New York turns on to shale gas, easing reliance on heating oil New York's meatpacking district where a new pipeline for shale gas is set to terminate The meatpacking district of New York has become a magnet in the past decade, home to boutiques, hotels and the popular High Line elevated park. On November 1, it will become a different sort of destination. The city's first major natural gas transmission pipeline in 40 years will terminate there, right next to the Renzo Piano-designed art museum under construction. IN US Society The pipeline shows how the fracking boom in the rural US is transforming the biggest metropolitan areas. Heating oil is so widely used in New York that futures deals for the fuel are settled in tanks lining its harbour. But environmental and market imperatives are turning the city on to gas. Mayor Michael Bloomberg put gas high on his agenda in a bid to improve air quality. A few hundred miles west, the Marcellus Shale of Pennsylvania has the fastest-growing gas supplies in the US, driving prices down in relation to oil. The $1.2bn pipeline built by Houston-based Spectra Energy would bring 800m cubic feet a day of gas from Pennsylvania, and elsewhere across the Hudson River, into Manhattan - enough to heat 2m homes. The future is gas. A lot of people are switching over," said a flagman directing traffic as workers coated pipe with steaming buckets of sealant at the terminus last week. Another company, Williams, has proposed a new spur from its existing Transco pipeline to the borough of Brooklyn. Liberty Natural Gas and Höegh LNG of Norway are seeking to build a liquefied natural gas port offshore to deliver batches by ship during cold snaps. The Bloomberg administration outlined a "critical need for additional natural gas capacity" in its long-term urban plan. The city has outlawed burning heavy fuel oil, known as number 6, after 2015, prompting many landlords to convert to gas. "With gas prices nearing historic lows and expected to remain below oil prices for some time, building owners have the unique opportunity to upgrade their heating systems while generating a return on their investment," the plan said. New York's thirst for gas comes as the state government mulls whether to lift a ban on hydraulic fracturing, which critics say threatens to contaminate water supplies and leak methane, a potent greenhouse gas. Even without contributions from New York state, gas production in the northeast of the US has climbed more than 500 per cent since 2005 as fracking grows in the Marcellus, according to Bentek Energy. The new pipeline has therefore become enmeshed in bigger debates about the wisdom of fracking. A city consultant estimated that northeastern fields will supply almost 90 per cent of New York City's gas needs by 2030, from 13 per cent in 2005. "This is a very simple equation: the more buildings that switch to gas, the more fracking will happen," Sane Energy Project, a group formed in opposition to the pipeline, wrote in a letter to federal regulators last year. In New York state, 29 per cent of homes heat with oil, compared with a US average of 6 per cent, according to the Energy Information Administration. But oil has been losing share to gas, which sells for a discount of as much as 65 per cent per thermal unit, according to Con Edison, the New York utility. "Obviously, it's difficult, because we are in competitive markets," said John Maniscalco of the New York Oil Heating Association. Right now, natural gas has the price edge. Mr Maniscalco held out hope the advantage would not last. Don't think it'll stay like this forever. Once they start exporting natural gas, you're going see an entire flip-flop," he said, referring to LNG export projects recently approved by the Obama administration. For the hedge funds, banks and merchants that participate in wholesale gas markets, the arrival of new pipelines threatens a lucrative trading niche. The Transco Zone 6 market hub at the edge of New York City has traditionally been volatile, with spot prices 1,000 per cent higher than benchmark gas on one day last January. "It's just not going to be as extreme as in the past because of the new supply," said a senior executive at an energy trading company.