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Gas pipeline developers to press build-out hopes in New York, New England

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  • Jun.13,2018

Opportunities exist for a further expansion of Millennium Pipeline and the revival of Access Northeast despite regulatory and environmental hurdles to adding more takeaway capacity designed to move Appalachian Basin gas to downstream markets, senior officials with the developers said Tuesday.

The comments during the second day of the LDC Gas Forums Northeast conference in Boston reflect the confidence midstream operators have that the traditionally pipeline-constrained region can continue to be a growth driver for the sector.

So long as demand pulls producers to boost drilling and industry leaders act collaboratively to counter opponents' concerns, building in New York and New England is within reach, the officials said.

"We all need to take a more proactive approach to messaging," Richard Gardner, senior vice president of business development for Millennium Pipeline, told attendees at the conference.

Millennium serves as a significant outlet for production from the long-constrained Northeast Pennsylvania region, primarily delivering gas into downstream markets in New York and Boston.

The pipeline receives approximately 1 Bcf/d of production from Northeast Pennsylvania -- last winter more than 75% of that gas ultimately made it to an interconnect with Algonquin for final delivery into the New England markets, data compiled by S&P Global Platts Analytics shows.

Northeast Pennsylvania production receipts that exit the region via Millennium have little additional optionality to make it to demand markets. A maintenance earlier this spring cut production receipts onto Millennium to zero MMcf/d for several days, bringing down total Northeast Pennsylvania production by nearly the same amount, Platts Analytics data shows.

Millennium, owned by TransCanada's Columbia Gas Transmission and by National Grid and DTE Energy, is currently building its 223,000 Dt/d Eastern System Upgrade in New York, where the project has been met with strong opposition. The operator is targeting a November 1 startup, and Gardner said at the conference "there is no reason for us to believe that in-service date won't be met." As for the future, Gardner said there is no reason for Millennium to stop with the ESU project.

"I think, yes, we can build something else," he said. "It will be a market pull, not a supply push. I think that's out there. I think there's opportunity. I think it will be small scale."

Gardner said the capacity of a potential further expansion could be 150,000 Dt/d, and such a project could find shipper support by being built in conjunction with a wind farm. He wouldn't discuss a possible location, though he suggested the operator wouldn't shy away from New York.

"If I went to New York regulators and say, 'I have a project concept and we don't need to do a lot of looping ... I think it goes a long way to overcoming some of the challenges in New York," Gardner said.

Access Northeast, meanwhile, has stalled, but the developers aren't giving up on the project that would serve New England.

Erin Petkovich, director of Northeast business development for Enbridge, said at the conference that the pipeline operator, together with its partners Eversource and National Grid, "remain committed to advance a solution for New England."


Petkovich said she believes there are several potential paths forward for Access Northeast.

"We're working on a policy level to see if we can develop a uniform New England policy," she said. "We're also working with the market."

In a related move, Eversource on Monday notified the New Hampshire Public Utilities Commission that it will submit an updated proposal to replace the company's agreement to purchase capacity on Access Northeast. The high court there recently reversed the PUC's 2016 dismissal of the original agreement and remanded the issue to the PUC, Eversource said.

Despite the proximity of the Marcellus and Utica shale plays, New England imports significant volumes of gas from Canada via pipeline and other countries via LNG tanker to meet peak demand. Market experts blame insufficient west-to-east and south-to-north pipeline capacity to transport gas there from producers in Pennsylvania and West Virginia.

"We are actively developing there," Petkovich said of Access Northeast. "We feel like the need is there. Hopefully, we will have some more tangible events to share at this event next year."