Want To Lower Prices and Pollution? End Restrictions on Liquefied Natural Gas, State Officials Say

Printed from: https://newbostonpost.com/2018/12/18/want-to-lower-prices-and-pollution-end-restrictions-on-liquefied-natural-gas-state-officials-say/

By Colin A. Young
State House News Service

As cold weather and higher electricity prices start to encroach, Massachusetts energy officials want to lobby the federal government to ease restrictions on shipments of liquefied natural gas into New England in hopes of controlling costs and improving reliability in the energy grid.

When winter hits — it officially begins on Friday — the demand for natural gas to heat homes and to generate electricity exceeds the supply of natural gas being delivered to the state via the existing pipeline infrastructure. Instead, power generators must rely on shipments of liquefied natural gas and oil to generate enough electricity for the grid.

Even though liquefied natural gas is produced fairly cheaply in the United States, the New England region has to get its shipments from Trinidad and Tobago because of a 1920 federal law called the Jones Act that prohibits the transportation of any cargo between U.S. ports unless the ship was built in the country and is owned by U.S. citizens.

In an energy report released last week, the Executive Office of Energy and Environmental Affairs said there are so few LNG tankers that comply with the Jones Act that the cost to import domestic liquefied natural gas is prohibitive.

“The issue is magnified with regards to natural gas because the U.S. has cheap and plentiful natural gas, but no Jones Act-qualified carriers. Accordingly, Massachusetts imports LNG from Trinidad and Tobago, while U.S. gas is sent overseas on foreign-flagged ships,” the office wrote. “When pipeline natural gas supply is constrained, the lack of a fleet of Jones Act qualified tankers means a bigger price spike due to the need to import LNG from foreign ports.”

So the Baker administration, with the support of the rest of the New England governors, is planning to try “working with federal officials to explore modifying the Jones Act to facilitate shipping of LNG from domestic sources,” Massachusetts Department of Energy Resources commissioner Judith Judson said last week.

The Jones Act has been suspended or amended before, often in the wake of a natural disaster when the government wants to maximize the number of ships that can help deliver relief aid. The state Office of Energy and Environmental Affairs said such a waiver or exemption “could be done permanently or semipermanently to ensure a reliable and affordable supply of LNG to Massachusetts consumers.”

The New England region is one of the only parts of the country that still imports large quantities of foreign liquefied natural gas, according to the U.S. Department of Energy. Four of the country’s 11 LNG-receiving terminals had taken shipments of foreign liquefied natural gas this year through October, but the terminal in Everett took shipments each month and has accounted for 84 percent of the imported volume — 48 billion cubic feet.

In 2017, the United States exported about 1.94 billion cubic feet of domestic liquefied natural gas per day, according to the U.S. Energy Information Administration.

“Enabling delivery of domestic LNG shipments into New England may reduce costs and improve our fuel security while reducing our energy reliance on foreign nations,” the energy plan said.


‘Nothing But A Disaster’

On a peak energy consumption day in the winter of 2015, natural gas use in Massachusetts was 44 percent above the available natural gas delivery capacity, the state Office of Energy and Environmental Affairs said, making the state dependent on stored fuels such as liquefied natural gas and dirtier fossil fuels like oil.

With demand for natural gas to heat power plants, homes and businesses high during a frigid stretch between Christmas 2017 and January 9, 2018, Massachusetts power generators burned two million barrels of oil — more than twice the amount of oil they burned during all of 2016 — in order to produce sufficient electricity, Energy and Environment secretary Matthew Beaton told lawmakers earlier this year.

“Economically, this is a disaster for us in New England. Equally as important, environmentally the emissions and the profiles of what occurred in this timeframe is nothing but a disaster,” Beaton said.

Massachusetts deals with some of the highest energy prices in the country, and state leaders have been at odds over whether the state needs more natural gas pipeline capacity. Baker and Beaton have a stated desire to increase natural gas capacity into the New England region, but Attorney General Maura Healey and some Democratic lawmakers have said additional capacity is not the best solution to meet the state’s longer-term energy demand needs.

In the wake of last winter’s cold snap, a French tanker with a shipment that included gas from a new export terminal in Siberia owned by a Russian company subject to U.S. sanctions delivered gas to the Everett terminal.

“It is ironic that Massachusetts is importing Russian gas, while European nations are looking to reduce their dependence on Russian gas by building LNG import terminals and signing memorandums of understanding with U.S. firms,” the Institute for Energy Research wrote in a paper published in April. “The irony is enhanced by the U.S. position as the number one producer of natural gas in the world.”