Spectra Energy to Boost Gas Capacity in New England - Analyst Blog

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Spectra Energy Corporation 's ( SE ) share price dropped 0.3% following the news of the company's intention to boost natural gas pipeline capacity in the New England Market to meet the demand for reliable electric power generation, along with Spectra Energy Partners ( SEP ).

The New England governors' latest proposal on new energy infrastructure and the expectations of a Request for Proposal to be started by The New England States Committee on Electricity (NESCOE) has prompted these plans for expansion of the Algonquin and Maritimes pipeline systems.

As per the letter dated Jun 27 to NESCOE, this expansion is expected to create a capacity of about 1 billion cubic feet per day. This new capacity excludes Spectra Energy's earlier announced Algonquin Incremental Market (AIM) and Atlantic Bridge projects. The timing of NESCOE's process will influence the commissioning of the project.

Spectra Energy will offer various services to New England such as the supply of natural gas on peak days, new innovative services, direct access to low-cost cost natural gas supplies, and cost effective solutions that limit price volatility and generate annual savings to consumers. The company will also be able to expand its operations with the rise in demand..

The de-bottlenecking of the pipeline system, aided by the company's Algonquin Incremental Market expansion project is expected to begin by the winter of 2016. This will increase the reliability and reduce natural gas prices in New England. Notably, AIM has long-term capacity contract commitments from gas utility companies across New England.

The Atlantic Bridge is scheduled for commissioning in Nov 2017 and will be similarly supported by gas utilities. Moreover, Spectra Energy's latest move will help in supplying the required additional firm supplies directly to the power generators and hence, solve the electric reliability issue.

Currently, Spectra Energy carries a Zacks Rank #3 (Hold). Meanwhile, one could consider better-ranked players in the same sector like Encana Corp ( ECA ) and EQT Corp. ( EQT ), both of which sport a Zacks Rank #1 (Strong Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: EQT , SE , ECA , SEP

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