Category Archives: Economy

What’s the Impact of a Recession on Natural Gas?

From Allegheny-Blue Ridge Alliance ABRA Update #268, March 19, 2020:

Growing speculation about a possible economic recession triggered by the COVID-19 pandemic has begun to raise questions about the impact on the natural gas market. A March 9, 2020, commentary by Andrew Bradford, CEO of BTU Analytics, notes that declines in natural gas demand in 2020 could decline by as much as 5%, or 4.2 billion cubic feet per day. Continuing, he says:

“Considering the US gas market was already expected to be long supply following a weak winter 2019-2020, an additional 4.2 Bcf/d is a lot of length to manage into an already long summer gas market. Add in an oversupplied global LNG market and the US gas market could be further awash in supply if demand falters. While US operators are slashing CAPEX (capital expenditures) in the face of falling oil prices, the risk of demand shocks to the system may overwhelm the CAPEX declines.”

Natural Gas: A Bridge to Climate Breakdown

A new report from As You Sow, Natural Gas: A Bridge to Climate Breakdown, informs investors about the evolving risks associated with the use of natural gas within the power sector.

At a time when investors are paying increasing attention to power utilities’ exposure and contribution to climate change impacts, natural gas infrastructure build-out is expanding rapidly in the United States. As coal’s inevitable decline within the energy system continues, natural gas, which is largely replacing it, is a growing source of climate concern. In isolation, risks to future cash flow for individual projects may seem minimal, but examination in aggregate reveals a different picture – that investment in new natural gas infrastructure is incompatible with long-term shareholder and societal well-being.

Building Pipelines Is Unnecessary

An excellent compilation of information by Mothers Out Front!

From the vantage point of Norfolk and Hampton Roads, Mothers Out Front presents a full and fully documented case against the Atlantic Coast and Mountain Valley fracked gas pipelines and their effects.

They say, “We believe that the construction of the Atlantic Coast Pipeline (ACP) and Mountain Valley Pipeline (MVP) is unnecessary and will cause serious, lasting and expensive harm to America’s public health, economy, and environment. It seems shortsighted to build pipelines designed to carry fossil fuels, with a cost that customers will bear for over 40 years, when it is likely that 10 years from now those fossil fuels will no longer be used or wanted. This is akin to buying typewriters as computers were developed, or buying Blockbuster stock as Netflix took off.”

They document pipeline effects and explain in detail why Mothers Up Front opposes new local or intrastate natural gas pipelines. They provide a detailed timeline indicating ways “the affected states are starting to realize that these pipelines are not in their best interests”

They state, “One fundamental issue is that the ACP and MVP pipelines are not necessary — existing pipelines are adequate to serve customers for the projected future,” and provide an extensive listing of a wide variety of in-depth resources as background material.

Be sure to check out this new and excellent Web page!

Everybody Loses

In his January 2020 report, Why Support for the Atlantic Coast Pipeline Adds Risks to Shareholders and Ratepayers, Tom Hadwin, a former utility company executive and a member of the Steering Committee of the Allegheny-Blue Ridge Alliance, clearly explains why both stockholders and customers are losers in the Atlantic Coast Pipeline should be built.

His Executive Summary states:

  • Continued efforts to complete the Atlantic Coast Pipeline (ACP) are fraught with risks.
  • A huge surplus of generating capacity exists within the region. S&P Global Market Intelligence says we have a glut of gas-fired generation. The surplus capacity in the PJM region is growing and will last past 2050.
  • About 80% of the capacity of the ACP was reserved for new power plants. Large gas-fired facilities, once thought necessary when the pipeline was proposed, have been cancelled or significantly postponed.
  • Existing pipelines serving Virginia and the Carolinas have already increased in capacity by more than what the ACP would provide.
  • Our region has access to all the gas we need without the Atlantic Coast Pipeline.
  • Rather than saving us money, the ACP will add tens of billions of dollars to our energy costs in just 20 years.
  • Utility customers will be asked to pay in full for the capacity reservations on the ACP whether all of it is used or not.
  • The full report expands on these points, and also provides a summary of the ACP’s revoked permits and legal obstacles.

Reminding us that numerous recent articles document over and over a long-term glut of natural gas-fired power plants, a long-term glut in natural gas supplies, and a decreasing demand for natural gas, Hadwin says, “There is no reason to burden families and businesses in Virginia and North Carolina with more than $30 billion in added energy costs for an unnecessary pipeline.”

He concludes, “To embrace the future, our energy companies must cut the chain that ties them to the outdated business model that keeps their thinking confined to the options that worked well in the 20th century. They can embark on that new path by cutting loose the Atlantic Coast Pipeline. New opportunities arise when tough decisions are made.”

New Paper Underscores Lack of Need, High Risks of the ACP

The following announcement from the Allegheny-Blue Ridge Alliance (ABRA) appears in their ABRA Update 261 for January 30, 2020.

“Continued efforts to complete the Atlantic Coast Pipeline (ACP) are fraught with risks” to investors, ratepayers and those who live along the route of the ACP, according to a new paper released January 30 by ABRA. “Why Support for the Atlantic Coast Pipeline Adds Risks to Shareholders and Ratepayers” is authored by Thomas Hadwin, a former utility executive who is a member of ABRA’s Steering Committee.

Hadwin points out that since 2014, when the ACP was proposed, existing pipelines serving Virginia and the Carolinas have increased in capacity more than the ACP would provide. The paper explains that the cost for Dominion subsidiaries to use gas from the ACP would be over four times as expensive as gas transported by the Transco system, where sufficient capacity exists. The same would be true for Duke Energy’s subsidiaries.

Describing the environmental risks associated with the project, the paper notes that over 150-miles of the ACP route – one-fourth its length – would traverse terrain that is landslide prone. ABRA will be releasing next month a study on the landslide threat to pipelines built through the central Appalachian region. The paper concludes: “We have an overabundance of gas-fired generating capacity and gas transmission pipeline capacity. The Atlantic Coast Pipeline is not a solution. It is part of the problem.