Will This Be the Winter of Our Discontent?

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Sounding the Alarms

Are you alarmed that, as a New Englander, you may not have enough fuel to stay warm or to avoid blackouts this winter? Well, you are not alone. The CEO of Eversource, an energy company offering retail electricity and natural gas and water services,  also is sounding the alarm.

Joseph R. Noland, Jr. is requesting that President Biden use emergency power to ensure that there is enough fuel to keep the furnace going and the lights on.

From Eversource CEO Nolan:

As both an energy company CEO and a lifelong New Englander, I am deeply concerned about the potentially severe impact a winter energy shortfall would have on the people and businesses of this region.

The Green Energy Fantasy

Despite the development of large-scale clean energy projects – like offshore wind farms and hydropower facilities – Mr. Nolan is concerned for New England. NE is dependent on natural gas, both for this winter and for the “foreseeable future,” reports Boston.com.

Nolan also cites concerns raised by ISO-New England, the region’s electricity grid operator, and the Federal Energy Regulatory Commission. For months, representatives from those organizations have warned that New England will not have enough natural gas to meet power supply needs if weather conditions bring a period of severe cold to the region.

Natural gas pipelines that serve NE typically operate at max capacity in winter.

But if the weather gets very cold for an extended period of time, those pipelines cannot meet the region’s heating demands without “significant injections” of liquefied natural gas, or LNG. Both the gas distribution system and the electric power system in New England rely on imported LNG.

Give War a Chance?

From a national security perspective, Mr. Nolan warns, there will be upward pressure on prices in the international market for natural gas.

As a major gas supplier, Russia will directly benefit from higher prices, and that in turn threatens to subsidize the Russian military and prolong the war in Ukraine,” he wrote.

What to Do?

Nolan suggests “advance planning” through actions from President Biden and his administration. ASAP.

To work, Advance planning requires “a process by which raw materials and production capacity are optimally allocated to meet demand. APS is especially well-suited to environments where simpler planning methods annot adequately address comples trade-offs between competing priorities. Production scheduling is intrinsically very difficult due to the (approximately) factorial dependence of the size of the solution space on the number of items/products to be manufactured.”

Nolan’s Suggestions for President Biden:

• an emergency order that would allow Secretary of Energy Jennifer Granholm to oversee new, temporary connections between energy facilities.
• waive the Jones Act, which mandates that goods shipped between U.S. ports must be transported by U.S. flagged vessels. The deliveries made to Everett are done by foreign-flagged vessels.

There were no U.S. flagged LNG vessels, as of Feb. 2020, according to Natural Gas Intelligence. This means that LNG produced in the U.S. cannot be shipped to LNG import facilities in the country.

Mr. Nolan also urged Secretary Granholm to convene a group of federal officials, electricity regulators, LNG terminal operators, fuel suppliers, and more.

Dangerous Warning?

Over at the Manhattan Contrarian, Francis Menton warns that “it doesn’t matter how much in the way of wind and solar facilities you build, you will still have long periods of blackout absent full backup from some dispatchable source.” Writing about the mess the UK is in, Mr. Menton says the biggest immediate bottleneck for the UK is that all U.S. facilities for cooling and compressing natural gas into LNG for export are already operating at capacity.

(From Reuters, March 25, 2022: “All seven U.S. LNG export plants, however, are currently operating at capacity and liquefying about 12.7 bcfd of gas. So, no matter how high global prices rise, the U.S. cannot produce anymore LNG – at the moment.”).

Years to Alleviate?

Mr. Menton discusses other bottlenecks that will take years to alleviate:

• shortage of LNG tankers to transport the fuel
• insufficient pipeline capacity from the Permian basin gas fields to the export facilities on the Gulf coast

It’s All in the Prep

According to CEO Nolan:

The need for action now is compelling. Many of the solutions require advance planning because they may require actions by regulators, finding new resources, chartering vessels, arranging for additional fuel deliveries, and other yet to be identified extraordinary actions.