The Ability to Meet Future Gas Demands from Electricity Generation - - PowerPoint PPT Presentation

The Ability to Meet Future Gas Demands from Electricity Generation in New York State

The Roundtable June 13, 2003 Charles Neill Charles River Associates

CHARLES RIVER ASSOCIATES

Key Findings and Conclusions

• New York has sufficient gas delivery capacity to supply the

amounts of gas required for generation under all 2005 generation and pipeline expansion scenarios -- even if pipeline expansions are limited to those currently under construction.

• Pipeline capacity is sufficient to meet the maximum

potential gas demands of generators under our base case scenario – i.e., pipeline capacity equivalent to the FERC provisionally approved pipeline expansions into downstate (785 mmdth/d), and 4,495 MW of new generating capacity additions.

CHARLES RIVER ASSOCIATES

Key Findings and Conclusions

• Under scenarios with less pipeline expansion capacity

and/or less additional generating capacity, a substantial portion of the maximum potential gas demands for generation can be met. Some oil does need to be burned in each of these cases, but the total annual 2005 NYCA oil burn

• - in all cases analyzed -- is less than the historical amount

actually burned in either 2000 or 2001.

• Oil storage in the NYCA has been, and can continue to be,

an effective substitute for pipeline capacity. – Residual oil at dual-fuel steam units – Distillate oil at new CCs However, volumes must remain at historical scale.

CHARLES RIVER ASSOCIATES

Key Findings and Conclusions

• 1. New York has sufficient gas delivery capacity to supply the

minimum amount of gas required for generation under all 2005 generation and pipeline expansion scenarios analyzed.

Actual Fuel Consumption Year Electric Case/ New Capacity Fuel No Post 2003 Pipeline Expansions 300 Million/d Expansion to Downstate Region 400 Million/d Expansion to Downstate Region 500 Million/d Expansion to Downstate Region 800 Million/d Expansion to Downstate Region 2002 Base Case Gas 453,010 N/A N/A N/A N/A Oil 18,010 N/A N/A N/A N/A 2005 Case 1 (Base) Gas 439,414 484,370 490,823 494,239 497,802 4495 MW Oil 18,438 11,371 6,420 3,574

• Case 2

Gas 468,241 487,173 489,355 496,489 496,489 1840 MW Oil 22,069 8,005 6,116

• Case 3

Gas 478,423 494,615 502,656 502,656 502,656 1090 MW Oil 24,439 8,051

• 2010 Base Case

Gas 517,009 569,503 576,346 580,276 587,817 5075 MW Oil 95,274 21,524 11,870 6,257

CHARLES RIVER ASSOCIATES

Relationship Between New Power Plants and Pipeline Expansions

Power plants should only be added if gas supply is adequate. Pipeline additions require firm capacity subscribers

CHARLES RIVER ASSOCIATES

Key Findings and Conclusions

• 2. Pipeline capacity is sufficient to meet the 2005 maximum

potential gas demands of generators on all days under our base case scenario -- with pipeline expansions of 800 mmdth/d and 4,495 MW of new generating capacity additions.

• 200

400 600 800 1,000 1,200 1,400 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Mdth/day Unutilized Pipeline Capacity Gas Deliveries to Generators

2005 Fuel Burn for Electric Generation in Con Ed (800 Million Cubic Foot per Day Expansion)

CHARLES RIVER ASSOCIATES

What do we mean by a gas deliverability “shortfall?”

Shortfalls can be defined in terms of supply/demand balance.

• Inability to meet the maximum potential demand for gas – irrespective of

the relative price of gas versus other fuels and/or available generating alternatives

• Inability to meet the economic demands for gas -- at market prices --

that result from the likely mix of electric generation, given electricity and gas market structure and rules

• Inability to support alternative economic and environmental policy
• bjectives (e.g., reduce emissions from electric generation, lower

electricity prices by increasing competition)

However, assumptions about market behavior should be made explicit, so that analytical results can be placed in their proper context.

CHARLES RIVER ASSOCIATES

Key Findings and Conclusions

• 4. In each of these cases, the total annual 2005 NYCA oil burn is

less than the historical amount actually burned in 2000 and 2001.

