MAINE’S NEW OPPORTUNITIES AND NEW CHALLENGES WITH NATURAL GAS MARCH 20, 2013 Patrick Woodcock Director Governor’s Energy Office
Old Challenge – Exposure to Oil Prices Total Petroleum Consumption per Capita 200 180 160 140 120 Million Btu 2007 100 2008 2009 80 2010 60 40 20 0 Massachusetts Connecticut Maine New Rhode Island Vermont United States Hampshire • Highest per capita consumption of oil in the region.
Growing Challenge – Cost of Energy in Maine $300.00 $250.00 $200.00 $150.00 $100.00 $50.00 $- 2003 2005 2007 2010 2011 Residential Electricity Expenditure Heating Oil Expenditure Residential Motor Gasoline Expenditure • Highest Residential Energy Bills in the Country and Going in the Wrong Direction
New Opportunities in Natural Gas Potential for 10.6 billion cubic feet by the end of this year, or 12 percent of total U.S. gas use from Marcellus.
New Opportunities in Natural Gas Residential Sales Commercial/ Mid-Size Industrial/ Large Industrial or Small Industrial Hospital / Shopping Mall NGV Fueled Truck Sales / Smaller NGV Customer Fleet LDC – Existing Load Supply Commodity 6.56 6.56 4.05 4.05 Interstate Pipeline / Basis - - 1.75 1.75 Differential NG Distribution 6.08 4.25 3.30 2.31 Total - $/mmBtu $12.64 $10.81 $9.10 $ 8.11 LDC – Expanded Service Territory Supply Commodity 6.56 6.56 4.05 4.05 Interstate Pipeline / Basis - - 2.00 2.00 Differential NG Distribution 8.50 6.00 5.00 4.00 Total - $/mmBtu $15.06 $12.56 $11.05 $10.05 Delivered CNG/LNG off- n/a n/a $16.00 $11.00 pipeline Delivered Propane $32.12 $32.12 $26.48 $26.78 Diesel at $3.50/Gallon $25.47 $25.47 $25.47 $25.47 • $3.50 per gallon creates opportunities for diverse delivery options.
Natural Gas Growth in Maine Maine Home Heating by Fuel Type 100% 4.00 3.8% 4.9% 5.3% 4.6% 4.7% 4.5% 5.1% 3.5% 3.3% 3.6% 3.4% 4.5% 5.0% 4.2% 90% 7.8% 6.7% 3.50 7.8% 9.4% 11.5% 12.0% 12.3% 6.2% 6.3% 80% 5.9% 6.2% 6.5% 3.00 6.7% 7.6% 70% 2.50 60% $/gal 50% 2.00 40% 78.1% 77.7% 77.0% 75.1% 1.50 71.4% 70.4% 68.7% 30% 1.00 20% 0.50 10% 0% 0.00 2005 2006 2007 2008 2009 2010 2011 Fuel Oil Bottled, tank, or LP gas Wood Utility Gas Electricity Coal or coke Solar Energy Other Fuel No Fuel Average Winter Heating Oil Price Minimum Winter Heating Fuel Price Maximum Winter Heating Fuel Price 3.3 percent in 2005 to 5 percent in 2010 with plans in operational stages today.
New Challenge – Cost of Upgrade Installed Equipment Annual Fuel Payback Period Cost ($) Cost (years) Burn Biodiesel in Oil Furnace $0 $3,314 N/A Gas Conversion Burner $2,500 - $4,500 $897 1.0 – 1.8 Air Sealing $600 N/A 2 New Natural Gas Furnace $5,000 - $10,000 $803 2.0 – 3.9 Wood Stove - Supplemental $3,500 - $6,500 $1,960 2.5 – 4.6 Solar Hot Water - Supplemental $8,300 - $12,900 $329 2.7 – 4.3 Wood Pellet Furnace $10,000 - $22,000 $1,618 5.7 – 12.6 Insulation (Attic or Basement) $4,000 N/A 5.3 Geothermal Heat Pump $11,000 - $45,000 $1,292 5.3 – 21.8 Air Source Electric Heat Pump $5,000 - $12,000 $2,423 5.3 – 12.8 Air Source Heat Pump – Supplemental $3,000 - $4,000 $XX 3.6 Solar Photovoltaic - Supplemental $18,000 - $30,000 n/a 5.4 -8.9 Propane Oil Furnace $1,000 - $5,000 $3,279 12.7-63.1 More Efficient Oil Furnace $2,000 - $5,000 $3,081 7.2 -18.1 • Paybacks Attractive, but Mainers do not have the upfront capital.
