Weather or not? Welfare impacts of natural gas pipeline expansion in the northeastern U.S.

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Abstract

1.3.3 Station 195 between Zones 5 and 6

• Gas injected at Station 195 flows northbound, and additional gas flows from Zones 5 to 6

Owners of gas at Station 195 prefer selling gas in Zone 6 more than in Zone 5. Thus the following must be true:

\begin{aligned} P_{6} - T_{195,6} > P_{5} - T_{195,5} \end{aligned}
(A.19)

For example, if the price in Zone 6 is $5/MMBtu, and the two transport costs both equal$0.25/MMBtu, this implies that the price in Zone 5 is less than \$5/MMBtu.

Furthermore, gas flowing from Zones 5 to 6 implies that the net withdrawal in Zone 6 is greater than the total injection at Station 195:

\begin{aligned} NW_{6} > I_{195} \end{aligned}
(A.20)
• Gas injected at Station 195 flows north, but no additional gas flows from Zones 5 to 6

In this case, condition (A.19) still applies. In addition, Zone 5 gas owners prefer not to send their gas to Zone 6, or:

\begin{aligned} P_{5} + T_{56} > P_{6} \end{aligned}
(A.21)

and Zone 6 gas owners prefer not to send their gas to Zone 5, or:

\begin{aligned} P_{6} + T_{65} > P_{5} \end{aligned}
(A.22)

Combining the two, we have:

\begin{aligned} P_{6} - T_{56}< P_{5} < P_{6} + T_{65} \end{aligned}
(A.23)

In this case, we say that Zone 6 is in autarky with respect to Zone 5.

• Gas injected at Station 195 flows both north and south

If gas injected at Station 195 goes both north and south, this implies that the net withdrawal in Zone 6 should be greater than zero but less than the total injection at Station 195:

\begin{aligned} 0< NW_{6} < I_{195} \end{aligned}
(A.24)
• Gas injected at Station 195 flows south, and additional gas flows from Zones 6 to 5

Assume that all of the gas injected at Station 195 goes south. This implies

\begin{aligned} P_{6} - T_{195,6} < P_{5} - T_{195,5} \end{aligned}
(A.25)

and that the payoff to sending gas south is greater than the payoff to sending gas north.

Given that all the injected gas flows south, it is also possible that Zone 6 gas would also flow south. In this circumstance, Zone 6 must have a net injection so that additional gas can be used for export:

\begin{aligned} NW_{6} < 0 \end{aligned}
(A.26)
• Gas injected at Station 195 flows south, but no additional gas flows from Zones 6 to 5

Condition (A.25) would still apply. In addition, autarky between Zones 5 and 6 implies that condition (A.23) must hold as well.

1.4 4: Scenario results

Below are the complete results for the equilibria found during our study period (Tables 15, 16, 17).

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Kleit, A., Lo Prete, C., Blumsack, S. et al. Weather or not? Welfare impacts of natural gas pipeline expansion in the northeastern U.S.. Energy Syst 10, 593–633 (2019). https://doi.org/10.1007/s12667-018-0292-x

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• DOI: https://doi.org/10.1007/s12667-018-0292-x