Enbridge Revives Algonquin Pipeline Expansion as New England Gas Constraints and Data Centre Demand Collide

Enbridge Revives Algonquin Pipeline Expansion as New England Gas Constraints and Data Centre Demand Collide US gas inventories sit 8% above last year while NYMEX Henry Hub holds below $3, but New England pipeline bottlenecks and data centre load growth threaten regional price spikes. Enbridge launched an open season this week to revive a proposed expansion of its Algonquin natural gas transmission system serving New England. The move comes as the region's grid operators grapple with rising power demand from data centres, persistent pipeline constraints, and a regulatory battle over returns that could determine the pace of infrastructure investment for the next decade.⁵ NYMEX Henry Hub front-month futures closed around $2.86, posting a modest gain after briefly dipping toward $2.75/MMBtu on short-term weather fluctuations. Natural gas prices rallied nearly 2% on Monday as warmer-than-normal weather forecasts covered most of the US east and west coast, driving cooling demand expectations higher. Support held near the 10-day moving average at $2.91.^1,4 The national storage picture looks comfortable. Working gas in storage fell by 52 billion cubic feet for the week, well below the five-year average withdrawal of 168 Bcf. Inventories are now 141 Bcf higher than a year ago, about 8% above last year's level. At the national level, there is no supply crisis.² But New England is not the national average. The region's pipeline capacity into the northeast has been constrained for years, and winter price spikes in the Algonquin city-gate regularly decouple from Henry Hub. Enbridge's open season signals that the commercial appetite for expansion capacity exists, even as New England states and consumer advocates push back against higher returns on equity for transmission owners.⁵ The production side is lean enough to keep prices supported. EIA data showed average total supply of natural gas fell 1% compared with the previous report week. Dry natural gas production decreased by 1%. Average net imports from Canada declined 11% as Rover began deliveries into the Vector pipeline, driving an increase in US exports to Canada. Supply is adequate but not growing.⁴ Data centres are adding a new demand layer that the existing grid was not built to serve. US regional grid operators outside of Texas have requested extensions on federal deadlines to upgrade transmission infrastructure and improve capacity levels. FERC directed these upgrades in late 2021, but the physical work of expanding the grid is proving slower and more contentious than the regulatory timeline anticipated.⁶ The tension between new demand and old infrastructure is sharpest in the US northeast. A proposed federal rule would speed up grid connections for curtailable data centres, allowing them to connect before full grid upgrades are completed. The optimistic case is that data centre demand pays for power infrastructure upgrades that benefit all users. The nightmare scenario is that concentrated demand forces grids into reliability emergencies during peak periods.⁷ In Europe, a parallel fight over energy returns is playing out. Five EU countries are pushing for a new windfall tax on energy firms. Green investors warned Montel that the proposal risks "spooking" renewables investors, distorting markets, and failing to reduce fossil fuel use. The pattern is consistent across both continents: policymakers want cheaper energy and faster infrastructure, but the regulatory signals they send make investment harder to justify.³ Comstock Resources illustrates the bull case for gas-levered producers. The company's production is 100% natural gas, and the Zacks consensus estimate for 2026 earnings per share implies a 37% year-on-year surge. Pure-play gas E&Ps are positioned to benefit if prices hold near current levels and demand growth from power generation and LNG exports continues to tighten the market.² The signal to watch is whether Enbridge's Algonquin open season attracts sufficient commitments to move forward. If it does, New England gains incremental pipeline capacity that would moderate future winter price spikes. If it stalls on regulatory pushback over returns, the region remains exposed to the same constraints that have driven Algonquin city-gate basis blowouts in every cold snap for the past decade.⁵