Kinder Morgan lines up customers for big Northeast pipeline project

Kinder Morgan Inc. (NYSE: KMI) announced March 5 that its subsidiary, Tennessee Gas Pipeline Co. (TGP), has finalized its anchor shippers for the market path component of the proposed Northeast Energy Direct Project (NED).

Collectively, the anchor shippers have executed agreements to transport approximately 500,000 dekatherms per day (Dth/d) of incremental natural gas supplies sourced from the Marcellus Shale region to meet New England’s growing consumer, industrial and power plant needs. NED’s market path component, from Wright, New York, to Dracut, Massachusetts, and beyond, is scalable to 1.2 billion cubic feet per day (Bcf/d), or ultimately 2.2 Bcf/d. A project in-service date of November 2018 is targeted.

Anchor shippers that have executed binding precedent agreements include:

  • National Grid, 186,963 Dth/d;
  • Liberty Utilities, 115,000 Dth/d;
  • Columbia Gas of Massachusetts, 114,300 Dth/d; and
  • Connecticut Natural Gas Corp., Southern Connecticut Gas Corp., The Berkshire Gas Co., The City of Westfield Gas & Electric Light Department and others.

TGP is continuing to negotiate with potential shippers on the NED Project, including electric distribution companies (EDCs) and others, and expects to announce additional commitments at a later date.

“We are pleased that a broad range of New England market participants have declared, through binding contractual commitments, the clear need for an expansion of TGP to provide a transformative solution to reduce energy costs and enhance gas and electric reliability in New England,” said KMI East Region Natural Gas Pipelines President Kimberly S. Watson.

Through these commitments to the NED Project, the regional gas utilities in New England are expanding long-standing relationships with Kinder Morgan to serve their growing markets. Kinder Morgan said it remains keenly aware of the effect that pipeline constraints have on electric prices and reliability in the region and has been actively involved in working to develop a regional solution. According to ISO New England, New Englanders paid an additional $3 billion in electricity costs in the winter of 2013/2014 due to natural gas capacity shortages.

The company said that discussions and efforts are progressing well with gas and electric utilities to work together with Kinder Morgan and other key stakeholders, including regulators and government officials, to address regional issues. Some of these efforts involve a model where EDCs may sign up for pipeline capacity to add gas capacity for power generation in the region. These potential contracts are not yet reflected in the commitments that have been made for the NED Project.

TGP has over 5,000 MW of natural gas-fired generation assets attached to its system, and supplies over 1 Bcf/d of natural gas critical to other intra-regional systems, such as Algonquin Gas Transmission. The NED Project expands TGP’s role as supplier to such systems.

“It is universally recognized that New England needs at least 2 Bcf/d of pipeline capacity to transport additional natural gas supplies to allow local gas companies to continue to serve their customers, to help New England’s natural gas-fired power generation fleet to supply energy reliably and economically, and to help support economic development and jobs within the region,” said Watson. “We applaud the efforts of the electric distribution companies and their proposed EDC model in solving the region’s energy challenges. We also commend the Baker-Polito Administration for directing the opening of a docket for options to expand natural gas capacity in Massachusetts and for the administration’s coordination with other leaders of New England states to work together towards comprehensive energy solutions for the region.”

Kinder Morgan is the largest energy infrastructure company in North America. It owns an interest in or operates approximately 80,000 miles of pipelines and 180 terminals. The company’s pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals, and handle bulk materials like coal and petroleum coke.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.