Maritimes and Northeast Pipeline owner wants to retrofit pipeline to bring gas from south

Posted Feb. 12, 2014, at 5:27 p.m.

The owner of the Maritimes and Northeast Pipeline has announced plans to retrofit its pipeline to allow it to carry natural gas from southern New England into Maine, the opposite direction of the pipeline’s original purpose.

Houston-based Spectra Energy, which is majority owner of the Maritimes and Northeast Pipeline, is willing to make the needed investments to make the pipeline “bi-directional” if it can secure the customers to make it economically feasible, Richard Kruse, Spectra’s vice president of regulatory affairs, told the Bangor Daily News on Wednesday.

The Maritimes and Northeast Pipeline was built in 1999 to carry natural gas from drilling rigs off the coast of Nova Scotia through Maine and into southern New England. It crosses the border in Baileyville, passing through Brewer, Searsmont and Portland before heading south to the Boston area.

It originally was built to carry 800 million cubic feet of gas per day south, but it has been operating on average at half that capacity or less for the last few years because the offshore projects are not yielding as much gas as anticipated, Kruse said. That, coupled with national shifts in the market for natural gas, makes the prospect of reversing the flow of the Maritimes and Northeast Pipeline an attractive option for the company.

While other areas of the country are benefiting from historically low prices for natural gas because of abundant amounts coming from the areas around the Marcellus Formation, Maine has missed out because the existing pipeline infrastructure needed to bring natural gas into New England is not sufficient to meet demand. As a result, industrial users of natural gas — such as paper mills — face rocketing costs, especially during the winter months when demand peaks.

Spectra’s multimillion-dollar effort to bring more natural gas into New England, which it’s calling the Atlantic Bridge project, would contribute to increasing that capacity and hopefully lowering costs of natural gas in Maine.

The company has announced what’s called an “open season,” which means it’s soliciting interest from potential customers who are willing to enter into contracts for gas that the Maritimes and Northeast Pipeline and the Algonquin pipeline would bring north from the Marcellus Shale and other sources of natural gas in Pennsylvania, Ohio, New York and West Virginia. Besides its Maritimes and Northeast Pipeline, the project also involves the Algonquin Gas Transmission Co., Spectra’s pipeline in southern New England.

Kruse said the company has secured an “anchor” customer: Unitil, which is Maine’s largest provider of natural gas. Even if no additional customers are secured, Unitil’s commitment to buy 100 million cubic feet of gas per day would be enough to go ahead with the project, Kruse said.

Though it’s too early to tell, if other customers sign on, that additional capacity could increase to 600 million cubic feet of gas per day.

Pipeline companies are required by the Federal Energy Regulatory Commission to have contracts secured before building new pipelines or expanding existing ones. Spectra would need to receive a certificate from FERC to move forward with the infrastructure improvements required by the Atlantic Bridge project.

The “open season” to recruit additional customers will run until the end of March.

Spectra’s announcement was welcomed by Patrick Woodcock, director of the governor’s energy office, who has worked with colleagues in other New England states to find a way to increase pipeline capacity into the region.

“I think it really is the first step in a realignment of our natural gas infrastructure to increase utilization of affordable and stable natural gas supplies from domestic resources,” Woodcock said Wednesday.

Gov. Paul LePage’s administration announced in early December a joint initiative with governors from the other New England states to work together to increase the natural gas pipeline capacity into the region.

Woodcock said Spectra’s plans, while good news, wouldn’t alone solve Maine’s energy problems when it comes to natural gas prices. The plan would expand the amount of natural gas entering New England by at least 100 million cubic feet of gas a day, but Woodcock said his office estimates it would take an increase of at least 1 billion cubic feet a day to significantly reduce natural gas prices in the region.

Beyond the fact that every little bit helps, Woodcock said Spectra’s plan is good news because it gets the ball rolling on the regulatory process.

“What is really critical about this decision is it starts the regulatory process and allows the New England states to examine if we can participate in getting the volume up and the capacity to a degree where we really are supplying Maine and New England with low-cost natural gas,” said Woodcock.

It’s too early to tell, but if there’s strong response from customers, the Atlantic Bridge project may require the replacement of portions of the Algonquin pipeline with larger diameter pipe to accommodate the flow into New England. However, Kruse said that would not be necessary in Maine, where the Maritimes and Northeast Pipeline is already a larger-diameter pipe. He said the only infrastructure improvements necessary in Maine would be additional compressor stations, but where and how many are questions that won’t be able to be answered until they know where the gas is going.

The Atlantic Bridge project would not be completed until 2017.

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