GOVERNOR’S ENERGY PLAN • Bring Affordability to Mainers with Capital Cost Assistance; • Make Maine Competitive in Manufacturing Rates; • Increase Gas Supply to Region.
Old Challenge – Cost of Electricity for Industrial Sector Industrial All Sectors Census Division and State November 2012 November 2011 November 2012 November 2011 Washington 4.23 4.26 7.04 6.95 Nevada 4.39 4.13 7.57 7.41 Oklahoma 4.65 5.15 6.98 7.31 Louisiana 4.73 5.31 6.79 7.08 Idaho 4.77 4.47 6.84 6.38 Iowa 4.89 4.85 7.12 7.11 Montana 5.12 5.24 8.32 8.08 Tennessee 6.68 6.47 9.19 8.94 Kansas 6.71 6.50 8.82 8.51 District of Columbia 6.93 4.85 11.53 12.16 Colorado 6.99 7.32 9.33 9.35 Pennsylvania 7.29 7.30 9.86 10.19 Wisconsin 7.31 7.24 10.26 10.11 Middle Atlantic 7.38 7.60 12.33 12.73 Michigan 7.59 6.86 10.84 9.92 Pacific Contiguous 7.88 7.56 11.09 10.67 Florida 8.06 8.21 10.81 10.61 Delaware 8.35 8.06 11.11 10.98 Maine 8.40 8.54 11.96 12.43 Maryland 8.53 8.30 10.92 11.16 Vermont 9.36 9.95 15.03 13.90 California 10.50 9.83 13.11 12.52 • Not-competitive with Manufacturing States
New Challenge – Gas Flow in New England • Limited Access into the region • Spikes in Gas Prices in New England during the Winter Months
Corresponding Volatility and High Natural Gas Prices New Challenge – Subject to Supply Constraints and $ per MMBTU 10 15 20 25 0 5 5-Jan-11 5-Feb-11 Current Settlement Prices Home Heating Oil and Natural Gas 2013 5-Mar-11 5-Apr-11 5-May-… 5-Jun-11 5-Jul-11 5-Aug-11 5-Sep-11 5-Oct-11 5-Nov-11 5-Dec-11 5-Jan-12 5-Feb-12 5-Mar-12 5-Apr-12 5-May-… 5-Jun-12 5-Jul-12 5-Aug-12 5-Sep-12 5-Oct-12 5-Nov-12 5-Dec-12 5-Jan-13 5-Feb-13 5-Mar-13 5-Apr-13 5-May-… 5-Jun-13 5-Jul-13 5-Aug-13 5-Sep-13 per mmbtu Weighted Avg Index Algonquin Citygate Hub, $/mmbtu Natural Gas-Henry - in MMBtu's Fuel Oil, No. 2 NY gal 5-Oct-13 5-Nov-13 5-Dec-13
Regional Natural Gas Partnerships • Canadian Provinces • ISO-New England • FERC • Major Pipeline Owners • Natural Gas Generators • Industrial Users
The Bottom-Line “Our biggest obstacle right now in terms of operational obstacles is the cost of gas in the state of Maine. This is not the base price of the gas, but actually the cost to deliver the gas, which is seasonally impacted by cold weather in the state of Maine as the state of Maine has a restricted pipeline capacity issue. ” March 7, 2013
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