New England is facing a potential shortage of liquid natural gas (LNG) after terrorist attacks on a Yemenese pipeline cancelled shipments to a Massachusetts terminal. Domestic gas could make up the shortfall, but a gas pipeline or export terminals would be needed. Currently, area power and gas companies are working to establish financing for construction of a pipeline expansion, and proposed LNG export facilities are being held up by DOE.
New England’s electricity market is a complicating factor in pipeline negotiations. New pipeline capacity would require long-term contracts between suppliers and utilities, and inchoate gas and electric power market rules make it difficult for utilities to sign long-term fixed supply contracts. Gas and power companies in the region have asked FERC to consider new approaches for funding pipeline expansion for the power sector or freeing existing pipeline capacity for power plants during supply shortfalls or demand peak.
Some Members of Congress are trying to block or limit LNG exports, arguing that keeping the gas domestic would help ensure low energy costs for U.S. manufacturers. Rep. Ed Markey (D-MA), for example, has argued against exports.”I believe that using our domestically produced natural gas here in America to reduce our dependence on foreign supplies should take precedence over any plans to export our natural gas,” he said.
Even if approval is fast-tracked, it will be several years before a new pipeline or export facility could come online, potentially leaving New Englanders subject to rising global LNG prices for the foreseeable future.
Is the North East’s potential LNG shortage an argument against natural gas exports? How might state, regional and federal regulators better align gas and power markets?
First, this goes back to the discussion about the need for an actually coherent energy policy – including regulations, and a stable atmosphere in which these kinds of long-term contracts… Read more »