The eastern US is the nexus of growth in gas-fired generation, but combined-cycle capacity isn’t the only factor pacing this growth — gas pipeline constraints also limit the region’s transition from coal to gas. Two pipeline constraints cap gas-fired generation: into the Southeast on hot days (yellow areas in Figure 1), and into eastern market areas from Alabama to New England on cold days (light coral and light yellow areas). A third keeps nearby Northeast gas bottled up (coral area in Figure 1).
Depending on which constraints bind, eastern prices fall into one of five paradigms, ranging from gas-on-gas competition at the low end to gas-oil competition at the high end. Now, two cohorts of pipeline projects are under construction to bridge these constraints: Northeast-to-Southeast (green and blue lines in Figure 1) and Gulf-to-Southeast (purple lines). They will reshape the region’s gas flows and how often each paradigm prevails, driving basis differentials in the years to come.
Figure 1 | Eastern constraint regions and forthcoming pipeline projects