Residual Oil Consumption in Eastern New York Historical 2000 & 2001 and Estimated 2005

5 10 15 20 25 30 35 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Month Fuel Consumption (Million MMBTU) 2000 2001 2005 1090 MW/No Gas Expansion Model Results 2005 4495 MW/No Gas Expansion Model Results

CHARLES RIVER ASSOCIATES

New York Generators Have Burned a Mix of Gas and Oil Historically

Historical Fuel Prices and Fuel Mix in Dual-Fueled Steam Units Eastern New York 2000-2001

5 10 15 20 25 30 35 40 45 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01 Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Month Fuel Consumption (Million MMBTU) 2 4 6 8 10 12 14 Fuel Price ($/MMBTU) Residual Oil Natural Gas Eastern NY Gas Price NY Harbor (1% Sulfur) Residual Oil Price

CHARLES RIVER ASSOCIATES

When Gas Prices Have Been Relatively High, Oil Has Been Burned Even During the Summer

2 4 6 8 10 12 14 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01 Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Month Fuel Price ($/MMBTU) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Oil Consumption (Percent of Total Fuel Use)

Residual Oil Eastern NY Gas Price

Summer NOx Season Summer NOx Season Oil Consumption as a Percentage of Total Fuel Use among Dual-Fueled Steam Generators Eastern New York State 2000-2001

CHARLES RIVER ASSOCIATES

Gas Demands Shift from Steam Units to Combined Cycles

New York State Unrestricted Gas Demand for Electric Generation Case 1 350 300 High Pressure Gas-Fired Generation Low Pressure Gas-Fired Generation 250 200 per Year MMdth 150 100 50 2002 2005 2002 2005 Downstate Upstate

CHARLES RIVER ASSOCIATES

Downstate Electric Generation Demand Shifts To Combined Cycle Units

Downstate Unrestricted Generation Demand for Fuel 2,000 High Pressure Gas Low Pressure Gas 1,800 1,600 1,400 800 1,000 Mdth per Day 1,200 600 400 200

• Nov

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

CHARLES RIVER ASSOCIATES

With Full Planned Pipeline Expansion, All Potential Power Generation Demands Are Met

High Pressure Gas Low Pressure Gas Excess Demand Downstate Generation Fuel Mix and Excess Demand 800 MMcf/d Pipeline Capacity Expansion 2,000 1,800 1,600 1,400 800 1,000 Mdth per Day 1,200 600 400 200

• Nov

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

CHARLES RIVER ASSOCIATES

As Fewer Pipeline Expansions Are Built, Power Generation Gas Deliveries Decline

High Pressure Gas Low Pressure Gas Excess Demand Downstate Generation Fuel Mix and Excess Demand 500 MMcf/d Pipeline Capacity Expansion 2,000 1,800 1,600 1,400 800 1,000 Mdth per Day 1,200 600 400 200

• Nov

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

CHARLES RIVER ASSOCIATES

Excess Demand is Relatively Small

High Pressure Gas Low Pressure Gas Excess Demand Downstate Generation Fuel Mix and Excess Demand 400 MMcf/d Pipeline Capacity Expansion 2,000 1,800 1,600 1,400 800 1,000 Mdth per Day 1,200 600 400 200

• Nov

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

CHARLES RIVER ASSOCIATES

At 300 MMcf/d, The Winter Pipeline Load Factors Approach Historical Levels

High Pressure Gas Low Pressure Gas Excess Demand Downstate Generation Fuel Mix and Excess Demand 300 MMcf/d Pipeline Capacity Expansion 2,000 1,800 1,600 1,400 800 1,000 Mdth per Day 1,200 600 400 200

• Nov

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

CHARLES RIVER ASSOCIATES

With No Post 2003 Pipeline Capacity Addition Winter Combined Cycle Utilization is Limited

High Pressure Gas Low Pressure Gas Excess Demand Downstate Generation Fuel Mix and Excess Demand No Post-2003 Pipeline Capacity Expansion 2,000 1,800 1,600 1,400 800 1,000 Mdth per Day 1,200 600 400 200

• Nov

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

CHARLES RIVER ASSOCIATES

With All Of The Pipeline Expansions, The Combined Cycles Always Run

Excess Demand CONED Generation Fuel Mix and Excess Demand 800 MMcf/d Pipeline Capacity Expansion 1,000 CONED--HP Gas CONED--LP Gas 900 800 700 600 400 500 Mdt/day 300 200 100

• Nov

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

CHARLES RIVER ASSOCIATES

Some Small Delivery Constrains Emerge As The Pipeline Expansions are Reduced

Excess Demand CONED Generation Fuel Mix and Excess Demand 500 MMcf/d Pipeline Capacity Expansion 100 200 300 400 500 Mdt/day 600 700 800 900 1,000 CONED--HP Gas CONED--LP Gas Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

