February 13

Plan to boost supply of natural gas would reverse flow of pipeline in Maine

Spectra Energy wants to switch to south-to-north transport to bring the sorely needed fuel to New England and Canada from New York and Pennsylvania.

By Tux Turkel tturkel@pressherald.com
Staff Writer

The lead owner of the pipeline that pumps natural gas from Canada through Maine to Greater Boston wants to reverse the flow and send gas north from Pennsylvania and New York.

It would be a first for the Maritimes & Northeast Pipeline, which was built in 1999 to move offshore gas from Nova Scotia’s Sable Island fields. It’s also a recognition that the new, affordable supplies of natural gas that New England and Atlantic Canada sorely need will come largely from the northeastern United States, not the Canadian Maritimes.

But the biggest question about the pipeline reversal can’t be answered yet: Will the project attract enough capacity to help lower natural gas and electricity prices in New England?

The answer will depend partly on which customers, such as power plants and paper mills, buy the gas, where the customers are and how much gas they buy.

There won’t be much information before March 31, the deadline for the pipeline’s owner, Houston-based Spectra Energy Corp., to hear back from interested customers for its Atlantic Bridge Project.

In an “open season” announcement last week, Spectra Energy said it plans to expand capacity on its Algonquin line, which runs from the New Jersey-New York border to Boston, and the Maritimes line by the end of 2017. The open season announcement is a way of seeking requests for service and bids from shippers.

The project represents the quickest way to boost the amount of natural gas flowing into New England, said Marylee Hanley, a spokeswoman for Spectra Energy.

The company also announced that it has an agreement with Unitil Corp. to serve as an “anchor shipper” for the project. Unitil operates in Massachusetts and New Hampshire and is Maine’s largest gas distributor, serving homes and businesses in Greater Portland and Lewiston-Auburn.

The development plan is timely. Last month, the six New England governors launched an unprecedented, regional energy plan that would, in part, increase natural gas pipeline capacity by 20 percent in three years. The governors’ plan would ask utility customers to pay for the multibillion-dollar investment, with the costs recovered through savings on energy bills as the projects increase supplies of lower-cost power.

Significant savings would come from bringing low-cost natural gas from the Marcellus and Utica gas fields in Pennsylvania and New York. The goal would be to shrink the wide difference in the price of gas – and the electricity made by gas-fired power plants – between New England and other states.

Hanley said that putting more gas on the Maritimes & Northeast line would involve modest investments at compressor stations and other equipment locations. It wouldn’t require any laying of new pipe.

A reversal of the line would still allow gas to move from Canada, when that’s desirable and economical. But by seeking to establish a two-way flow on the pipeline, Spectra Energy is recognizing the shortcomings of the supply from Atlantic Canada.

Production has slowed in the Sable Island fields, and imported liquefied natural gas brought by ship to New Brunswick has become too expensive most of the year to compete with the fields in Pennsylvania and New York.

Maine energy officials said Tuesday that they are encouraged by Spectra Energy’s reversal plan but it’s too early to know whether enough capacity would be added to lower prices in the region. The expansion could bring an additional 100,000 to 600,000 dekatherms of gas daily to New England and Atlantic Canada – the equivalent of 700,000 to 4.2 million gallons of heating oil.

“It’s a significant development,” said Patrick Woodcock, Gov. Paul LePage’s energy director. “It’s the first step in moving forward with a significant project that could provide access to affordable, stable gas prices for Maine.”

Woodcock noted, however, that the plan being promoted by the governors calls for pipeline upgrades that would move one billion more cubic feet per day than last year’s levels. That translates into capacity that’s well above what the Atlantic Bridge Project would provide.

Also, some industrial customers in Maine have calculated that it would take more than three times what Spectra Energy is proposing to erase the regional price gap.

It’s also too early to know how much of the pipeline’s gas would be sought in New England compared with New Brunswick or Nova Scotia, said Thomas Welch, chairman of the Maine Public Utilities Commission.

“If a lot goes to New Brunswick, Maine may not get that much of an advantage,” he said.

In its announcement, Spectra Energy acknowledged the governors’ ambitions and said that if the open season announcement leads to service requests beyond March 31, it could accept additional requests as part of the Atlantic Bridge Project or a future expansion.

Tux Turkel can be contacted at 791-6462 or at:

tturkel@pressherald.com

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