Natural gas continues to be at the heart of California’s future energy policy, and the key areas of focus are on pipeline capacity and liquefied natural gas (LNG), according to the California Energy Commission’s (CEC) top gas official, David Maul. As gas demand continues to increase in the nation’s most populous state, natural gas imports are at the 85% level.

Currently, the state’s gas infrastructure is deemed as “adequate,” but additional infrastructure will “soon be needed,” said Maul, who participated in a panel discussion at the annual GasMart conference in Denver Wednesday. “Demand for added gas is growing, and California’s energy agencies are working together to attract new investment and supplies.”

Maul cited four recent reports on gas in California, all completed last year. At this point, the state’s energy policymakers and planners agree that natural gas prices are “higher than desired,” Maul said, but they are assuming prices will continue on an upward trajectory, while they become even more volatile. At the same time, he said, additional import capacity is needed as identified in some of the above-cited planning documents completed in 2003.

Maul said the state officially last year recognized the need for LNG as holding potential value for California. More broadly, however, LNG use will have to meet a commitment from the “action plan” agreed to by the state’s three major energy agencies to “license and, where appropriate, fund construction of new energy facilities that are consistent with the reliability, economic, public health and environmental needs of the state.”

California has a long list of issues needing resolution before LNG can play a role, including: clarification of natural gas quality standards, equal access to the state’s gas markets, defining the role of long-term supply contracts by the state’s private-sector utilities, clarifying potential pipeline upgrades, and reducing uncertainty in terminal permitting, which probably has more — not less — uncertainty now than a year earlier.

For each of the issues, Maul cited actions already underway in the state to address them, such as a joint research study on emissions by Southern California Gas Co. and Air Resources Board reconsideration of its gas standards, along with a state “LNG Interagency Permitting Working Group” to begin to lessen the uncertainty surrounding the permitting process.

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