The beginning of the natural gas summer marks pipeline maintenance season, and New England’s Algonquin pipeline (AGT) recently released its upcoming maintenance calendar. Although these dates and events are tentative, and this looks to be a lighter maintenance season than years past, the trends we are seeing have interesting implications for the region.
The most notable theme in this year’s maintenance calendar is that mainline capacity will not be lowered for summer seasonal capacity. This will be the first summer since 2013 where summer mainline capacity will not be reduced from winter levels. For example, by May 14, 2019, mainline capacity through Stony Point and Southeast lowered from ~1.8 Bcf/d in winter to 1.55 Bcf/d for the duration of the summer. Algonquin has printed an estimated capacity matrix through the end of September, and mainline capacity remains at winter levels throughout the summer.
The bulk of the scheduled mainline outages will take place between mid-April and the end of May this year, with several significant outages in between. Unlike last spring and summer, there are no prolonged outages, but there are some individual days with high impact. For example, capacity through Stony Point will be cut by 528 MMcf/d on April 17, 773 MMcf/d on May 19, and 926 MMcf/d on May 27. This period presents notable upside risk for AGT Citygate prices if weather and demand materialize strongly. After that period, the next truly significant outage does not occur until July 28.
As a side note, all significant mainline outages correspond with individual cleaning tool runs or in-line inspection tool runs, but some smaller outages do not. From May 2 through 4, mainline capacity will be reduced by up to 86 MMcf/d. This does not correspond with a maintenance event, although it appears to be the most significant unlisted outage. Furthermore, some capacity constraints on Stony Point and Southeast are not specifically compressor outages but are the result of pigging near the beginning of the line between Lambertville and Mahwah.
So, how does AGT spring and summer capacity fit into the wider market? Demand is lower in New England in the summer versus the winter, and residential/commercial heating demand gives way to power demand. Additional summer mainline capacity through Algonquin comes, at times, rife with a higher gas share of the stack due to cheaper gas, leading to non-gas generation retirements. The 680 MW Pilgrim Nuclear Plant in Massachusetts decommissioned on May 31, 2019, NYISO’s 1028 MW Indian Point Nuclear Plant’s Unit 2 is scheduled to retire on April 30, 2020, and Unit 3 will retire on April 30, 2021. Several recent gas builds throughout the Northeast started contributing more generation in light of the retirements, including the massive 1100 MW Cricket Valley Plant on Iroquois, the 680 MW CPV Valley Plant on Millennium, and the 350 MW Canal Unit 3 on Algonquin. This ~250 MMcf/d of previously unavailable summer capacity through Algonquin will give both NYISO and ISONE additional flexibility to ramp up power generation to meet the region’s dynamic power needs.
Overall, this spring and summer look to be a much less impactful maintenance season on AGT year-over-year. Coupled with cheap gas prices, this will allow gas to take even more of a share in the region’s power stack. At Genscape, we collect notices from over 190 natural gas pipelines and categorize data by date, market impact, and severity. For more information on our services, please click here.