Priorities for the 126 th Legislature Richard Levitan, - - PowerPoint PPT Presentation

Maine Energy & Environmental Policy: Priorities for the 126th Legislature

Richard Levitan, rll@levitan.com March 21, 2013

1

Marcellus gas production skyrocketing

0.0 0.5 1.0 1.5 2.0 2.5 2006 2007 2008 2009 2010 2011 2012 Trillion Cubic Feet (Tcf)

2

New England’s Pipeline Infrastructure

Iroquois PNGTS Tennessee M&N Algonquin

3

Key Market Trends

Shale gas boom Deterioration in New England’s P/L portfolio diversity Increased P/L congestion along Algonquin / Tennessee Decline in production from Atlantic Canada Inexpensive gas at the wellhead ≠ low delivered prices

• Price volatility effects
• Uncertainty about timing of new infrastructure

4

Insert

5 10 15 20 25 30 35 40 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Spot Price ($/MMBtu) Henry Hub TZ6 NY Algonquin CG

5

Basis in New England has skyrocketed

• 15
• 10
• 5

5 10 15 20 25 Jan- 08 Jul- 08 Jan- 09 Jul- 09 Jan- 10 Jul- 10 Jan- 11 Jul- 11 Jan- 12 Jul- 12 Jan- 13 Algonquin CG minus TZ6 NY ($/MMBtu)

6

Potential Infrastructure Additions

Algonquin Incremental Market Project

• +450 MDth/d into New England from Ramapo, NY

Tennessee Northeast Exchange Project

• +600 MDth/d into New England from Marcellus/Utica

shales

Deep Panuke

7

The challenge for the 126th Legislature

Support the development of new P/L capacity Benefits include:

• Reduced costs for both gas and electric customers
• Reduction in uplift
• Increased electric reliability
• Environmental benefits
• Enhanced adaptability when electric and gas side

contingencies arise

8

What’s to be done?

Pipelines need anchor shippers Structural changes to the Forward Capacity Market Producers not cultivating New England market Cost allocation and the missing money problem State jurisdictional issues