Northeast Gas Poised to Surge on Pipeline Limits: Energy Markets
Natural gas prices in the U.S. Northeast are poised to reach five-year seasonal highs this summer because increasing demand from power plants may be too much for pipelines to handle.
Regional costs may average $5 to $5.50 per million British thermal units, with the potential to jump to $7 to $8, Chris Kostas, senior power and gas analyst for Energy Security Analysis Inc., a market research and advisory company in Andover, Massachusetts, said in a May 1 interview. Average prices for summer delivery at Algonquin City Gates, which includes Boston, were less than $5 from 2009 to 2012 after jumping to more than $10 in 2008.
Kinder Morgan Energy Partners LP (KMP), Spectra Energy Corp. (SE) and Williams Cos., which own the region’s main interstate pipelines, say their systems are running at or near capacity. New England electricity customers were on the verge of rolling blackouts last June and again in February amid equipment failures and limited gas supply during periods of high demand, according to Philip Moeller, a member of the Federal Energy Regulatory Commission.
“Boston is in the hot seat with their lack of offtake or access to other sources,” Stephen Schork, president of Schork Group Inc., a consulting group in Villanova, Pennsylvania, said in a phone interview yesterday. “We can certainly be paying the highest prices since the 2008 commodity bubble.”
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http://www.bloomberg.com/news/2013-05-03/northeast-gas-poised-to-surge-on-pipeline-limits-energy-markets.html