Friday -- February 20, 2015

Active rigs:

	2/20/2015	02/20/2014	02/20/2013	02/20/2012	02/20/2011
Active Rigs	127	183	184	200	171

RBN Energy: did oil and imported LNG save New England this winter? This is an incredibly interesting story. I will post it again as a stand-alone. In addition, a reminder: these articles are archived at the source.

The much-discussed shortfall in natural gas pipeline capacity into New England has been largely mitigated this winter because generators—encouraged by low oil prices and incentives to lock in backup supplies of oil and LNG—are ready, willing and able to switch their dual-fuel power plants away from pipeline natural gas and onto oil and LNG-sourced gas if market conditions warrant.

But now that prices for those fuels are more attractive, could switching to oil and imported LNG during winter’s coldest days and nights actually be a longer term solution to New England’s pipeline capacity problem instead of just a stopgap until new pipelines are built? Today, we begin a look at the changing economics of burning oil and LNG-sourced gas to help power New England when the region turns arctic, and what they may mean for proposed pipeline expansion projects.

This winter has provided some déjà vu to the power generation and fuel supply sectors in New England. As the season approached, oil (which was once, with coal, a fuel of choice for generators in the region) was being delivered to and stockpiled at the significant number of power plants in the region that can run on either natural gas or oil. More recently, imports of liquefied natural gas into the region’s LNG-receiving terminals spiked, with the expectation that LNG—like oil—will supplement and even displace gas piped into New England from the south and west when doing so makes economic sense. New England’s electricity market is highly competitive, and up-to-the-moment information about the degree to which oil (and LNG-sourced gas) is displacing piped-in gas for power generation is scarce. But, as we’ll get to in a moment, there are signs that this winter oil and imported LNG are playing out-sized roles.