NGSA backs tariffs for gas quality, interchangeability

April 4, 2005
The Natural Gas Supply Association urged the US Federal Energy Regulatory Commission to adopt the use of pipeline tariffs as a way to address natural gas quality and interchangeability issues.

The Natural Gas Supply Association urged the US Federal Energy Regulatory Commission to adopt the use of pipeline tariffs as a way to address natural gas quality and interchangeability issues.

NGSA and other industry stakeholders submitted two technical papers to FERC during a Mar. 2 commission meeting. FERC then opened a comment period on the papers, ending Apr. 1.

"There are enough solid technical findings in the two technical papers to put specifications in pipeline tariffs," said Jeffiner Deegan, NGSA's energy markets director. "The establishment of gas quality and interchangeability policies and the incorporation of specifications in pipeline tariffs will reduce business risks to commercially acceptable levels and lessen regulatory uncertainties in the natural gas marketplace."

NGSA said that a diverse group of industry stakeholders worked on the technical consensus for a year to address evolving issues regarding natural gas quality and interchangeability.

Gas quality refers to variations in the hydrocarbon content of gas that can, in some instances, lead to liquids forming in the gas stream. Interchangeability refers to the ability to replace gas of a given quality with another gas source without affecting the end use performance of the gas. This is an important issue associated with LNG importation.

One key factor in determining interchangeability relates to the high heating value, or btu content, of vaporized LNG when compared to the HHV of typical US pipeline gas. In LNG markets outside the US, gas is received and burned at a greater HHV (about 1,100-1,180 btu/cf) and the facilities are designed generally to produce LNG within this HHV range.

Industry comments

The Gas Processors Association (GPA) urged FERC to make its decision so that all parties involved would have time to adjust before the winter heating season of 2005-06.

"The industry (both LNG and domestic) urgently needs these issues to be solved sooner rather than later," GPA said in its filing with FERC.

The South Coast Air Quality Management District of Diamond Bar, Calif., told FERC that it supports efforts to increase supplies of clean gas, including clean LNG, as long as safety, security, and environmental issues are addressed. SCAQMD monitors air quality standards in a four-county area of California.

"There are five proposed LNG terminals in California. While all of them may not be built, the combined potential capacity is about two-thirds of the total California demand, and even more of the southern California demand since they all would serve the SCAQMD area," the district said.

It recommended a regional air quality impact analysis of LNG imports and also a cost analysis of different mitigation measures.

"SCAQMD believes that the current natural gas quality standards in our area are inadequateU. Additional natural gas quality standards are necessary to protect air quality in SCAQMD from high-Btu LNG," the district added.

NGSA acknowledged that gas quality and interchangeability requirements might be affected by future research and development, but the association said it believes that gas supply development hinges upon FERC adopting policies soon.

"The policy for implementing natural gas quality and interchangeability specifications must be simple so that it does not have the effect of adding an unintended and unnecessary layer of regulatory risk," NGSA said.