The Wall Street Journal is reporting that analysts now believe New England could suffer from blackouts this winter as more shipments of liquified natural gas (LNG) flow to the tight market in Europe.
The report noted that demand for LNG is surging across the Atlantic, as dwindling gas flows from Russia need to be replaced in the EU. However those supplies are also vital to electricity production in the northeastern region of the US, encompassing Maine, Vermont, New Hampshire, Massachusetts, Connecticut, and Rhode Island. During peak demand in the winter, those states all require additional LNG imports from abroad to meet their surging winter demand, due to limited pipeline infrastructure, according to the Energy Information Administration. Due to the Jones Act, they cannot purchase American LNG, due to a restriction on ship movements between US ports which excludes all LNG transport vessels from transporting goods from one US port to another.
In addition, the prices of LNG in Europe make it a more attractive customer for American firms looking to sell LNG. While prices in New England for LNG rarely exceed $30 per million British thermal units, the European benchmark price for natural gas is over $100 per British thermal units.
Earlier in the year some New England governors wrote to US Energy Secretary Jennifer Granholm, asking for the Jones Act to be waived or ended, so that US LNG could be shipped from one US port to another, however so far there is not word on whether there will be any changes to the act implemented.
The crisis will be worsened by any extended cold spells, as it is expected limited gas supplies would be redirected from electrical generation to home heating. ISO New England, the region’s power grid operator, predicts that they may need to employ rolling blackouts to balance supply and demand for electricity. Experts also say the shortage might require utilities to purchase gas on the spot market which would be much more expensive, and result in much higher energy bills.