PG&E proposes pipeline expansion for California market

Ann de Rouffignac
OGJ Online

With demand for gas and power escalating in California, PG&E Corp. is pursuing an expansion of its interstate Pacific Northwest pipeline system to be completed by late 2002.

The existing pipeline has been operating at near 100% of its 2.7/bcfd capacity for much of this year. PG&E will ascertain shipper interest in an additional 200/MMcfd of capacity by calling for preliminary bids for the capacity by Feb. 15, 2001. If there is sufficient interest in the expansion project, permitting with FERC will proceed. That process is expected to last 1 year.

The company indicates that demand is increasing for direct-use customers and electricity generation.

Industry experts agree that California�s demand for gas is in a growth mode.

�This (pipeline) expansion might even be a little late,� says Ron Gist, principal with Purvin & Gertz Inc., consultants in Houston. �California got a bum rap for a while which slowed infrastructure investment.�

Several pipelines built to serve California were underutilized for a few years after completion. But the under utilization was the consequence of a freak set of events, Gist explains. Winter weather was warmer than usual for several straight years and there was an overabundance of hydroelectric power because of generous rainfall.

Subsequently, both conditions reversed themselves. Increased electric demand from the robust California economy, coupled with a return to normal winter and drought conditions reducing the amount of hydroelectric generation have created constraints on the pipeline system and spiking gas prices.

�California is starved for natural gas,� says Gist. �The prices are crazy with $50 gas recently now settling down to $20 compared with $8 or $9 gas elsewhere.�

The 612-mile PG&E Gas Transmission Northwest pipeline system begins at the Idaho/British Columbia border, travels through northern Idaho, southeastern Washington, and central Oregon, and terminates at the Oregon/California border where it interconnects with the Pacific Gas and Electric Co. intrastate pipeline that delivers to end users.

�The expansion is designed primarily to serve the California market. There is an increasing use of natural gas to fuel electric generation plants that has created an immediate need for new supplies in excess of 200/MMcfd,� Thomas B. King, president of PG&E National Energy Group, said in a statement.

Expanding an existing pipeline usually means adding compression or loops to the line to get around bottlenecks and constraints in the system, explains Toni Chodorowski, principal with Purvin & Gertz.

PG&E also proposes additional expansion plans after initial expansion is completed in 2002, including:

� A second mainline expansion in 2003-2004 will be targeted to meet growing demand for natural gas supplies in the Pacific Northwest and California to fuel electric generation.

� A new pipeline project will interconnect with the existing northwest pipeline near Spokane, Wash. It will head west to serve the Puget Sound/Seattle area with estimated completion in 2004.

� A third mainline expansion beyond 2005, will transport Alaska gas supplies to markets in the lower 48 states.

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