By the OGJ Online Staff
HOUSTON, Mar. 28�In direct response to increased power generator demand, Sempra Energy will increase the capacity of its intrastate gas pipeline which transports gas from the California border to its service territory in southern California. It will also increase storage capacity.
Long criticized for keeping a tight rein on the supply of natural gas in the market, Sempra�s unit Southern California Gas Co. will modify its pipeline to allow the delivery of an additional 175 MMcfd by yearend. This will boost the pipeline's capacity by 5%.
�We are taking immediate action to increase compression horsepower at three delivery stations to boost the amount of natural gas that can be transported into the gas company�s intrastate system,� said Edwin Guiles, chairman of the gas company in a statement.
The increased capacity is consistent with the company goal of maintaining a 20% reserve over and above what is required during normal demand periods, the company said.
Analysts have attributed high gas prices in California in part to inadequate intrastate pipeline capacity and lack of storage. Interstate pipelines can bring sufficient gas to the border, according to an industry source. But problems emerge in getting gas from the border to customers in southern California.
A shipper of gas into southern California must be able to guarantee the gas will be taken away at the border. Without a guarantee, interstate pipelines are reluctant to accept gas for shipment because there is no storage on the interstate pipeline serving southern California.
Industry marketing sources said gas shipped into southern California is subject to a premium. The requirements constrain supplies.
Besides adding pipeline capacity, Sempra said it will increase storage capacity along its gas pipeline system. The company intends to increase the in-state supply of natural gas by 24 bcf over the next year. Because of strong gas demand last summer, the levels of natural gas storage reached historic lows during the winter, the company said.
Analysts said the lack of gas in storage in California contributed to a huge price increase. Gas prices were two to three times what they were in the rest of the nation this winter.
Even though spring is the usual injection period, withdrawals continue to outpace injections into state storage facilities. Last month, injections of gas totaled 7,982 MMcf, compared to withdrawals of 14,813 MMcf.