Southern Trails Stymied by SoCalGas Tariff
With focus shifting to natural gas prices and supply
availability this fall and winter, a proposed conversion of the old
16-inch-diameter Four Corners oil pipeline to natural gas has run
into a stalemate over a Southern California Gas Co. tariff that
allegedly inhibits the new pipeline from signing up industrial
loads in the southern half of the state.
As a result, the proposed 120-130 MMcf/d of new gas supplies,
originally expected to be in play in California by now, would be
available at the earliest in the third quarter of next year even
though the project backer, Salt Lake City-based Questar Corp., has
obtained federal approvals, including an environmental assessment
for its 700-mile Southern Trails Pipeline.
All the preliminary engineering and planning work has been
completed, but there won't be any conversion work of the idle oil
pipeline until final resolution of the California tariff issue and
an additional environmental assessment on part of the pipeline's
route in the desert east of Riverside, CA, is completed, according
to a Questar spokesperson. The pipeline terminates in the heavily
industrialized port at Long Beach, CA.
"We're not going to get excited about placing any orders for
compressors until we get these (California) regulatory issues
resolved," the spokesperson said.
The interstate pipeline has not been able to line up any
California customers for the converted line thus far, the
spokesperson said, because of a SoCalGas "residual load service"
(RLS) tariff, which requires customers to pay utility capacity
charges for increments of supply they switch from the SoCal system
to a competing pipeline. A California Public Utilities Commission
administrative law judge is considering proposals from both
SoCalGas and Questar for alternative tariffs that won't continue
"to hang up our marketing efforts," the spokesperson said.
The tariff issue is "definitely the priority" for Questar, the
spokesperson said. Questar is cool toward one of SoCalGas'
alternate proposals, viewing it as too similar to the existing RLS.
Another proposal by SoCal and one by Questar, itself, suggest a
cost-based rate, which is what Questar alleges will allow the
company to convert the pipeline and compete in the California
"Our proposal is not what SoCalGas has proposed; their's is sort
of a scaleable approach, which we think still tries to keep
competition from coming in," said the Questar spokesperson. "We
support a cost-based rate that is truly based on the cost of
The same RLS rate had been the subject of discussions in the
far-reaching SoCalGas settlement discussions last year and earlier
this year as part of the CPUC's natural gas restructuring
"Customers still look at the use of any other pipeline as
punitive," the Questar spokesperson said. "They have to ante up to
SoCal and pay another pipeline, too."
The other outstanding issue in California for Questar involves
"a couple of issues" the company is working through with the State
Lands Commission related to environmental aspects for a portion of
the converted pipeline near an American Indian Reservation in the
Palm Springs area about 120 miles east of Los Angeles. It involves
less than 10 miles of the pipeline, according to the spokesperson.
Questar's $2.2 billion operation includes exploration and
production in Wyoming and distribution in Utah and small portions
of southeast Idaho and southwest Wyoming. It has about 700,000
retail customers, mostly all in Utah, and its interstate pipeline
network will allow the converted Southern Trails pipeline to link
with six interstate or distribution pipelines, including
TransColorado Gas Transmission, Transwestern Pipeline, El Paso
Natural Gas, SoCalGas, Pacific Gas and Electric and Southwest Gas
Richard Nemec, Los Angeles