Impacts of frigid temps forcing closer look at energy mix, liquefied natural gas

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BOSTON (SHNS) – As policymakers from Washington, D.C. to Beacon Hill debate the implications of New England’s gas pipeline constraints this week, a tangible symbol of the region’s winter energy crunch lays anchored miles off the coast of Nahant.

The tanker Gaselys may be carrying liquefied natural gas (LNG) from the Yamal LNG export terminal in Russia, which is operated by a company subject to U.S. sanctions, Reuters reported this month, soon after the vessel picked up its supply of the super-chilled fuel from the Isle of Grain facility at the mouth of the Thames River in England.

The ship-tracking website reported the ship was at an anchorage outside Boston’s Inner Harbor as of midday Thursday. The vessel arrived in the area on Wednesday, according to the U.S. Coast Guard.

A different tanker brought the fuel from Novatek PAO’s facility in Yamal to the Isle of Grain, and the tanker Gaselys subsequently made a pickup from there, according to Reuters, which said it is “possible that some of the LNG on the Gaselys is from Yamal,” citing a report by S&P Global Platts. A spokesperson for the fuel purchaser ENGIE told the News Service the transaction “is compliant with all U.S. trade laws.”

The LNG shipment is headed for an Everett facility constructed in 1971 that is the largest LNG terminal in the United States. Around 80 percent of the supplies to the facility come from a liquefaction plant on the island of Trinidad in the Caribbean, according to ENGIE whose subsidiary Electrabel acquired the Everett terminal in 2000.

“ENGIE North America purchased this LNG cargo on the spot market, due to the high natural gas demand during the recent record cold snap,” the company told the News Service. ENGIE does not announce the location of ships or the timing of deliveries, according to a company spokeswoman, who said once the delivery is made, it will help the region with “the most flexible and responsive way to meet temperature-sensitive demand.”

As furnaces blaze around the region, eating up natural gas supplied via pipelines, gas-fired power plants have had to turn elsewhere for fuel. Over the course of about two weeks between Christmas and Jan. 9, Massachusetts electrical generators burned about two million barrels of oil, which is more than double the amount burned throughout all of 2016, Energy and Environmental Affairs Secretary Matt Beaton told lawmakers on Wednesday.

The fuel-loaded tanker in Massachusetts Bay and the massive quantities of oil burned this winter are features of what Beaton and the region’s electrical grid operator, ISO New England, say are constraints on the region’s natural gas pipeline capacity. When there isn’t enough gas flowing through pipes, power plants turn to oil supplies and to liquefied gas, which arrives via ship to the terminal in Everett.

Gov. Charlie Baker supports a multipronged energy approach that would include additional pipeline capacity in addition to new supplies of renewable energy from offshore wind and other sources. ISO New England found that on the coldest days the region’s pipeline infrastructure “can’t meet all the demand for both home heating and power generation.”

In 2015, Attorney General Maura Healey publicized a study that found more pipeline construction is not the best solution to the region’s energy needs.

“This study demonstrates that we do not need increased gas capacity to meet electric reliability needs, and that electric ratepayers shouldn’t foot the bill for additional pipelines,” Healey said in a statement at the time. “This study demonstrates that a much more cost-effective solution is to embrace energy efficiency and demand response programs that protect ratepayers and significantly reduce greenhouse gas emissions.”

Sen. Michael Barrett, a Lexington Democrat, thinks that ISO New England should expand its purview to consider climate change implications in addition to grid reliability and price considerations.

“I would like to see the organization stretch itself and balance its reliability mandate against the urgent need to reduce greenhouse gases. We’re looking for a new paradigm here and we need one,” Barrett told the News Service. He said, “Congress and the various state legislatures did not give them a three-part mandate. It didn’t say, ‘Take a look at reliability, price and environmental impacts – environmental implications and global warming implications.’ It just said, ‘Take a look at reliability and price of electric power.’ They’ll be the first to concede that they approach this with two thirds of a toolbox.”

Climate change is a chief concern of Barrett, who wants to put a revenue-neutral tax on home-heating oil, gasoline and other greenhouse gas emitters.

Barrett, who is the Senate chairman of the Committee on Telecommunications, Utilities and Energy, said he does not think the grid operator would need congressional action to shift its perspective and he is looking for a less “formal” change to incorporate global warming into its thinking.

ISO New England is “required to be fuel- and technology-neutral in how it operates the power grid, administers the competitive wholesale power markets, and conducts long-term planning,” a spokeswoman told the News Service.

“Also, the ISO is running a regional power system that covers all six New England states, with varying policies on emissions,” the spokeswoman said. “The ISO monitors public policy initiatives that could have an impact on the regional power system and is constantly adjusting operations, markets, and long-term planning to accommodate those impacts.”

Rep. Tom Golden, a Lowell Democrat and co-chairman of the committee, said he hopes to bring ISO New England in for an informational hearing with the committee and he takes the organization’s concerns seriously.

“I think it’s important to listen to ISO to see what their concerns are,” Golden told the News Service. He said, “They need power. That’s what they’re primarily looking for, and if they see something coming off the grid in future years, their concern is quite frankly keeping the lights on.”

The region will lose a carbon-free electrical generator in May 2019 when the 680-megawatt Pilgrim Nuclear Power Station is scheduled to close.

New England’s electrical fuel mix was the subject of a Senate Committee on Global Warming and Climate Change oversight hearing on Wednesday, and in Washington, D.C. on Tuesday, the chief executive of ISO New England and others testified before the U.S. Senate Committee on Energy and Natural Resources.

“The cold weather that affected much of the Northeast and Midwest during the first week of January triggered a number of natural gas pipeline capacity constraints, resulting in record-setting natural gas price spikes,” Federal Energy Regulatory Commission Chairman Kevin McIntyre told the energy committee in written testimony.

During the recent cold snap, New England was able to “compensate for pipeline capacity constraints with cross-border supplies from Eastern Canada and Liquefied Natural Gas,” according to McIntyre, who said the region’s “reliance on oil-fired units during this period highlights the need to timely replenish oil inventories and carefully manage emission allowances.”

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