FERC TRIES TO ASSESS U.S. GAS DELIVERABILITY

Nearly 25% of Oklahoma's peak day natural gas production during December 1989 supply shortfalls is unaccounted for in a preliminary report of a Federal Energy Regulatory Commission task force studying U.S. gas deliverability.

During Dec. 10-27, 1989, Oklahoma wells produced an estimated 9.3 bcfd of gas, exceeding by 2.3 bcfd reported consumption of 1.7 bcfd and estimated net transmission of 5.3 bcfd. The results appeared in the draft report of a case study released by FERC's deliverability task force (DTF).

DTF is assessing the usefulness of U.S. deliverability data in light of market dislocations resulting from open access gas transportation.

DELIVERABILITY MODEL

In the Oklahoma study, DTF attempted to test whether gas production, transmission, and consumption data are adequate to construct a national gas deliverability model.

The model would help assess adequacy of production capacity, estimate demand, and anticipate transportation bottlenecks limiting capability of meeting seasonal fluctuations in regional consumption.

Responses to a FERC survey in July from 23 interstate pipeline companies showed that, as a result of supply shortfalls during December 1989, four pipelines curtailed firm sales service, one pipeline curtailed firm transportation service, and three pipelines declined to schedule unconfirmed nominations for firm transportation.

FERC Chairman Martin L. Allday formed the DTF last March, based on the belief that credible, timely gas deliverability data will assure a healthy, competitive gas market in the U.S.

"With the advent of open access transportation, the definition of deliverability has changed," FERC Commissioner Jerry Langdon said at a DTF meeting in Houston.

FERC proposes that DTF industrial, technical, and regulatory panels work through the 1990-91 heating season and send a final report to the DTF in May 1991. The DTF would analyze those reports and publish its findings before the 1991-92 heating season, according to the plan.

DTF members also considered at the Houston meeting whether to merge their efforts with a National Petroleum Council deliverability study, which was expected to begin later this month.

OKLAHOMA TEST

In the Oklahoma test, DTF found significant differences between production data obtained from the federal Energy Information Administration's Form 627 and data gathered by Dwight's Energydata Inc. for the Oklahoma Corporation Commission (OCC) and Oklahoma Tax Commission.

DTF attributed some discrepancies in production data to lack of compliance with revised reporting procedures. Beyond Oklahoma, it observed, production data vary from state to state, based on different reporting requirements of state regulatory agencies.

DTF also sought to produce a detailed assessment of Oklahoma's gas productive capacity. But since Oklahoma production data were based on reports of marketed volumes, the task force couldn't determine productive capacity.

Similarly, volumetric transportation information needed for the Oklahoma study wasn't available in annual flow diagrams of pipeline data reported in FERC Form 567, or in exhibits G, G-I, and G-II of pipelines' Section 7(c) filings. So engineering data needed to estimate peak flows were obtained from pipelines by informal requests.

Still, FERC staff had to rely on steady-state modeling to estimate transportation volumes of Oklahoma's 15 interstate transmission pipelines during December 1989 because seasonal data needed for transient flow analyses were not available. Thus, estimated peak flows in the study did not represent maximum capability of each transmission system.

OCC provided gas consumption data averaging 1.3 bcfd during December 1989 for the study from monthly purchased gas filings by local distribution companies (LDCs). But data did not include direct intrastate sales to industrial or commercial end users, sales by marketers to intrastate or interstate transmission systems, or sales of marketed gas to LDCS.

Instead, DTF used an average consumption figure of 1.7 bcfd provided by the Oklahoma Energy Center at the University of Oklahoma. According to the preliminary report, both of the figures are believed to be understated.

DECEMBER 1989 CURTAILMENTS

"Ten years ago, pipelines knew within a manageable percentage what available capacity was on their systems, and the main variable was weather in their service areas," FERC's Langdon said at DTF's meeting in Houston.

Yet curtailments of significant volumes of firm gas sales and transportation occurred during December 1989, when record cold weather resulted in unprecedented customer demand and caused failures of production equipment and compressors.

FERC's survey of interstate pipelines showed that Arkla Energy Resources curtailed firm sales of about 5 MMcf of gas to Alumax Mill Products in Arkansas during a period beginning Dec. 22 and ending Dec. 24, 1989. Arkla also curtailed firm transportation service for 300 MMcf of gas from 20 customers at 23 sites during the same period.

During Dec. 3-4 and Dec. 12-28, 1989, Southern Natural Gas Co. curtailed firm sales service, based on an end user priority system. For a period beginning Dec. 23 and ending Dec. 27, Southern curtailed firm sales to all but Priority 1 residential customers because of supply failures after Dec, 22 resulting from cold weather.

Southern said it did not know how much shortage occurred during curtailment periods because its sales customers do not nominate daily sales requirements. Rather, Southern said, during curtailment periods projected demand was expected to exceed system capacity because of forecast temperature sensitive loads.

Transcontinental Gas Pipe Line Corp. on Dec. 23 curtailed firm sales service to 50% of customer contract demand. Transco service was further reduced to 48% of contract demand Dec. 24-26.

As a result of experiences last December, three interstate pipelines responding to FERC's survey reported plans to expand their systems in projects that include pipeline loops, compression and dehydration facilities, and installation of electronic gas metering equipment.

Respondents also reported communication difficulties because many problems arose during weekends. As a result, some of the pipelines were unsure about the nature and extent of supply shortfalls during the first critical 24 hr.