Ann de Rouffignac
OGJ Online
HOUSTON, May 24 -- California state regulators expect curtailments of natural gas supplies to the San Diego area this summer.
The Southern California Gas Co. intrastate gas system is at full capacity. Even with announced capacity enhancements, SOCAL will have to curtail noncore customers at times, said Julie Halligan of the California Public Utilities Commission.
Halligan, other regulators, and industry participants spoke at a Federal Energy Regulatory Commission conference Thursday on the California natural gas infrastructure.
Anticipating curtailments, PUC is about to change its gas curtailment rules, she said. One of the biggest problems in the southern California market is that there are no direct receipt points from interstate pipelines in that area and there are no storage fields. Electric power generation demand is the reason for the overload.
But determining if expansion is warranted beyond what SOCAL has already proposed remains controversial.
"There is a need for more intrastate capacity to receive the gas," said Bill Wood of the California Energy Commission. He said there is 300 MMcfd stranded gas capacity coming into the state. There is interstate capacity of about 7 bcfd but only 6.7 bcfd of intrastate capacity available to "take away" the gas inside California.
"We are most concerned about SOCAL's ability to receive gas," Wood said.
Whether the state avoids curtailments will depend mostly on how much it must depend on gas-fired generation to get through the summer peak. Wood is less apprehensive about the summer than the PUC.
"Things will turn out okay unless things turn out dire, like if hydro conditions get worse, the QFs ['qualifying facilities,' or small renewable power generators] stay offline longer, or the summer is hotter than anticipated," he said.
Lad Lorenz, a SOCAL official, disagreed that there was a problem with capacity on his company's intrastate system.
"There were no curtailments of firm or interruptible capacity in the last 10 years," said Lorenz. "We expect no curtailments for this summer or winter either."
Lorenz said the system has excess capacity now. He admitted that the capacity utilization rate had increased but said that was a temporary situation: drought and consequent low hydroelectric output has caused gas-fired generation to substitute for hydropower, increasing gas demand.
"But we expect to operate just fine this year. Core and noncore customers are injecting into storage as anticipated," he said.
He said gas demand will even start to fall by 2004-05 as new, more efficient gas-fired power plants replace older ones. This will actually "off-load" the SOCAL system, he said. And it will start raining again, Lorenz added.
SOCAL said it would proceed to expand its system anyway, adding 475 MMcfd as announced.
Northern California is predicted to have adequate gas transmission supply at least for the near term. Longer term, it will need more capacity, said Dan Thomas of Pacific Gas & Electric Co.
Contact Ann de Rouffignac at [email protected]