The People of America's Oil and Natural Gas Indusry

New England, Infrastructure and Energy Costs

Mark Green

Mark Green
Posted August 28, 2015

There’s a new report out this week that says energy infrastructure constraints have cost New England at least $7.5 billion over the past three winters – while cautioning that failing to expand natural gas and electricity infrastructure will cost the region’s households and businesses $5.4 billion in higher energy costs between 2016 and 2020. Other key findings in the report by the New England Coalition for Affordable Energy:

  • Without additional infrastructure, higher energy costs will lead to the loss of 52,000 private-sector jobs over the same time period. In all, a lack of infrastructure investment could mean 167,000 jobs lost or not created.
  • A reduction in regional household spending of $12.5 billion
  • $9 billion in foregone infrastructure construction activity

Alvaro Pereira of La Capra Associates, one of the study’s authors:

“While prior studies have examined the need for specific projects or types of infrastructure in the region, this study examined multiple types of infrastructure to reduce energy costs including natural gas pipelines, electricity transmission lines, renewable and non-renewable electricity generation. This involved sophisticated and multifaceted modeling coupled with the use of realistic assumptions to capture the interactions among natural gas and electricity infrastructure systems in New England.”

The report underscores what many in New England probably have known – a region that is increasingly turning to natural gas for power generation, rising to 40 percent of the region’s demand, has not seen pipeline infrastructure keep pace. The lack of needed infrastructure has serious implications for the regional economy and individual households. The report:

Regional environmental policies and federal environmental requirements are contributing to decisions to retire older generating plants. These anticipated retirements will require replacement generation. This replacement generation is expected to be primarily powered by natural gas and wind, which will in turn require expanded natural gas pipeline capacity and new transmission lines to move electricity to and within the region. Underinvestment in infrastructure due to external constraints ensures persistent and increasing energy prices and costs for the region. Such costs make it difficult for businesses to maintain competitiveness, which undermines the region’s ability to retain and attract jobs. In addition, higher costs reduce disposable income for families, affecting their quality of life.

The report says in an unconstrained scenario, additional natural gas supply of 1.7 billion cubic feet per day (beyond existing 3.9 Bcf/day) could be assumed from new pipelines. Additions also are assumed for electricity transmission, renewable generation and non-renewable electric generation. A chart from the report:

infrastructure

Carl Gustin of the coalition:

“The positive news is that infrastructure projects have been proposed, and some are under way, that would mitigate or eliminate these adverse consequences (projected in the report). It’s clear that energy infrastructure is needed to provide New England households and businesses with more affordable energy, but timely decision-making by regulatory and permitting agencies is necessary if the region is to achieve more affordable prices for consumers and improved competitiveness for employers.”

While different parts of the U.S. have specific energy and energy infrastructure needs and issues, New England generally reflects overall infrastructure needs in the United States, while affirming the hard work needed to plan and complete projects.

According to IHS, essential infrastructure investments in just the oil and natural gas sector could spur up to $1.15 trillion in new private capital investment over the next 10 years, support 1.15 million new jobs and add $120 billion on average to national GDP. For investment and infrastructure construction to occur we need sound policy decisions and fair regulatory processes, as well as effective company engagement to secure buy-in from communities

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.