CHARLES RIVER ASSOCIATES

Pipeline Excess Capacity Remains High

CONED--LP Gas Excess Demand CONED Generation Fuel Mix and Excess Demand 400 MMcf/d Pipeline Capacity Expansion 1,000 CONED--HP Gas 900 800 700 600 400 500 Mdt/day 300 200 100

• Nov

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

CHARLES RIVER ASSOCIATES

Winter Delivery Interruptions Occur At 300 mmcf/d But Are Not Excessive

CONED--LP Gas Excess Demand CONED Generation Fuel Mix and Excess Demand 300 MMcf/d Pipeline Capacity Expansion 1,000 CONED--HP Gas 900 800 700 600 400 500 Mdt/day 300 200 100

• Nov

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

CHARLES RIVER ASSOCIATES

Without Any Pipeline Expansion, The Economics Of Combined Cycles Are Weak

CONED--LP Gas Excess Demand CONED Generation Fuel Mix and Excess Demand No Post-2003 Pipeline Capacity Expansion 1,000 CONED--HP Gas 900 800 700 600 400 500 Mdt/day 300 200 100 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

CHARLES RIVER ASSOCIATES

Pipeline Utilization: 800 MMcf/d Expansion

2005 Fuel Burn for Electric Generation in Con Ed (800 Million Cubic Foot per Day Expansion)

• 200

400 600 800 1,000 1,200 1,400 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Mdth/day Unutilized Pipeline Capacity Gas Deliveries to Generators Oil Burn

CHARLES RIVER ASSOCIATES

Pipeline Utilization: 300 MMcf/d Expansion

2005 Fuel Burn for Electric Generation in Con Ed (300 Million Cubic Foot per Day Expansion)

• 100

200 300 400 500 600 700 800 900 1,000 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Mdth/day Unutilized Pipeline Capacity Gas Deliveries to Generators Oil Burn

CHARLES RIVER ASSOCIATES

Pipeline Utilization: No Post-2003 Pipeline Capacity Expansion

2005 Fuel Burn for Electric Generation in Con Ed (No Post-2003 Pipeline Capacity Expansion)

• 100

200 300 400 500 600 700 800 900 1,000 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Mdth/day Unutilized Pipeline Capacity Gas Deliveries to Generators Oil Burn

CHARLES RIVER ASSOCIATES

Incremental Demands For Pipeline Expansions Are Not Constant

2005 Downstate New York Winter Gas-Power Load Duration Curve 1,800

• 200

400 600 800 1,000 Mdth/day 1,200 1,400 1,600 Days When Unrestricted Gas Market For Power Is Not Served Gas Deliveries to Unrestricted Gas Market for Power (No Post-2003 Pipeline Expansion) 1 151 Days

CHARLES RIVER ASSOCIATES

At 300 mmcf/d, Winter Pipeline Load Factor Approaches Historical Levels

Days When Unrestricted Gas Market For Power Is Not Served Additional Deliveries to Power (with 300 Expansion)* Gas Deliveries to Unrestricted Gas Market for Power 2005 Downstate New York Winter Gas-Power Load Duration Curve 1,800 1,600 1,400 1,200 800 1,000 Mdth/day 600 400 200

• 1

151 Days * Represents additional deliveries to the power markets from a 300 MMcf/d pipeline capacity expansion into the downstate region.

CHARLES RIVER ASSOCIATES

The Summer Incremental Market Is Small

2005 Downstate New York Summer Gas-Power Load Duration Curve Gas Deliveries to Unrestricted Gas Market for Power (No Post-2003 Pipeline Expansion) 1,800 1,600 Days When Unrestricted Gas Market For Power Is Not Served 1,400 1,200 800 1,000 Mdth/day 600 400 200

• 1

214 Days .

CHARLES RIVER ASSOCIATES

Pipeline Load Factors Here Are Very Weak

1,800 Days When Unrestricted Gas Market For Power Is Not Served Additional Deliveries to Power (with 300 Expansion)* Gas Deliveries to Unrestricted Gas Market for Power 2005 Downstate New York Summer Gas-Power Load Duration Curve 1,600 1,400 1,200 800 1,000 Mdth/day 600 400 200

• 1

214 Days

* Represents additional deliveries to the power markets from a 300 MMcf/d pipeline capacity expansion into the downstate region.

CHARLES RIVER ASSOCIATES

Seasonal Competition for Pipeline Capacity

Non-power Market (Normal Weather) LNG Peaking Weather Sensitive Storage Storage Refill vs. Power Demands

1 365

Days Mdth/ Day Pipeline Storage Weather Sensitive Storage Opportunistic Supplies Off-Peak Summer Capacity