Introduction

The Northeast (NY, MA, NJ, CT, RI, VT, NH and ME) got very lucky in the winter of 2005/06. Near record warm temperatures kept space heating demand in check. Residential gas deliveries, which in a normal winter represent between 40% of the total gas market, fell by 13% from 4.5 Bcfd in Jan 2005 to 3.9 Bcfd in Jan 2006. As a result, city gate prices in Boston, which had been poised for major spikes after the summer hurricanes, fell nearly $4/MMBtu from October to January to around $13/MMBtu. As a reminder of what cold weather could have done, however, just across the Atlantic U.K. soared above $40/MMBtu as cold weather gripped the market in late winter.

Will the Northeast be so lucky in 2006/2007 or will it take its turn for a cold snap as happened in 2003, when residential consumption nearly broke 5 Bcfd? What are short-term supply measures should temperatures fall? The market is fragile. Too little gas and prices will spiral out of control.

Furthermore, how will the market supply new sources of gas for the next decade? Residential consumption grows on average 1.5% per year, but most LNG projects are stalled. With expansions at Everette limited and proposals for expansions at Cove Point challenged, only the Canaport and/or Bear Head on Canada's southeast coast seem to be moving ahead. Lucky for the Maritimes & Northeast Pipeline.

So, how will the Northeast gas market shake out over the next ten years? Where will LNG ultimately land? Will basis differentials continue to favor Maritime & NE or can Transco, Algonquin or TGP find new supplies? How will storage operators benefit? Will we see more peakshaving plants, especially for-profit plants built outside of regulated utilities? This conference will address these and other issues.