Introduction
The price spread for natural gas between NYMEX
November and NYMEX February contracts is currently
over $2.20 per MMBtu, offering a profitable margin
to most gas-storage operators. Needle-peaking
markets, however, like those served by LNG peakshavers
require much higher margins. The good news is
that, given supply constraints to states east
of the Appalachians and in the Northwest, needle
peak prices commonly exceed summer prices by $10/MMBtu.
At this premium, LNG peakshavers can provide handsome
returns.
Consequently, proposals for new peakshaving plants
are beginning to pop up in the eastern and northwestern
United States and southern Canada. Some developers
are downscaling their projects to vacuum-jacketed
tanks commonly manufactured for LNG-powered transportation
markets.
One regional market that where LNG peakshaving
demand is growing rapidly is the Southeast. Since
1973, winter load (Dec-Feb) has grown more than
twice the rate as annual base-load demand. Consequently,
Atlanta Gas Light (AGL) is expanding its LNG peakshaving
capabilities across five plants. AGL’s largest
unit in Riverdale, Ga., stores 2.6 Bcf and can
empty the tanks in just six days. It now owns
units at Ball Ground, Ga.; Macon, Ga. and Chattanooga,
Tenn.; and one at the end of the Columbia pipeline
in Virginia.
What is the demand for LNG peakshaving, given
the recent prosperity in gas storage? How will
an abundance of new LNG terminals change LNG peakshaving
markets? Will trucking become more common as new
satellite plants are built in the Southeast and
mid Atlantic? How have construction costs changed
and is downscaling easier due to more tank availability?
These are some of the questions before this conference. |
