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New England weighs Canadian gas imports

PROVIDENCE -- In just a few short years, New England may run short of natural gas.

Energy analysts predict that by 2010, and perhaps sooner, there won't be enough supply to fulfill the region's energy needs. But plans to build liquefied natural gas terminals in New England face stiff opposition.

Opponents say highly inflammable LNG is too risky to store in heavily populated areas, and security measures to protect tankers that bring in LNG shipments will be a burden. Some have proposed putting terminals offshore, but those plans worry fishermen and environmentalists.

One option proposed by Rhode Island's governor, Don Carcieri, and others is two new LNG terminals being built in Canada that can use an existing underground pipeline to deliver gas.

But the plan depends heavily on the goodwill of another government -- and its regulations -- for a crucial energy source. Some say gas from Canada could be more expensive, and there's no guarantee how much gas the New England market would get.

''You have elected officials that say, 'Let's build LNG facilities in the Maritime Provinces and bring the gas here,' " said Tom Kiley, president and chief executive of the Northeast Gas Association, a Needham trade group that supports building an LNG terminal in New England. ''Well, they don't have control over where that gas goes."

Long reliant on heating oil, New England came late to the natural gas market. Thirty-five percent of households in the region use natural gas, the lowest percentage among all regions of the country, according to the US Energy Information Administration. That compares with 55 percent of households nationwide.

But demand for natural gas in New England is expected to grow an average of 1.4 percent annually through 2025, according to the EIA -- a 35 percent increase in usage over that period.

While that level of growth may not seem extraordinary, the key is its effect during so-called peak days, when demand is highest and the system is strained.

Experts say supply is stretched thin even now during peak periods because the main and secondary pipelines operate at capacity. As recently as last January, the region endured a gas crunch when high demand put unexpected pressure on infrastructure and caused prices to spike.

Also, New England is at the end of the pipeline network and has no underground storage capacity, which can make it especially susceptible to weather problems or disruptions.

''We're close to capacity at peak days, and if that is affected by something we haven't planned for, then that's a cause for real concern," said John Shea, director of environment and energy programs at the New England Governors Conference.

About 80 percent of New England's gas now comes through pipelines from western Canada, US reserves in the Gulf of Mexico, and offshore deposits near Sable Island off the coast of Nova Scotia. The rest comes from ships transporting LNG to a terminal in Everett.

To help meet growing demand, energy companies have proposed at least seven LNG projects in New England, from Maine to Connecticut. Only one has received federal approval -- a proposed terminal in Fall River, but it's opposed by local and state officials from Massachusetts and neighboring Rhode Island.

Across the border in Canada, construction has already begun on facilities in New Brunswick and Nova Scotia, which are due to begin production in 2008.

The two plants could yield up to 2 billion cubic feet of gas per day -- nearly half of New England's the current maximum daily usage.

At the 29th Annual Conference of the New England Governors and the Eastern Canadian Premiers in August, American and Canadian officials discussed the LNG projects.

Carcieri, the conference's co-chair, said Canadians, unlike New Englanders, generally support the plants.

''Folks are comfortable with it and are anxious to have the economic opportunities that those developments bring," said a spokesman for Nova Scotia's Department of Energy.

Experts say the major cost would be transporting the gas through the pipeline, which Kiley estimates would be about $1.30 per million cubic feet. That compares to about 74 cents per million cubic feet to send gas through pipelines from the Gulf.

Other governors of states where LNG terminals are proposed have not said whether they support increasing dependence on Canadian gas.

Governor Mitt Romney has said he is open to reviewing proposals that aren't located in residential communities.

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