PURPOSE
There is an increasing concern at the local and national level regarding our region's and our country's ability to meet the growing demand for natural gas, the most environmentally friendly of all fossil fuels. The Weaver's Cove Energy LNG terminal will address this concern by bringing additional supplies of natural gas to Fall River, southeastern Massachusetts and New England, helping to meet the energy needs of our homes and businesses.
In response to growing concerns about the quality of our environment (especially our air), power plants in New England (particularly in southeastern Massachusetts) have been built with natural gas as their primary fuel source, rather than using oil or coal. In recent studies, ISO New England (the organization responsible for running our electric system), among others, has identified the need for additional natural gas delivery infrastructure for the region. New gas-fired electric generating plants have increased the demand for natural gas, especially in southeastern Massachusetts. Meeting this demand is more difficult in New England because the region lies at the very end of the U.S. natural gas pipeline system, far from the major producing fields in Texas, Louisiana and Oklahoma. The area around Fall River lies at the end of the New England gas pipeline system. Fall River is also in the heart of the New England gas market. 83% of the region's gas usage occurs in Massachusetts, Connecticut and Rhode Island. The US gas market has experienced a growing imbalance between demand and supply, which has resulted in higher prices. New England, which traditionally has higher energy prices than the rest of the country, has experienced some very dramatic gas price increases. We have seen this evidenced during recent winters, when cold weather led to increased electric power demand from gas-fueled plants as well as natural gas heating demand for homes, businesses, schools and hospitals.
Today, natural-gas pipelines in New England operate at or near capacity during much of the winter. This is particularly true for the two largest pipelines serving the region- Algonquin and Tennessee, as shown on the following chart. According to the Northeast Gas Association, in 1996, pipeline capacity was 2.6 billion cubic feet per day. Today, in 2005, it is 4 billion cubic feet per day. Despite the added capacity, there has been a steady growth in demand that, on the coldest days, exceeds the natural gas available in the pipelines. LNG can be safely stored, transformed into natural gas and injected into the transmission system whenever there is a peak demand for additional gas. With its location near the center of the market, the Weaver's Cove Energy LNG terminal will "back-feed" natural gas into the pipeline system, improving pipeline efficiency while providing a needed new source of natural gas. When it is placed into service, the Weaver's Cove terminal will be capable of supplying approximately 15-20% of the region's natural gas supply.
Large increase in gas-fired generation ISO New England NEPOOL Generation Capacity
Source: EIA, US Natural Gas Price Data, Historical