Natural Gas: Time of Opportunity for Massachusetts - Energy Summit
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November 8, 2012
Worcester, MA
Natural Gas:
Time of Opportunity
for Massachusetts
Presentation to:
2012 Massachusetts
Energy Summit
Tom Kiley
Northeast Gas Association
A Market Transformation
Underway
Daniel Yergin and Robert Ineson, Wall Street Journal, November 2,
2009
“The biggest energy innovation of the
decade is natural gas—more specifically
what is called "unconventional" natural
gas... To have the resource base suddenly expand by this
much is a game changer.”
28.
NGA’S ANTITRUST COMPLIANCE PROCEDURES
Adopted by the NGA Board of Directors on June 4, 2003
Objective
The Northeast Gas Association (NGA) and its member companies are committed to full compliance with
all laws and regulations, and to maintaining the highest ethical standards in the way we conduct our
operations and activities. Our commitment includes strict compliance with federal and state antitrust laws,
which are designed to protect this country’s free competitive economy.
Responsibility for Antitrust Compliance
Compliance with the antitrust laws is a serious business. Antitrust violations may result in heavy fines for
corporations, and in fines and even imprisonment for individuals. While NGA’s attorneys provide
guidance on antitrust matters, you bear the ultimate responsibility for assuring that your actions and the
actions of any of those under your direction comply with the antitrust laws.
Antitrust Guidelines
In all NGA operations and activities, you must avoid any discussions or conduct that might violate the
antitrust laws or even raise an appearance of impropriety. The following guidelines will help you do that:
Do consult counsel about any documents that touch on sensitive antitrust subjects such as pricing,
market allocations, refusals to deal with any company, and the like.
Continued on NGA web site…
http://www.northeastgas.org/about-nga/antitrust-guidelines
NGA Members
Non-profit trade association
Local gas utilities (LDCs) serving New
England, New York, and New Jersey
Several interstate pipeline companies
LNG importers (Distrigas, Repsol)
and LNG trucking companies
Over 220 “associate member”
companies, from industry suppliers
and contractors to electric grid
operators
www.northeastgas.org
National Trends:
Shale & the New Supply Picture
Price Trends
Increasing U.S. Supply Reserves: 100 yrs? Source: Potential Gas Committee, April 2011
North American Shale Gas Basins Map: National Energy Board of Canada
U.S. Gas Production Forecast:
Shale’s Increasing Role
U.S. Natural Gas
Production, through 2035
History 2010 Projections
30
25
Shale is over
49%
25% of the U.S. 20
23%
Shale gas
production mix
15
today, and may Alaska
26%
Tight gas
double over next 10 2% 9%
21%
Non-associated offshore
25 years. 9% 7%
Coalbed methane 1%
5 10%
Associated with oil 7%
21% 7%
Non-associated onshore
9%
0
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Source: U.S. EIA, “2012 Annual Energy
Outlook”
Declining Commodity Price,
Stable Forecast
Recent History 20-Year Forecast
Source: U.S. EIA
Natural gas spot prices in 2011 were at lowest level in a decade.
The 2012 price (and future outlook) remain stable.
Regional and State
Trends:
Infrastructure
Home Heating Conversions
Lower EmissionsPNGTS
M&NE
Iroquois
Tennessee
Algonquin
5 Interstate
Pipelines
Serve New
England
Co p yr ig h t : No r t h east Gas Asso ciat io n
Pr ep ar ed b y: Co ler & Co lan t o n io , In c.
Feb r u ar y 2012MA Natural Gas Distribution
System: Service Areas
13.Home Heating Price
Advantage
Average Consumer Expenditures for
Heating Fuels, 2006-2012
3,000
2,500
2,000
1,500
1,000
Natural Gas
500 Heating Oil
0
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
forecast
Source: U.S. EIA, Oct. 10, 2012. Natural gas data is for Northeast states of
CT, ME, MA, NH, NJ, NY, PA, RI, VT. Heating oil is U.S. average.Conversions on the Increase
Columbia Gas of MA reports that planned conversions in 2012
are a 33% increase over last year.
NSTAR is projecting 3,500 conversions for 2012 - nearly 5 times
its recent historic average.
NSTAR Conversions, 2003-2012
National Grid in its
MA and NH service
areas projects an
increase of about 39%
in 2012. Its
commercial
conversions are also
on the rise: to a
planned 840 in 2012 -
an increase of 46%.
6.Lower Emissions – at the
Home and Power Utility
Electric Utility Emissions, MA, CO2 Emissions, Electric Utilities,
1990-2010 MA, 1990-2010
30,000,000
250,000
25,000,000
200,000
NOx 20,000,000
150,000
SO2
15,000,000
100,000
10,000,000
50,000
5,000,000
0
1990 2000 2010 0
1990 2000 2010
Source: U.S. EIA, “Electric Power Annual 2010,” released 11-11. Metric tons.
19.Market Opportunities &
Challenges:
Home Heating
Vehicle Fuel
Power GenerationOpportunity for Market Growth
in the Region
Potential growth sectors…
CNG and LNG
35% of New vehicles have Gas combined-cycle
England homes potential, plants remain leading
heat with gas especially in choice (along with
heavy-duty Renewables)
• 47% in Mass. market (e.g.,
fleet vehicles,
refuse trucks)Natural Gas as a Low-
Cost, Low Emission Fuel
“If we start making cars and trucks that
run on natural gas, there’s the potential to
create over a half a million American
jobs…With rising gas prices and growing
instability in oil regions around the world,
the time to act is now.”
- Rep. John Larson, CT, lead co-sponsor
of NAT GAS Act, U.S. CongressMore Natural Gas in the Future
Likely as Power Gen…and
Back-up for Renewables
PROPOSED GENERATOR
ADDITIONS, %
(Source: ISO-NE, 4-12)
Other, 7
Photo: National Grid
Natural gas is
already the leading Wind, 33
fuel for power gen in
MA and New England. Natural
Gas, 60
Its future role is likely
to grow further.New England Challenge More interstate pipeline infrastructure needed into New England There are some proposed New England-related pipeline projects, but still few years away – and still requiring customer commitment to firm contracts Electric power sector currently relies too much on interruptible contracts – a concern
Environmental Issues with Shale Development
Environmental Issues
Associated with “Fracking”
High volume hydraulic fracturing
Water consumption & transportation
Chemical additives
Fluid handling, disposal, treatment
Local impacts to infrastructure
Horizontal drilling from multi-well
pads
Duration of impacts
Can it be done safely and responsibly? Yes.Industry Responsibilities
Best practices
Communications and
transparency
Safety and operational
securityStorm Response • Major damage to gas distribution system from flooding and storm surge in coastal New Jersey and Long Island • NGA helping in extensive mutual aid effort • Utility crews from Photo: NJ Natural Gas throughout U.S. and Canada assisting
Thank you…
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