Everett LNG Terminal at the Crossroads

The surge in natural gas production in the United States as a result of the shale boom has reversed long-standing assumptions about the nation’s energy future and the need for imports. Facilities such as Cove Point in Maryland and Sabine Pass in Louisiana that were built to import liquefied natural gas (LNG) over the past few decades have fallen idle, and their owners are now moving rapidly to convert them to export terminals. The possibility of large-scale LNG exports has seized the nation’s attention, leading to multiple congressional hearings and extended debate about their impact on the domestic energy market.

But there is one LNG facility that has held steadfastly onto its role as an importer, with little sign of relinquishing its importance: the Everett Marine Terminal in Massachusetts.

The Everett facility, located on the Mystic River in Boston Harbor, has been operating continuously since 1971, longer than any other import terminal in the U.S. Owned and operated by Distrigas of Massachusetts (DOMAC), a subsidiary of GDF Suez North America, the terminal currently supplies about 20% of New England’s annual natural gas demand.

The New England region has struggled with gas supply bottlenecks for decades, but until recently, the problems did not threaten reliability of the grid. Since 2000, however, the area has added a significant amount of gas-fired capacity as tightening environmental regulations have forced the shutdown of much of its coal capacity and skyrocketing oil prices have made oil-fired generation unprofitable except in situations of extreme demand. The result has been a shift from a balanced portfolio to one dominated by gas: The New England Independent System Operator (ISO-NE) region now gets more than 50% of its electricity from gas.

But pipeline capacity into New England has lagged well behind the shift in generation, causing serious constraints during periods of high demand in the winter and summer. This past winter, during January and February, ISO-NE faced repeated episodes of gas-fired plants being unable to respond to startup orders because of a lack of fuel. The situation has become severe enough that ISO-NE has warned that long-term reliability is at risk unless the gas supply bottlenecks can be addressed.

This makes the Everett terminal a critical resource for New England even as the rest of the nation ponders exporting its excess gas. For Everett’s customers, an excess of gas is a fantasy for the future.

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