1. Regional Natural Gas Supply & Deliverability
Boston, MA
May 21, 2004
Regional Natural Gas
Supply & Deliverability
Presentation to:
Massachusetts Electric
Restructuring Roundtable
Stephen Leahy
Northeast Gas Association

2. Topics New England market overview Gas & power generation
Winter of
Supply needs – and options
Regulatory interest

3. NGA Members
LDCs serving New England, New York, and now part of New Jersey
Several interstate pipeline companies (Tennessee, Algonquin, Iroquois, PNGTS, M&NE, TransCanada)
LNG importer (Distrigas) and 3 LNG trucking companies
Over 250 “associate member” companies, from industry suppliers and contractors to NPCC and ISO-NE ME VT NH NY MA RI CT NJ

5. Northeast Market Snapshot
NEW ENGLAND
NEW YORK
Gas Customers
2.3 million
4.5 million
Annual Consumption (2002)
785 Bcf
1,190 Bcf
Underground storage
---
207 Bcf
LNG import terminals 1
Gas production in-state
36 Bcf
Gas as %, home heating fuels
33%
52%
Total population
14 million
19 million
Sources: NGA, AGA, EIA, NYSERDA, U.S. Census

6. NE Projected Demand Growth
EIA projects 1.6% annual growth in New England over the next 20+ years
Annual Growth Rate:
Residential: 1.0%
Commercial: 1.2%
Industrial: 2.1%
Electric: 1.9%
Source: U.S. Energy Information Administration, “2004 Annual Energy Outlook,” 1/04

7. New England’s Changing Electric Generation Fuel Mix
2003: Gas was 30% of mix, with Gas/Oil another 10%
Source: ISO New England

8. Recent New England Gas Power Plants ME NH VT MA RI CT
Androscoggin Energy, Jay, 155 MW
Additions since 1998.
Winter unit ratings.
Source: ISO-NE, “2004 CELT Report”
Maine Independence, Veazie, 540 MW ME
Rumford Power,
270 MW NH
Bucksport Energy,
193 MW VT
AES Granite Ridge,
792 MW
West Springfield, 96 MW
Westbrook Power, 562 MW
Exelon Mystic 8 &9,
1600 MW
Berkshire Power, Agawam, 257 MW
Newington,
535 MWs
Kendall Repowering,
168 MW
ANP Bellingham,
497 MW
Millennium, Charlton, 386 MW MA
Exelon, Weymouth,
831 MW
Calpine, Dighton,
180 MW
Wallingford Power, 247 MW RI CT
ANP, Blackstone,
504 MW
Bridgeport, 527 MW
Lake Road,
811 MW
Hope Energy, Johnston,
575 MW
Tiverton,
279 MW

9. New England Natural Gas Transmission System
Maritimes &
Northeast
PNGTS
Iroquois
Tennessee
Pipeline capacity has increased strongly since 1990
Greater source diversity
Algonquin
Prepared by Northeast Gas Association, 1-04

10. LNG
LNG provides about 15% of NE’s annual gas supply, and nearly 30% of peak day
Distrigas recently increased installed vaporization capacity from to 0.700/day on average
Last spring, Distrigas began serving nearby power plant, ~ 1600 MW
LNG Imports, DOMAC
Source: U.S. Dept. of Energy

11. Jan. of ’04: How Cold Was It? Top 5 Coldest Januarys, Boston Rank 1 23 4 5
Years
1875
1888
2004
1893
1918
1920
1912
1981
1904
Jan. Avg.
20.1
20.7 21
21.4
21.5
Source: WSI

12. NE LDCs: New Peak Day Sendout, 1-15-04
Peak Sendout Data for New England LDCs
For January 15, 2004, sendout was 3% above this winter’s design conditions, and
12% above previous regional LDC peak day of Jan. 2000

13. Gas System Performance
Intense cold, high demand = high gas sendouts
As noted, new LDC system peak within this period
Distrigas, LNG importer, reported top 10 sendout days recorded in Jan. 2004
One major pipeline set new sendout record; others recorded higher sendouts earlier (Dec.)/later in winter (late Jan.)
During period of Jan , NGA convened Gas Supply Task Force via conference call to monitor system status
Industry consensus - conditions challenging but manageable
Cooperation among all industry segments
interstate pipelines, LDCs, LNG, etc.
Firm obligations met, as designed

14. Meeting Firm Commitments
FERC Study, 12-03:
“The adequacy of the natural gas infrastructure is based on its ability to fulfill its contractual obligations. Natural gas may be contracted on a firm or interruptible basis. Interruptible contracts are typically less expensive because capacity is only paid for if used, and the supplier or transporter may interrupt service. The natural gas infrastructure is considered adequate if firm commitments are met and terms of the interruptible contracts are satisfied.”

