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Sunday, March 30, 2014

Big natural gas pipeline may be coming close to Nashua

A big new pipeline that would bring natural gas across northern Massachusetts and possibly up into Greater Nashua faced a major deadline last week: making sure there are enough customers to justify the expense.

“It will be dependent on marketplace interest,” said Richard Wheatley, spokesman for Tennessee Gas Pipeline Co. “We don’t build these on spec due to the high cost, long lead times, complex … permitting process, federal and state and local.” ...

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A big new pipeline that would bring natural gas across northern Massachusetts and possibly up into Greater Nashua faced a major deadline last week: making sure there are enough customers to justify the expense.

“It will be dependent on marketplace interest,” said Richard Wheatley, spokesman for Tennessee Gas Pipeline Co. “We don’t build these on spec due to the high cost, long lead times, complex … permitting process, federal and state and local.”

Friday was the deadline for “open season” on the Northeast Expansion Project from Tennessee Gas Pipeline. “Open season” refers to a period when customers and shippers submit what the company calls “requests for service on new capacity.”

If all goes as Tennessee Gas hopes, the company would build 250 miles of 3-foot-diameter pipeline from Pittsfield, Mass., in the Berkshires and across northern Massachusetts to Dracut, connecting into a major interconnection point for various natural gas lines.

It wouldn’t start operating until Nov. 1, 2018, at the earliest, Wheatley said.

The Northeast Expansion Project would carry between 600 million and 2.2 billion cubic feet of gas per day.

As currently envisioned, it would run along existing rights of way through Dunstable, Mass., not far from the New Hampshire border.

One map submitted to the Dunstable Planning Board by Tennessee Gas Pipeline shows a potential spur line running north, into or close to Nashua. However, that isn’t part of any official proposal.

“In general terms, we are looking a number of laterals off the main line in New York, Massachusetts, also in New Hampshire, but we can’t give more particulars until we have a better determination of interest,” Wheatley said.

There’s certainly no shortage of demand for natural gas in New England.

Use of the fuel has exploded in the last decade as prices have fallen because of production via “fracking” in Pennsylvania and New York, and it now fuels more than half of the region’s electricity generation, as well as heating an increasing number of industries and homes.

This cold winter, however, the dependence backfired: Spot prices for natural gas in New England soared, hitting record levels in January that drove a fourfold increase in short-term electricity prices.

Those price spikes happened in large part, industry officials say, because only two major pipelines exist that can bring gas into New England.

One is owned by Tennessee Gas Pipeline, running from Pittsfield in southern Massachusetts and then north along the Interstate 495 corridor to Dracut. The other, Algonquin Gas Transmission, is owned by Spectra Energy, running through Connecticut to Boston.

So there’s demand for more gas in New England –
but whether the demand will prompt the huge expense of a new pipeline is less certain.

The economics and politics of gas pipeline expansion is complicated. That’s partly because the industry depends on 20-year financing, whereas most major customers, such as utilities, are reluctant to commit beyond five years. It’s also partly because of the political difficulty of passing on costs to ratepayers or taxpayers.

This financing mismatch has contributed to a sharp decline in new gas pipeline construction over the last decade, reducing the cost savings from fracking-led natural gas, according to industry observers.

Tennessee Gas hasn’t released a cost estimate for the Northeast Expansion Project, but such mainline natural gas lines cost more than $3 million a mile on average, according to the Federal Energy Regulatory Commission.

The project envisions 179 miles of 36-inch pipeline on new right-of-way, while the rest would parallel existing gas lines.

This winter, the region’s six governors, including Maggie Hassan, met with ISO-New England, which runs the region’s power grid, and the Federal Energy Regulatory Commission during the meeting of the National Governors Association to urge more pipeline construction.

Tennessee Gas Pipeline is a subsidiary of Kinder Morgan Energy Partners, part of Kinder Morgan, the third-largest energy company in the U.S.

David Brooks can be reached at 594-6531 or dbrooks@nashua
telegraph.com. Also, follow Brooks on Twitter (@GraniteGeek).