The competition to serve California's growing gas demand with an interstate pipeline has developed a new wrinkle.
Los Angeles Department of Water & Power (DWP) has turned to Coastal Corp.'s Wyoming-California Pipeline Co. for natural gas pipeline capacity after negotiations collapsed with the competing Tenneco Inc./Williams Cos. Kern River Transmission Co. project to bring gas from Wyoming to southern California.
DECISION THIS WEEK?
The scramble among competing interstate pipeline projects to California could become clearer this week (OGJ, Sept. 4, 1989, p. 21).
California Public Utilities Commission is scheduled to meet Feb. 7 to draw up guidelines on gas pipeline policy-likely related to a recent ruling by CPUC Administrative Law Judge Robert Barnett. Later this year CPUC is expected to make a recommendation to Federal Energy Regulatory Commission on what action to take on the market scramble.
Barnett ruled that California requires an additional 900 MMcfd of gas by 1995 and that the best method of obtaining that gas is through a new pipeline from Wyoming to southern California.
Among other findings, Barnett also ruled the state should support the Kern River project, Southern California Gas Co.'s southern expansion project of 200 MMcfd, and El Paso Natural Gas Co.'s proposal to supply SoCalGas with 200 MMcfd.
DWP/KERN IMPASSE
DWP began evaluating other options to meet its need for reliable and competitive gas pipeline capacity after a letter of intent with Kern River expired Jan. 31.
The utility had signed a letter of intent covering transportation of 100 MMcfd on the Kern River system.
Kern River would have shipped the gas into the Bakersfield area from Wyoming. From Bakersfield, the gas would have moved via SoCalGas pipelines to DWP's four thermal generating stations in the Los Angeles area.
DWP ran into problems this winter and last winter when a spike in gas demand in the U.S., combined with deliverability Problems, led SoCalGas to curtail supplies to DWP.
Draconian new state air quality rules oblige the utility to burn gas instead of coal or fuel oil.
To remedy the situation, DWP is trying to secure more reliable service from SoCalGas. The two have negotiated an agreement to that effect, which is pending before CPUC.
DWP's other proposed remedy, securing new out of state supplies, ran into problems with Kern River when the utility wanted to retain the right to build its own pipeline from Los Angeles to interconnect with the Kern River line.
"We must insist that we have the right, at any time, to build our pipeline from the Los Angeles area to meet up with the Kern River pipeline," said DWP General Manager Norman Nichols.
"Although we hope that SoCalGas will transport the gas reliably, if SoCalGas can't or won't be permitted to move it for us in the future, then we will have to get in the gas business."
Kern River wouldn't budge on that provision, claiming that if it included such language in its contract with DWP, it could complicate the process for its FERC application.
Another concern is that the CPUC has generally opposed gas consumers' building their own lines to bypass local distribution companies.
That led to negotiations with WyCal. The utility said it is optimistic it could reach agreement with WyCal allowing an interconnect in the future if it became necessary.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.