Assessing Pipeline Adequacy to Meet Natural Gas Demand for Electricity Generation: New York State Case Study

Abstract

A conceptual framework and modeling approach are presented for assessing pipeline adequacy to meet existing and future demands for natural gas in electricity generation after gas demands for traditional end users have been met. Transportation logistics and economics issues are identified that natural gas (and electric) suppliers face in trying to meet traditional and electricity generation gas demands. An integrated electric and gas modeling approach is used for this purpose. The approach uses separate models for electric and gas systems. Consistent equilibrium solutions are obtained by iterating between the two models. The economic decisions and logistical issues facing the gas and electric industries are quite stark. The incentives of the two industries need to be realigned to achieve greater electric efficiency, reliable generation, and better air quality at a reasonable cost. As a detailed case study of the modeling approach, results are presented from an analysis of the ability of the natural gas delivery system to meet future electricity generation requirements in New York State. The analysis integrates the modeling of the gas demands of New York State electric generators with the modeling of available gas supply and delivery capacity to the state. Although the analysis indicates that the gas and electric systems in New York can reliably meet their future loads under a range of electricity generation and gas pipeline expansion scenarios, oil use by electric generators remains a key substitute for gas during times of peak gas demands (e.g., cold winter days).