Driven by growth in renewable energy resources and energy efficiency, California's natural gas demand will steadily fall over the next 15 years, staying below current 6 Bcf/d levels, according to a draft state assessment.
A fall-off in gas-fired power generation will accompany the decline, staff with the California Energy Commission (CEC) staff said Tuesday in a workshop to discuss a draft of the Integrated Energy Policy Report.
The gas outlook offered high, mid-range and low scenarios for future demand using input from staff and outside experts, including Rice University’s Ken Medlock of the Institute for Public Policy in Houston.
The outlook finds national gas demand growing at 1.4% annually between now and 2030, but California’s gas demand is seen declining to about 5.8 Bcf/d by 2030, below the state's current 6.2 Bcf/d levels. State gas demand is expected to drop to 6 Bcf/d next year and keep declining.
"Implementation of renewables and energy efficiency suppresses California's total natural gas demand, declining at a 0.63% annual rate between 2015 and 2026," according to a presentation by CEC's Ivin Rhyne, manager in the supply analysis office.
CEC staff used a variation of Rice’s World Gas Trade Model, which it dubbed the North American Gas Trade Model, to assess state supply/demand. It concluded that California will continue to import 98% of its gas supplies from diverse sources in Western Canada, the Rockies and various Southwest basins.
"The new forecasts begin at a higher point in 2015, as actual natural gas demand in California was higher in 2015 than estimated in 2013 [by a mid-range case in the state gas demand report two years ago]," according to the draft outlook.
"From North American Market Gas Trade Model results, in the mid-demand case, staff expects gas in California to decline at an annual rate of 1.1% between 2015 and 2026.” The draft said with full implementation of higher renewable portfolio requirements for electric generators and full penetration of energy efficiency after 2026, gas demand will grow again from population growth and associated demand, reaching 5.92 Bcf/d in 2030, but still well below current demand levels.
The assessment pointed out that the gas demand decline is more evident in the power generation sector where renewables will have the greatest impact. "While overall demand declines at an annual rate of 1.1%, the decline observed in the power generation sector is about 2.1%." Even with a rebound after 2026, the gas demand for generation only returns to about 1.7 Bcf/d, still about 1 Bcf/d lower than current levels.
The CEC outlook takes into consideration assumptions and projections related to North American export and import developments, the shale production revolution and heightened pipeline enhancement and safety efforts following the 2010 San Bruno, CA, transmission pipeline rupture and explosion that killed eight people and injured 58.
The mid-energy demand case outlined in the draft represents "a business-as-usual case in which likely outcomes are based on current trends in gas markets, commercial activity and economic developments."