EOA SEES U.S. GAS GRID MEETING DEMAND IN 2000

Interstate natural gas pipelines should be able to meet record U.S. natural gas demand by 2000, Energy Information Administration predicts in a new study.

EIA noted the pipeline grid has delivered about 18 tcf/year to end users since 1988 but said, "Environmental concerns and the likelihood of even greater dependence on foreign sources of oil have focused attention on the potential of natural gas to meet a greater portion of the nation's energy requirements."

The EIA study examined the capacity of 42 long lines, average utilization of the pipeline grid, and recently completed or planned capacity expansions.

It said, "Despite a warmer than normal year in 1990, the nation's interstate pipeline system operated at a high level relative to system capability. More than a third of the pipeline systems examined reported their highest monthly flow in more than a decade."

REGIONAL COMPARISONS

EIA said significant additional volumes could be transported into some major consuming areas during off-peak periods.

"Pipelines entering the Midwest, with a relatively low average utilization rate of 64% and the largest amount of interstate capacity entering a region, have the greatest potential to move additional volumes into a region during off peak periods (Table).

"Absent downstream and upstream bottlenecks, capacity exists to increase volumes into the Midwest by an average of 8.4 bcfd. The average daily utilization of capacity at other regional boundaries varied from a low of 37% between the Central and Southwest regions to a high of 90% between the Southwest and West regions.

EIA said only relatively small additional volumes could be transported into the growing Northeast and West regions even during off-peak periods.

"In 1990, average capacity utilization was 84% into the West region and 77% into the Northeast. If those systems could be operated to achieve full capacity utilization, at most an additional 1. 1 bcfd could be moved into the West region and 2.3 bcfd into the Northeast.

"Since 1990, however, these areas have gained some additional flexibility for obtaining gas transportation services because of the completion of several construction projects that increase capacity."

EIA said the Southwest has the greatest capability to export gas to other U.S. regions, with 33.9 bcfd of interstate pipeline capacity exiting the region. In 1990, that capacity was used at an average 66% rate.

"The interstate systems serving the Southwest have significant ability to move additional gas supplies to other regions by increasing off-peak throughput volumes."

NEW PROJECTS' ROLE

EIA said, "Most of the new pipeline and capacity expansion projects reflect either a need to meet a shift in supply sources or to serve growing new markets in the Northeast, Southwest, and West regions.

"Production declines in the Gulf of Mexico, Texas, and Louisiana during the 1980s have been partially offset by increased production from the Rocky Mountains area and the Arkoma basin area of Oklahoma.

"Construction in the Southwest is mainly aimed at hooking up new supplies to existing trunklines or reconfiguring trunklines within the region to provide better access to growing markets outside the region.

"For example, lines that once moved gas from Texas to Oklahoma and Colorado now operate in the opposite direction, moving gas to Texas to interconnections with pipelines shipping gas to California."

EIA said projects completed since 1990 have already expanded the interregional flow capacity of the industry by 2.2 bcfd, representing an increase of about 3%

"If all the remaining projects currently planned or under way are fully implemented, 7.5 bcfd would be added to the interregional capacity of the industry by 1995. However, since some of the proposed projects are competing for the same markets, it is possible that some may be downsized, deferred, or canceled as they are tested by market forces."

CANADIAN GAS ROLE

EIA said about a third of the projects completed since 1990 link Canadian gas supplies with U.S. markets.

"Including the completion of the Iroquois pipeline in early 1992, import capacity at the U.S.-Canadian border has increased by 700 MMcfd from its 1990 level of about 6.2 bcfd. In addition, 2.3 bcfd of import capacity is planned to be added the next several years. If all this import capacity comes on line, the capability to move Canadian gas into the U.S. will increase by about an additional 34% from 1992 levels. About half of this capacity is directed to markets in the West region, with the other half directed to markets in the Northeast and Midwest."

OUTLOOK

EIA said U.S. gas consumption could reach 22 tcf/year by the end of the century, matching peak levels of the early 1970s and could increase another 1 tcf/Year by 2005,

"Much of the projected growth in natural gas consumption is expected to be in the electric generation and cogeneration markets.

"In the Northeast, some of the new growth will stem from fuel diversification programs. In the West, some of the new growth is expected as a result of local air quality regulations that prohibit the use of fuel oil in large boilers."

EIA estimated about 20 million kw of gas fired electricity generating capacity will be added by 2000, leading to an increase in gas consumption for power generation from 2.8 tcf in 1990 to 4.4 tcf in 2000.

It said if all the proposed pipeline projects are built, interregional capacity will increase by as much as 9.8 bcfd, or about 13%. Additional projects limited to providing service within a specific region would account for another 6.4 bcfd of capacity.

"Some expansion projects may not materialize in the current form under the forces of the more competitive market, and some projects may be downsized or abandoned altogether.

"Still, these plans indicate industry's willingness to adapt and to meet the challenges generated by shifts in supply and market areas as well as future increases in demand."

EIA said recent Federal Energy Regulatory Commission orders are designed to get more efficient use of the U.S. transmission network.

It said with the reassignment of capacity under Order 636 and changes in rate design, in the future peak period capacity will be used by customers that place the highest value on the service, and throughput during off-peak periods will increase.