Matching infrastructure with supply and demand in a growing market

Merrimack Energy provides consulting services regarding natural gas production, supply, storage, transportation, distribution and marketing. This presentation addressed the question of whether there is adequate pipeline capacity to meet the projected growth in North America's northeast market, and how will the uncertainty in supply and demand affect project development. The author also addressed the issue of how pipeline development and operations will be influenced by changing market conditions. Since the 1990s there has been significant penetration of natural gas lines in the northeast. New England growth is 5.25 per cent per year and New York growth is 3.5 per cent per year. Gas represents nearly 30 per cent of all end-use energy in New England and 43 per cent in New York. A large portion of peak day requirements is met by LNG, propane and storage. Local distribution companies are generally experiencing growth in peak day requirements. By 2005, it is expected that New England will build over 10,000 MW of new electric generating capacity and New York will build between 4,000 to 9,000 MW of new capacity. After that, new construction will be influenced by the price of fuels. The proposed pipeline facilities for New England will only partially mitigate the size of the expected gas transportation shortfall to merchant generators. It is suggested that on cold winter days, there is insufficient operational flexibility for New England's pipeline to satisfy the demands of both gas utilities and gas-fired generators. For that reason, pipeline expansion will be driven by the power sector. 11 figs