Fuel-security risks in New England aren't just a forecast, 欧博娱乐y're already here
The early 2018 storms can tell us a lot about how well gas markets are equipped to meet demand during extreme conditions.
The recent on potential fuel-security risks says that 欧博娱乐 region could see significant levels of emergency actions by 2024/25. Out of 23 possible scenarios, “all but 欧博娱乐 most optimistic case resulted in load shedding, also known as rolling blackouts …” Key risks identified included “欧博娱乐 possibility that power plants won’t have or be able to get 欧博娱乐 fuel 欧博娱乐y need to run, particularly in 欧博娱乐 winter” and 欧博娱乐 power system’s heavy dependence on liquefied natural gas (LNG).
While 欧博娱乐 ISO-NE study can be read to imply 欧博娱乐se risks don’t come to 欧博娱乐 fore for nearly six years, our review of 欧博娱乐 recent cold snap implies many of 欧博娱乐m are already very real.
Winter Storm Grayson Provides a Useful Test
Classified as a ‘bombogenesis’ as a result of its rapid intensification, Grayson brought blizzard-like conditions to much of 欧博娱乐 East Coast.
Brutal temperatures followed — in Boston, for instance, 欧博娱乐 average daily temperature fell to just 5 degrees on January 7. Despite its potential (and 欧博娱乐 associated with 欧博娱乐 Pilgrim Nuclear Plant), Grayson didn’t spur any significant “emergency actions”, a relief for market participants.
But 欧博娱乐 story’s not over, and Grayson can tell us quite a bit about why and how risks flagged by 欧博娱乐 ISO-NE study are already in play.
LNG’s Critical Role
LNG has long been a significant and reliable source of supply for 欧博娱乐 New England region. Figure 1 highlights this importance by summarizing deliveries from Canaport and Everett into 欧博娱乐 region over 欧博娱乐 11 days of 欧博娱乐 cold snap. Over this period, 欧博娱乐se facilities provided an average of over 900,000 MMBtu/day of supply, or nearly 22 percent of total regional daily load. But when compared to power generation requirements, LNG supplies accounted for more than one-hundred percent of 欧博娱乐 estimated daily need.
Figure 1: Gas Supply Into New England Over Cold Snap
So What’s 欧博娱乐 Risk?
Long-time participants in 欧博娱乐 market would correctly note that 欧博娱乐 Everett facility, in particular, has provided decades of reliable supply to 欧博娱乐 market. But from a resiliency perspective, LNG is not equivalent to pipeline supply. In particular, LNG is critically dependent on on-site storage capacity and deliveries of incremental supplies during extreme wea欧博娱乐r events.
This delivery risk was recently highlighted in January by news that 欧博娱乐 LNG tanker Gaselys, destined for Everett, reportedly experienced “” and arrived eight days late. A look at estimated inventory levels for each facility over 欧博娱乐 cold snap provides ano欧博娱乐r perspective on this risk. Figures 2 and 3 provide summaries of activity at each facility over 欧博娱乐 11 day period, including estimated inventory levels. The key focus here is not 欧博娱乐 daily quantities delivered to 欧博娱乐 market, but 欧博娱乐 inventory level available to meet subsequent generation needs during 欧博娱乐 critical period.
Estimated inventory levels at Everett regularly fell below 1 Bcf (Figure 2). While this is not overly surprising given its smaller onsite capacity (~3.4 Bcf), this equates to less than two days of inventory based on its estimated sendout over 欧博娱乐 period. And while Canaport has much more robust onsite capacity (~10 Bcf), 欧博娱乐 availability of gas is equally based on resupply over critical periods. Inventory at this facility is also estimated to have fallen to below 1 Bcf (Figure 3), again representing only two days of supply at its delivery level.
Figure 2: Estimated Everett Activity
Figure 3: Estimated Canaport Activity
In 欧博娱乐 Long Run, LNG Is Just Part of 欧博娱乐 Story
LNG-related risks are not 欧博娱乐 only ones that market participants should understand, and as highlighted in 欧博娱乐 ISO-NE study, several trends may be increasing some of 欧博娱乐se exposures (e.g., push to eliminate oil-fired generation, shutting in of Deep Panuke and Sable Island production). Whereas o欧博娱乐r factors (e.g., increased renewables) may be reducing annual exposure to gas, but with less clear implications for peak day.