Why Natural Gas & LNG

Both the need for additional supplies of natural gas in New England and the need for the Weaver’s Cove Energy LNG marine import facility continues. New England, and in particular the southern New England states of Massachusetts, Rhode Island and Connecticut, is located far from the natural gas producing and underground storage regions of North America. New England sits at the far end of the North American pipeline grid.

Regional Pipeline Grid map - click here

New England continues to experience the highest natural gas prices in North America, and since much of the region’s electric power generating capacity is fueled by natural gas, the price of electricity in the region has also been among the highest in the country. Weaver’s Cove Energy’s LNG project will help meet demand in New England for additional supplies of natural gas, and thereby help moderate natural gas and electricity prices.

Our mandate...

The purpose of the Weaver’s Cove LNG project is to bring new LNG supply to serve the natural gas and liquid LNG needs of the New England marketplace. Natural gas is widely used in New England for residential, commercial, and industrial consumption and for electrical power generation, and demand is projected to continue to grow (particularly in the power generation sector). LNG (stored as liquid) is used throughout New England, predominantly within southern New England, at satellite peakshaving facilities to meet a substantial portion of peak day demand requirements. With its storage tank, regasification and truck delivery capabilities, The Weaver’s Cove LNG project can meet the diverse needs of the New England marketplace for baseload, seasonal, peak day and intraday supply.

Natural gas has increasingly become the fossil fuel of choice in the United States, including in New England, and consumption is projected to increase. Based upon 2009 U.S. Energy Information Administration (“EIA”) data, New England’s natural gas consumption is expected to increase from 750 BCF in 2006 to approximately 940 BCF in 2025 (a 25.3 percent increase). EIA expects that traditional fossil fuels will continue to meet the bulk of energy requirements for the foreseeable future. Over 80 percent of New England’s natural gas demand is located in MA, RI and CT.

Natural Gas usage new NGA chart

New England needs an increased supply of natural gas – LNG in particular. In an August 2006 paper, the NGA noted eight fundamental reasons that highlight the value of additional LNG in the Northeast region:

  • Provides needed supply
  • Strengthens region’s energy security
  • Backfeeds existing delivery system
  • Helps mitigate price volatility
  • Supplements regional pipeline system
  • Contributes to economic growth
  • Increases diversity of supply sources
  • Contributes to improved environmental air quality

The Weaver’s Cove project is well-positioned to provide all of these benefits.

The fundamental forces of supply and demand impact the overall price of natural gas. Consequently, new natural gas infrastructure is needed to moderate prices in New England. The Weaver’s Cove LNG terminal will be strategically located near the existing Algonquin Gas Transmission (“Algonquin”) interstate natural gas pipeline system. Two short pipelines operated by Mill River will connect the terminal to the existing Algonquin pipeline system, allowing Weaver’s Cove Energy to deliver large volumes of natural gas to the region’s primary interstate pipeline system.

Additionally, the Weaver’s Cove’s LNG project will be ideally located and have the requisite trucking capabilities for serving New England’s peak day needs. Located immediately adjacent to the entrance of a major highway, the Weaver’s Cove terminal will be able to provide LNG deliveries by trucks to LNG peakshaving facilities, which will improve reliability, enhance LNG competition, reduce trucking costs and improve supply logistics. Natural gas supply delivered directly to southern New England will increase supply availability and moderate the price of natural gas.

Renewables

Renewable energy, energy efficiency and conservation will form only part of the solution for meeting New England’s existing and future energy requirements. Such sources do not replace the need for additional gas supplies. Many of the proposed renewable projects are facing siting and permitting issues similar to traditional fossil fuel energy projects. Wind generation, which is expected to be the largest component of renewable energy moving forward, is a seasonal, intermittent resource. It will need to be backed up by significant quick start, standby generation. These fast start units would have to be fueled by either natural gas or low sulfur diesel fuel. Given that natural gas is typically substantially cheaper than low sulfur diesel and more environmentally friendly, utilization of natural gas units should be an integral part of a responsible renewable energy plan.

Why Weaver’s Cove and LNG…

New England relies upon natural gas for residential, commercial and industrial uses, including for electric generation and peak day demands. Because of the substantial use of clean-burning natural gas in the power sector, natural gas supply is tied directly to electric prices. By providing more supply, Weaver’s Cove Energy will help moderate prices and ensure reliability. Additionally, New England experiences very high peak day demand. Weaver’s Cove Energy will be uniquely positioned to enhance overall and peak day gas supply, given its proximity to the interstate pipeline system and to peakshaving facilities and given its trucking capabilities. Specifically, the Weaver’s Cove’s project will have the ability to provide the following services to this market segment:

  • As demand rises and peaks in southern New England during the winter, the terminal will be able to increase sendout to meet demand in southern New England with little need to add new pipeline infrastructure;
  • With significant storage in the market area, the terminal will be able to meet peak day and intraday demand swings on short notice and sustain much larger gaps between LNG tanker deliveries than any other terminal located in the New England region; and
  • With LNG trucking capability, Weaver’s Cove Energy will help provide satellite LNG peakshaving facilities with a reliable supply of LNG.

While there are various existing and proposed LNG import projects in and outside of the Northeast that have the potential capabilities to supply natural gas, none of these new or proposed projects are as well situated as the Weaver’s Cove project to meet demand in southern New England, and to help provide some relief to high regional costs. Weaver’s Cove Energy will also enhance the reliability of both the natural gas and electric grid.

The Weaver’s Cove facility with its numerous attributes (location in southern New England, storage, regasification, LNG liquid trucking and inert injection system) is very well-positioned to attract LNG supply and to economically serve the baseload, seasonal, peak day, and intraday needs of the southern New England marketplace. LNG import facilities located outside of southern New England or offshore Massachusetts are not as well-positioned to attract LNG supply or to economically meet the market needs.

In its July 2009 Regional Market Update, the NGA stated that the region needs to increase both its natural gas supply and infrastructure to meet regional energy market demands.