Thank you for writing to me. Great questions. I like a guy who does his homework. The heat pump will need to go outside the shed. they need lots of fresh air. You just pop a couple of pipes through the wall of the shed. Usually not a problem. Gas in NJ costs a fortune. If the heat pump costs $100.00 a month to operate, a propane heater might cost $400.00 to $500.00 for the same heat. That is why I am sending so many more heat pumps to NJ than gas heaters. In fact NJ is the 3rd most popular place in the country for pool heat pumps. Your 1 HP pump motor is fine. For you size pool look at heat pumps over 100,000 BTU's unless you use a blanket all the time and that you can use an 70,000 through 80,000 BTU heater. I try to get May first through October first in the Northeast. If you want more than that you will need a heat pump that defrosts itself. I hope that helps. The fall is a good time to get the heater installed as prices have been going up 2X a year the last couple of years due to titanium , copper and plastic going crazy. Also pool guys and electricians are usually overwhelmed in the spring and it is nice to start up the heater as soon as you get some nice weather in April or May and not have to have someone fit the heater in the peak season.