15. Pipeline Scheduling
Schedule maximum volume nominated while maintaining system integrity & operating flexibility such that the pipeline can:
Satisfy firm obligations and deliver confirmed volumes (firm and interruptible) for the day
Stand ready to satisfy nominations from firm shippers for delivery on subsequent days
Allocate capacity to nominations up to operational capacity
Priority – firm vs. interruptible
Source: Duke Energy Gas Transmission

16. Key Issue: Market Design
Ensuring a market structure that sends appropriate incentives to power generators to ensure electric system reliability.
A central issue is the difference between firm and non-firm transportation contracts
LDCs generally rely upon firm transportation in their gas resource portfolio
Many generators opt for secondary or non-firm arrangements
Generators do not have an “obligation to serve” like the LDC
ISO-NE, NEPOOL, gas industry, regulators, other stakeholders, through “Cold Snap Task Force” looking at many related issues
Considering near-term and longer-term recommendations

17. Key Issue: Communications
Needs to be greater understanding and mutual education among electric and gas system operators
NGA working to strengthen communication protocols with ISO-NE, NECPUC, NEGC
NGA workshop for regulators held last week
Gas industry and ISO-NE coordinating joint efforts for operators, communications protocols, etc.

18. Key Issue: Infrastructure
Continuing to enhance gas infrastructure is a necessary part of process
Numerous proposals for pipeline enhancements, NE & NY
Numerous proposals for new LNG import terminals, from NJ to Eastern Canada
New England, and Northeast, need more gas infrastructure to meet market needs

19. FERC Study on New England Gas Market
FERC/DOE study released
Conclusions:
There is adequate natural gas infrastructure to meet demand through 2005
Additional infrastructure will be needed to meet region’s demand for gas through 2010
Proposed pipeline and LNG projects should maintain the status quo
Recently constructed efficient gas-fired electric generation will help to moderate increased gas demand while meeting New England’s electric demand
As supply areas in eastern Canada are further developed or additional LNG terminals are constructed, additional natural gas pipelines will be built to supply the New York City area.

20. Mass. Governor’s Task Force on Electric Reliability
March 2004 report; sections on electricity, gas, telecom sectors; online at:
Gas sector recommendations:
“Massachusetts and the gas industry should promote continued increases in pipeline capacity and deliverability to bring new supplies into and within Massachusetts and New England to meet market demand, which will enhance overall energy system security and reliability. Additional LNG supplies may represent an important part of this supply mix.”
“Massachusetts and the gas industry should encourage continued diversity of supply sources to enhance reliability.”
“Electric and natural gas system operators should work to create greater communication and coordination in the region, which will help to ensure quick responses to emergency situations in either the gas or electric systems.”
“Massachusetts and the gas industry should continue to encourage natural gas-related efficiency measures.”

21. FERC Conference, June 3
June 3, New York City, on Northeast Energy Infrastructure
Topic areas:
New York City: “As demand grows, there will be a need for new capacity – gas and electric – later in this decade.” [FERC notice, ]
New England: “There are gas transmission constraints in New England from all geographic directions, effectively isolating the region and calling for more pipeline capacity or reliance on Liquefied Natural Gas (LNG) import terminals, which often face local opposition. Further, New England has seen considerable construction of gas-fired electric generation without a corresponding addition of electric transmission capacity to get this energy to markets.” [FERC notice, ]

22. NGA Actions Continued liaison with ISO-NE
Pipelines are coordinating with ISO on EBBs, maintenance schedules, etc.
NGA to work with ISO on improving communications protocols
Continued liaison with state regulators, NEGC
NGA increasing integration of NY and NE gas control and gas supply representatives
Developing common supply contact manual, conducting joint emergency drill, etc.
NGA will hold annual gas power plant workshop this fall
NGA updating communications plan
Member companies continuing system enhancements

23. Summary
Region’s gas delivery network has grown reliably over the past decade, with increased diversity of supply sources
This past winter, at a time of new electric peaks (in NE and NY), region’s gas industry recorded new peak, met firm commitments
Need for better coordination of electric and gas markets – work underway
Further gas capacity and infrastructure growth in region needed
LNG and pipeline projects proposed; development needed

24. 75 Second Avenue, Suite 510
Needham, MA Tel
1515 Broadway, 43rd floor
New York, NY
Tel