The potential for selling to several gas-fired merchant powerplants in the area is what prompted Denver-based Western GasResources to enter California’s increasingly crowded natural gasmarket by getting an option to buy a Shell-Mobil gathering anddelivery system in northern California. Included in the proposeddeal that should be wrapped up by year-end are 170 miles oftwo-inch- and 10-inch-diameter pipelines crossing more than a dozenlocal gas fields between the Sacramento Airport north of thecapital and the industrialized north Contra Costa County to thesouthwest, where there are substantial existing and proposed largeindustrial loads.

Aera, an alliance between Shell and Mobil, owns the interest intwo systems that Western Gas is proposing to buy, given thego-ahead from state regulators to operate the pipelines asopen-access utility facilities and interconnect with Pacific Gasand Electric’s existing backbone transmission pipeline system atthe expanding Denverton Creek gas field. Gas supplies totalingabout 70 MMcf/d are located within a ten-mile corridor formed bythe Steelhead and Sacramento River Gas Systems. Shell historicallyowned this pipeline system, principally to supply gas to itsrefinery in Martinez, CA, which is now operated under aShell-Texaco joint venture called Equilon Refinery. Heading east inthe same area parts of the pipeline system go by a Tosco refineryand existing power plants owned by San Jose, CA-based CalpineCorp., which has a proposal to build a new merchant power plantnearby, as does Enron.

(Calpine also continues to own a portion of the Sacramento Riverpipeline system not included in Western’s deal.)

Western Gas, an independent gas gatherer, processor,transporter, producer and energy marketer with the bulk of itsassets in Wyoming, is currently talking with prospective customersas well as with PG&ampE regarding interconnection with its largetransmission system in the area, according to Craig Supplee, whoheads Western’s business development out of Denver.

Supplee said Western Gas is proposing to move both locallyproduced gas, along with Canadian supplies flowing throughPG&ampE’s transmission system, for Shell, Tosco, and Calpine amongother prospective customers. An open season is planned for May.

Supplee indicated Western Gas is betting that the CaliforniaPublic Utilities Commission, to which it applied April 6 forutility status, will continue its more than a decade-long policy of”supporting competition” for gas supply business to large,so-called “non-core” customers, such as power plants andrefineries.

Richard Nemec, Los Angeles

©Copyright 1999 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.