Massive oil burn during cold snap a 'disaster,' says state energy and environment secretary

The Fore River Energy Center's stack billowed in North Weymouth on Jan. 16. The plant can operate on either natural gas or ultralow-sulfur diesel fuel oil "depending on market conditions," owner Calpine says. During the recent frigid cold, many power generators with dual fuel capabilities switched to burning oil as the price of natural gas spiked.

BOSTON — During the frigid 15 days between Christmas and Jan. 9, power generators in Massachusetts burned about two million barrels of oil — more than twice the amount of oil they burned during all of 2016, Energy and Environment Secretary Matthew Beaton said Wednesday.

High demand for natural gas to heat power plants, homes and businesses during the cold created gas pipeline constraints that led to high natural gas prices and the corresponding increase in power production at less expensive oil- and coal-fired power plants, grid operator ISO New England said.

Beaton said power generators leaned on oil because the state does not "have enough capacity to begin to use that natural gas generation to actually produce our energy." Compounding the issue was the fact that Pilgrim Nuclear Power Station on Plymouth was offline for part of the cold streak.

The two million barrels of oil burned between Dec. 25 and Jan. 9 was more than four times the roughly 500,000 barrels of oil Massachusetts power generators had burned to that point in 2017 and more than double the total amount burned in 2016, according to data Beaton presented to the Senate Committee on Global Warming and Climate Change during an oversight hearing Wednesday.

"Economically, this is a disaster for us in New England. Equally as important, environmentally the emissions and the profiles of what occurred in this timeframe is nothing but a disaster," Beaton said. He added, "We can't ignore this and I think this has to be part of an honest conversation of how we look at the challenges facing our system."

To give the six-member committee — which on Wednesday was represented only by Sens. Marc Pacheco and Michael Barrett — a sense of the impact the significant increase in oil burning might have, Beaton equated it to the emission reduction requirements of the 2008 Global Warming Solutions Act.

"In those 15 days what we used in oil is the equivalent of approximately five percent of the total emissions reduction we need between 2014 and 2020," he said, referring to the requirement that Massachusetts achieve greenhouse gas emissions reductions of 25 percent below 1990 emissions levels by 2020.

That analogy did not sit well with Barrett, who said that the secretary's comparison was "confusing."

"One could imagine our having calculated that 15 days of oil burn and translated it into any number of effects that we can compare with. But translating the oil burn for 15 days to a percentage of the total emissions reductions needed is idiosyncratic, I think," the Lexington Democrat said. "This one strikes me as chosen to get a reaction."

Beaton responded, "You could put it a gazillion different ways, but there is no getting around the fact that in 15 days we burned 2 million barrels of oil."

"That's remarkable, that's more than what we do in an entire year and what it is really stressing is the stress that's put on our system," the secretary said. He added, "As time goes on and resources like Pilgrim are removed from the system, this is only going to get worse."

That message was one that federal lawmakers heard on Tuesday from ISO New England President and CEO Gordon van Welie, who testified at a hearing called by the U.S. Senate Committee on Energy and Natural Resources to examine the performance of the power grid during recent cold and storm conditions.

"Bitter cold temperatures drove an increase in demand for natural gas. However, we've known for several years that when it gets cold New England does not have sufficient natural gas supply infrastructure to meet demand for both home heating and power generation," van Welie said, according to testimony submitted to the committee. "Constrained pipelines resulted in substantially higher natural gas prices which led to much older and less efficient oil- and coal-fired power plants running 'in merit.'"

Between Dec. 25 and Jan. 4, the total U.S. natural gas demand averaged 127 billion cubic feet per day (Bcfd) and topped 100 Bcfd for 11 consecutive days, compared to an average demand of 93.5 Bcfd in January of last year, Federal Energy Regulatory Commission Chairman Kevin McIntyre told the committee Tuesday.

What McIntyre called "record-setting natural gas price spikes" also contributed to higher-than-usual wholesale energy prices. Day-ahead energy prices between Dec. 28 and Jan. 7 averaged $177 per megawatt hour (MWh) with a maximum price of $320 MWh at ISO-NE's internal hub, the FERC chairman said.

In her opening remarks at Tuesday's committee hearing, chairwoman Lisa Murkowski of Alaska noted that the issues facing the New England grid "in some respects could serve as a harbinger of challenges in other parts of our nation."

"Gas pipeline infrastructure remains too constrained," Murkowski said, according to written remarks provided by the committee. "Broader policy changes are not sufficiently taking into account increasing risks that, in future years, system operators may have to turn to intentional service interruptions — otherwise known as 'load shedding' or rolling blackouts or brownouts — to manage certain peak periods."

Massachusetts deals with some of the highest energy prices in the country and state leaders have been at odds over whether the state needs more natural gas pipeline capacity.

Beaton and Gov. Charlie Baker have a stated desire to increase natural gas capacity into the New England region, but Attorney General Maura Healey and some Democratic lawmakers have said additional capacity is not the best solution to meet the state's longer-term energy demand needs.

"There are disagreements out there in terms of capacity, just take a look at the attorney general's report," Pacheco told Beaton at Wednesday's hearing, referring to a 2015 report which concluded that new interstate pipeline capacity would have consumer price benefits but also carry significant up-front costs with risks for ratepayers of long-term commitments to pay for new infrastructure.

Regardless of the apparent natural gas pipeline constraints and the high wholesale energy prices that accompany them, ISO New England said Tuesday it does not see the financial support for new pipeline infrastructure coming soon.

"Despite several attempts on a regional and individual state basis to find innovative ways to finance new natural gas pipeline investment, ISO-NE does not see that investment materializing in the near future," van Welie told the U.S. Senate committee Tuesday.