stay low for years because of the vast increase in global supplies of oil and natural gas.
“LNG is way underutilized,” Cunningham said. “The fact that there is an existing infrastructure already in place is a big plus.”
But backers of new pipelines disagree. Kinder Morgan Inc., a Houston company, has proposed a $4 billion pipeline that would stretch across Western Massachusetts and into southern New Hampshire, before dipping back into Massachusetts in Dracut.
Spectra Energy Corp., another Texas company, has teamed with local utilities Eversource Energy (formerly Nstar and Northeast Utilities) and National Grid to expand the existing Algonquin gas pipeline system in the region. Known as Access Northeast, that project also includes expanding the capacity of the Maritimes & Northeast line, which carries liquefied natural gas from ships anchored off Eastern Canada. The project could cost up to $3 billion. (Customers would pay the costs of pipeline projects through higher rates.)
Officials at Kinder Morgan, Spectra, Eversource, and National Grid said new pipelines are needed to meet the region’s growing appetite for natural gas and keep down its electric prices, among the highest in the nation.
“It would be short-sighted to think the underlying problem that contributed to [recent] historically high prices has been fixed,” Eversource spokesman Michael Durand said. “Energy prices are still higher here than the rest of the country and New England customers will continue to be negatively impacted without a long-term solution.”
Baker, who took office in January, opposed the Kinder Morgan pipeline proposal during last year’s gubernatorial campaign. But he has signaled that he is open to Spectra’s plan as part of a strategy to diversify energy sources, including wind and solar.
Baker recently met with New England governors at the National Governor’s Association in Washington to discuss a number of issues, including energy, an administration spokesman said. Baker’s office is trying to schedule a meeting of New England governors to tackle energy issues.