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New Gas, Power Transmission Lines in PG&E's Plans, CFO Says

March 6, 2006
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As part of an industry panel that generally talked bullishly about investment in new transmission infrastructure, PG&E Corp.'s CFO Christopher Johns stressed his utility company's increased interest in investing in new interstate natural gas and electric transmission projects. While PG&E doesn't want to own liquefied natural gas (LNG) terminals, the company wants to be able to access LNG wherever it lands in the West, Johns told a financial audience at the Citigroup's First Annual Power, Gas and Utilities Conference in Miami, FL.

In response to a question, Johns said PG&E is looking at an investment in the range of $200-$300 million for its part of a proposed interstate gas transmission pipeline from an LNG terminal proposed at Coos Bay along the south-central Oregon coast to load centers in California. "California is a very gas-dependent state, so we're very interested in looking at all new areas where we can bring some new supply sources into the state and bring downward pressure on our natural gas prices," he said.

Panelists agreed massive shifts in supply sources are at work, and with each source, large new infrastructure projects are required. Kinder Morgan CFO Kimberly Dang said her company's three major pipeline projects -- Rockies Express, an LNG-link pipeline from the Gulf of Mexico and an oil pipeline from the Alberta Tar Sands supplies south into the United States -- all are examples of that.

Growing flows of oil and gas are under way, she said, citing as examples oil production levels of the Tar Sands heading toward 1 million bbl/d, Rockies gas supplies hitting 7 Bcf/d next year, and the five LNG terminals under construction in the Gulf. As protection against the possibility of overbuilding, Dang said Kinder Morgan has signed long-term contracts on all of the projects with terms varying from five to 11 to 20 years.

On the electric side, PG&E has looked at a number of new in-state and interstate high-voltage transmission lines, including an undersea DC line proposed from Oregon to the San Francisco Bay area. None of these is in the utility's current $1.8 billion transmission capital expenditure budget for this year, Johns said.

In response to another question on the four-state Wyoming-to-California Frontier Line high-voltage transmission proposal, Johns said "there really hasn't been a tremendous amount of momentum behind that proposal [since it surfaced last April]." Nevertheless, all of the panelists agreed that even before the incentives in the 2005 Energy Policy Act, investment was swelling in electric transmission, following the August 2003 blackout that struck the northeastern United States and Canada.

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