PG&E GT-NW Unveils Multi-Phase Expansion Plan
Responding to tight energy supplies in the Pacific Northwest and California,
PG&E Corp.'s National Energy Group revealed plans last week to begin
an open season early next year, kicking off a five-year expansion effort.
The first phase would add 200 MMcf/d of firm transportation capacity out
of western Canada on its Gas Transmission-Northwest (GTN) pipeline system.
The PG&E GTN group expects the phase one expansion to be in service
by November 2002 at the latest.
"As we have been anticipating, the western natural gas market is
at a critical point in the need for additional pipeline capacity,"
said Thomas B. King, president of the PG&E National Energy Group (PG&E
NEG) West Region. "Gas supplies into the Pacific Northwest and California
are very tight. At the same time, the market is strong and growing, and
the PG&E Gas Transmission Northwest pipeline system has been operating
at or near maximum capacity levels for the greater part of the year. We
believe GTN is now positioned for an aggressive expansion period that will
result in additional supplies of natural gas --- at competitive transportation
rates --- in this region for both direct-use customers and electric generation
King noted that the phase one expansion of the GTN system was brought
on primarily because of the state of disarray in the California market.
He cited the growing use of gas to fuel electric generating facilities
as the main reason new capacity is needed.
King added that the GTN pipeline system is the most direct and economic
link for tapping the Canadian production basins, and bringing the load
to California and the Pacific Northwest markets. He also emphasized that
the expansions would help the market prepare for new supply from Alaska.
"We are constantly talking to our customers about what is the right
time for us to expand our pipeline system," said Sandra McDonough,
spokeswoman for PG&E Corp. "With the power plant development both
in California and in the Pacific Northwest, including plants in the Northwest
that are being built right next to our pipeline, the time is clearly now
to start expanding the system. We have gotten more bids for capacity than
we have been able to move recently." McDonough told NGI last week
that the company was looking to expand its mainline in the near future
(see NGI, Dec. 18).
To gauge demand, PG&E NEG plans to launch an open season for the
200 MMcf/d expansion of the mainline beginning on Jan. 2, 2001. Bids are
due by Feb. 15, 2001. Following the open season, the company will hold
a capacity rationalization period, which will allow existing shippers to
release capacity directly to customers who have expressed an interest.
The 612-mile dual pipe GTN system begins at the Idaho-British Columbia
border, travels through northern Idaho, southeastern Washington and central
Oregon, and terminates at the Oregon-California border where it connects
with the Pacific Gas and Electric Co. intrastate pipeline system.
Currently, the GTN system is the largest U.S. transporter of Canadian
natural gas with 2.7 Bcf/d of capacity. The expansion was deemed necessary
because the average contract term on the line extends through 2013, and
the pipeline has been operating at capacity, or near capacity for most
of 2000. The method of expansion had not been decided on yet, but it is
expected to include additional compression and some looping.
McDonough said PG&E has been in contact with its upstream providers
including TransCanada Pipelines Limited (TCPL) to ensure coordination of
capacity. Doug Baldwin, CEO of TCPL, said TransCanada will work with PG&E
NEG to examine and, if appropriate, satisfy the needs of market participants
in both the western United States and Canada.
If response to the open season is adequate, PG&E NEG hopes to move
along with the project immediately. The November 2002 in service date includes
an anticipated one-year process to obtain a Federal Energy Regulatory Commission
"We also expect to have an incremental 265 MMcf/d of new direct-connect
gas-fired electric generation load along the GTN system in the Pacific
Northwest by mid-2002," King said. "We expect to follow the 2002
project immediately with additional pipeline expansions to meet the need
for additional gas supplies in the Pacific Northwest, on both the east
and west sides of the Cascade Mountains."
For the next five-to-eight years, PG&E Corp. expects to be busy
with pipeline expansions and new additions. The company has planned a second
mainline expansion to be in service in 2004, with a new interconnect near
Spokane, WA, which will serve the Puget Sound/Seattle area. The last expansion
phase will be brought online sometime after 2005. With Alaskan gas fields
expected to be ready for commercial service in the next five to 10 years,
PG&E NEG will build an expansion that will facilitate transportation
of gas from Alaska and Canada's Northwest Territories to markets in the
lower 48 states.
"Overall what we are looking at is the potential to expand the
system by 1 Bcf/d over the next decade," McDonough said.