LNG official says no need to build pipeline
GDF Suez is in the business of selling LNG, so it's no surprise the company would try to slow down a headlong rush for new pipeline capacity. More natural gas flowing into New England via pipeline could mean less demand for LNG that arrives by ship.
That east-to-west flow, which is possible because the pipelines are empty by the time they reach the East Coast, has been used to serve peak power needs in the past, and could do so in the future if power plant owners or the grid operators were willing to purchase the LNG ahead of time, Katulak said.
The analysis documents that pipeline capacity into New England is sufficient except for an average of 30 days each year, during which time "incremental LNG imports at Distrigas appear to be the most cost-effective solution."
"Since the additional capacity would have to be fully contracted, but needed only about 30 days per year, the per-unit cost of this option is relatively high, at $16 to $20 per MMBtu," the report states. "The landed price of LNG at Distrigas is likely to be less than $15 per MMBtu."
The barrier to an LNG solution is the same barrier that's blocking pipeline construction — something policy experts call "market design," which means there are no incentives for power plant owners to make long-term commitments to buy either LNG shipments or pipeline capacity, so we get neither.
ISO-NE is trying to address the problem through new "pay for performance" incentives that may not be in place until 2018, given the lengthy stakeholder process, regulatory review and possible court challenges by power plant owners.
By stockpiling oil, ISO was able to keep the electrons flowing even when most of the natural gas plants were idle due to high prices.
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