SoCal Demand Soon May Exceed Supply
A new pipeline may be needed in Southern California to eliminate
impending gas supply and infrastructure constraints, which could
become critical in the next few years, according to participants at
a one-day roundtable last week in San Diego. Demand is expected to
far exceed supply in the burgeoning southern end of California and
on both sides of the U.S.-Mexican border, where population,
industrial and energy growth are surpassing expectations.
San Diego's looming capacity constraints would not be relieved
by a currently shelved proposal for a southern extension of Kern
River Pipeline into the Los Angeles Basin or by Questar Corp.'s
pending proposal at FERC to convert an existing oil pipeline from
the Four Corners area into the port city of Long Beach, roundtable
With electricity demand in San Diego Gas and Electric's
territory expected to grow 3%/year for the next five years,
SDG&E's gas delivery capability --- which was nearly maxed out
two years ago during record summer electricity demands --- will be
inadequate, according to R. Thomas Beach, a consultant with
Berkeley, CA-based Crossborder Energy. Beach recently completed a
gas deliverability analysis of the area for PG&E Generating,
which is sponsoring a proposed new 500 MW plant at Otay Mesa, south
of San Diego.
"Based on the look we've taken at the reliability issue in the
San Diego area, there should be a significant concern about the
reliability of future gas supplies in this area," said Beach. He
noted San Diego's summer peak gas load has been increasing with the
increased electrical load in the general area. Gas demand hit 515
MMcf/d in July 1998, just 35 MMcf/d under the peak deliverability
capability of SDG&E. "The bulk of this peak load serves the
electric generating plants in the area. If future electrical load
growth is going to be met with gas-fired generation on the
SDG&E system, there are going to be some real restraints on the
gas availability during summer peak conditions."
Aside from his prepared remarks, Beach said he thinks a new
competing pipeline in the area, which is dominated by SDG&E and
its parent Sempra Energy, would enhance both electricity and gas
Sempra is building a pipeline across the Mexican border to serve
existing and added power plants at Rosarito Beach, about 30 miles
south of the border to displace fuel oil now used at those plants.
The proposed PG&E Generating plant at Otay Mesa would burn
about 85 MMcf/d, and Rosarito's summer peak is estimated at 140
MMcf/d. Beach estimates incremental gas supplies approaching 225
MMcf/d will be needed in the next few years.
"Based on our study, by 2003 --- with no new supplies --- during
an August peak day as much as 33% of the generating capability
could be curtailed [for lack of gas supplies]," Beach told the
CPUC's four commissioners and a state legislator who helped craft
the 1996 California electricity restructuring law (AB 1890). "This
is going to raise important public policy issues for the CPUC,
including the need to revise SDG&E's rules for gas
curtailments, which are outdated."
State Sen. Steve Peace, the author of AB 1890, said the fastest
growing industrial area in the world is concentrated on the Mexican
side of the California-Mexico border south and east of San Diego.
He said this has "tremendous implications" for California's
environmental and energy planning, including the gas and
electricity requirements on both sides of the border.
Participants at the roundtable indicated that perhaps a
resurrection of El Paso Natural Gas' plans early in the 1990s for a
natural gas pipeline spur off of its east-of-California interstate
pipelines across Mexico to northern Baja would alleviate the
impending shortages. Another concept is for more cross-border
environmental air quality and energy planning.
"All the major energy interests in the West have looked a
building a pipeline down there, and people are still looking at
it," said Beach, indicating he is aware of new exploration for
potential projects, but "nothing I can talk about. "There is a lot
of gas demand down in that corner of the world ---between CFE
(Mexican energy agency) and Duke and Dynegy (purchased for
SDG&E) and (proposed)
Otay Mesa plants, and to the east there is the Imperial
Irrigation District and Mexicali has some significant industrial
development. The new Mexican regulation permit bypass, so Sempra by
no means has that market locked up (south of Mexicali)." Others
can, and probably will, come in and take some of the industrial
load, Beach said.
Richard Nemec, Los Angeles