Distrigas of Massachusetts said that, through its affiliate GDF Suez Gas, it has entered into a series of contracts to sell approximately 9.5 billion cubic feet of LNG to New England gas utilities to help meet those utilities’ peak demand for natural gas in the 2015/2016 winter and beyond.
The LNG will be delivered over the summer and stored by those utilities until required this winter, the company said in a statement.
In a significant long-term supply arrangement, Distrigas has concluded an agreement to supply a large New England natural gas utility with 6 Bcf of LNG this year and at least 3 Bcf of LNG per year from 2016 – 2024.
LNG is anticipated to play a crucial role in protecting the region from natural gas price spikes on the spot market provided that utilities and other customers such as power generators contract in advance for LNG. This past winter, the region was protected from price spikes in natural gas thanks in large part to 39 Bcf of LNG supply that was consumed in the region and supplied by various providers, including 21.3 Bcf supplied from the Distrigas terminal. This LNG didn’t require any additional infrastructure investment or expansion, and energy prices fell by more than 20 percent for many customers.
New England lies at the end of the U.S. and Canadian pipeline systems, and there is no natural gas production or underground storage caverns in New England. Natural gas utilities are able to truck and store LNG in facilities above ground, then vaporize and inject the gasified LNG into their delivery systems when and where it is needed to meet consumers’ needs. The New England region is capable of storing about 20 Bcf of LNG in above ground storage facilities; hence LNG is an important element in regional diversification of natural gas supply, utilizing existing LNG import, transportation and storage infrastructure.
For both the short- and long-term contracts, the LNG will be trucked from the Distrigas Everett Marine Terminal just north of Boston to the utilities’ LNG facilities across New England. Deliveries began in April.