New England Gas Overview

1
New England Gas Overview

• Elements of the System
• Gas Price Considerations
• Discussion

Presented by Chris Fleming Vice President -
Asset Optimization Sithe Energies, Inc.
2
Elements of the System

• Pipelines and Supplies
• Capacity
• Who controls it?
• Storage
• Capability to store gas in the region
• Who controls it?
• Markets
• Electric Power Generation
• Traditional LDC Markets
• Combined Market and Capacity Economics

3
Pipelines Supplies
4
PNGTS
MNE
TGP
Hub Line
Iroquois
New England Pipelines
AGT
TGP
100
0
50
Scale in Miles
5
Eastern Canadian (Sable Island)
Western Canadian (Alberta)
3,500,000 DTh/day
12.5
22.5
LNG
Domestic W. Canadian
W. Canadian
65.0
Domestic
Domestic
Sources of Gas (Delivery Capacity)
6
MNE Line Expansion
4,100,000 DTh/day
11.0
34.0
LNG
55.0
Sources of Gas (Delivery Capacity)
7
Who Controls Gas Delivery Capacity?
3,500,000 DTh/day
LNG
Canadian
Domestic
8
Who Controls Gas Delivery Capacity?
4,100,000 DTh/day
LNG
Canadian
Domestic
9
Storage
10
Regional LNG Storage
Distrigas controls terminal, LDCs control storage
LDC Stg 14,200,000 DTh
Terminal Stg 3,500,000 DTh
Ship Cap 2,800,000 DTh
Vaporization capacity in New England will soon
exceed 2,000,000 DTh/day.
11
Markets Capacity Economics
12
Source New Energy Ventures, Inc.
13
Locations of New CC-Powerplants
Source Energy Ventures Analysis, Inc. (10/00
Study)
14
Todays Peak Hour Capacity Needs Hot Summer
15
Todays Peak Hour Capacity Needs Cold Winter
16
Todays Gas Needs for CC-Power Generation
Heat rate of 7,200 BTU/kwh assumed for
cc-power plant operation, on average
17
Todays Gas Needs for Traditional LDC Markets
Firm requirements only. Does not include
interruptible markets.
18
2001-2002 Total Gas Market/Supply Balance Cold
Year
19
2001-2002 Total Gas Load Duration Curve Cold
Year
20
2001-2002 Total Gas Load Duration Curve Warm
Year
21
2004-2005 Total Gas Load Duration Curve Cold
Year
22
2004-2005 Total Gas Load Duration Curve Warm
Year
23
Capacity Economics

• Capacity cost is high at low load factors.
• Significant capacity likely to remain in hands of
  marketers.
• Firm capacity from MNE expansion may be
  contracted to NY, PJM gencos.

24
Prices
25
Backflow from Sable will flatten average price
differentials between New England and New York
------
Dracut Hub
26
October 2001 Bidweek Basis Differentials
Source NGI Weekly Gas Price Index
AECO-C
0.67
0.30
0.37
Dracut
Chicago
- .07
0.30
PGE
0.64
NY / NJ
Opal
0.30
0.00
The prices of month ahead contracts in New York
and New England are close at present.
Henry Hub (1.87)
27
January 2001 Bidweek Basis Differentials
Source NGI Weekly Gas Price Index
AECO-C
11.31
7.14
3.43
Dracut
Chicago
- 5.31
7.96
PGE
2.14
NY / NJ
Opal
8.89
1.01
But basis differentials and the base cost of gas
can vary dramatically, depending on the weather
and wellhead availability.
Henry Hub (9.92)
28
When it gets cold, prices can be expected to
spike and availability may even become
constrained if capacity is contracted outside the
region.
?
This suggests a growing need for peakshaving
mechanisms in New England.
29
Discussion