Downstate New York's growing demand for natural gas will begin outstripping supply next winter, creating a gap that will continue to grow for at least the next decade absent a long-term solution, National Grid USA forecast in a new report.
Possible solutions include new pipelines and other large-scale projects, smaller-scale infrastructure or energy efficiency programs, and other workarounds, the gas and electric power utility operator said. Without some combination of those fixes, undersupply reaching 265,000 Dth/d by the onset of winter 2032-2033 in a low-demand scenario, or 415,000 Dth/d in the winter of 2034-2035 in a high-demand scenario.
"National Grid's current capacity of 2,888 MDth/day is challenged to meet existing peak demand during cold winter days, leaving our network with little room for error," the company said. "And looking ahead, our existing and planned expansion capacity to supply natural gas is not sufficient to meet forecast demand."
National Grid presented its outlook in a 116-page report, part of a $36 million settlement with its New York state regulator, the Public Service Commission, over the utility's six-month moratorium on new downstate gas hookups. The standoff reached a climax in November 2019, when New York Gov. Andrew Cuomo gave National Grid two weeks to present a remedy or else lose its license to deliver gas to 1.9 million customers of subsidiaries KeySpan Gas East Corp. and Brooklyn Union Gas Co. across Brooklyn, Queens, Staten Island and Long Island.
While the company stressed that its intent in the report was not to recommend the best solution, its assessment of the various options nevertheless implied that the safest, most reliable and cost-effective fix would be a proposed pipeline through New York Bay that helped spark the dispute between the state and utility.
The company imposed the moratorium in May 2019, saying it could not guarantee reliable service to new customers after the state denied a key water permit to the Williams Cos. Inc. pipeline project. The Northeast Supply Enhancement project would deliver gas into National Grid's downstate service territory by extending Williams' Transcontinental Gas Pipe Line Co. LLC system. The impasse has become a flashpoint in a larger debate over whether liberal states are abusing their Clean Water Act authority to block fossil fuel infrastructure and meet ambitious climate goals.
The pipeline alone would nearly close the supply gap in the high-demand scenario, delivering 400,000 Dth/d and allowing the company to stop trucking compressed natural gas, or CNG, into the region, National Grid said. The project would also reduce the need for customers to switch to fuel oil during cold weather, provide contingency supplies and give the company more flexibility to maintain LNG facilities.
That assessment could anger Cuomo, who castigated National Grid in several blistering statements last fall, accusing the company of ignoring other supply options and focusing solely on the pipeline project in order to bolster its gas distribution business. The governor did not immediately comment on the National Grid report.
New onshore or offshore LNG terminals could provide the same supply increase as the pipeline, but National Grid ranked them as less attractive in terms of reliability, cost and environmental and community impact.
Another option would be to combine smaller, distributed infrastructure like LNG barges or peak LNG facilities with non-pipe solutions. The options also include adding compressors to the Iroquois Gas Transmission System LP to increase supply into the region or building the Clove Lakes Transmission Loop project, which is eight miles of new 30-inch transmission pipe in Staten Island to remove supply bottlenecks.
New York would have to build at least two of these smaller projects, because each could only add 63,000 Dth/d to 100,000 Dth/d of capacity, National Grid said. That strategy would obviate the need for CNG supplies, but would also leave the region reliant on energy efficiency and demand response programs, and it could yet lead to restrictions on new customer hookups, the utility concluded.
The final option would rely entirely on energy efficiency, converting to electric heating systems and demand response programs that offer incentives to customers to switch from natural gas to other fuels during peak demand times. National Grid said that approach might depend on expanding power generation and the electric grid to meet new demand. All of the non-pipeline options ranked poorly on reliability, while energy efficiency and electrification also had weak cost scores.
National Grid sees gas demand growth slowing to an average of 1.8% per year through 2035 from 2.4% over the past 10 years, due to growth in electrification combined with energy efficiency and demand response.