Continuing flat energy demand in a time of record hydroelectric supplies has natural gas stakeholders in the Pacific Northwest watching as the shale gas boom redefines energy delivery patterns and markets. As Ruby Pipeline on Thursday brought an added 1.5 Bcf/d of gas capacity into the West, these stakeholders told NGI's Shale Daily that a national reordering of gas delivery systems needs to take place before gas' future role in the region can be determined.
Plans for future storage and pipeline enhancements will likely not be made until it is determined how gas flows around the nation are redirected as a result of the growing surge of shale plays, such as the Marcellus Shale.
In contrast to the cool reception in Oregon and Washington, California's lead natural gas regulator, Timothy Alan Simon, a member of the California Public Utilities Commission (CPUC), said Thursday that he thinks the combination of Ruby and the shale boom are going to have a profound positive impact on the state's energy mix. Simon urged his CPUC colleagues to have a "large California presence" when an official ribbon-cutting ceremony is held in September in Malin, OR, the termination point for the new 42-inch diameter interstate pipeline.
"This is one of the largest infrastructure projects in the United States," said Simon, who was the lead CPUC member in California's regulatory review of the El Paso pipeline four years ago. "This pipeline is going to have amazing impact on the California energy market, particularly given the shale gas development in the eastern parts of the country.
"Gas is looking for markets in the West, so this is very critical not only to our electric generation sector, but also to our consumer heating/cooking needs."
One concern expressed by a gas utility official in the Northwest is that development of gas supplies in Alberta will dry up as a result of the U.S. reordering, and the burgeoning British Columbia (BC) shale plays will be headed for export through Kitimat, which most observers in the region think is going to eventually get built as a liquefied natural gas (LNG) export center along the BC coast.
With Ruby and the expectation of the LNG exports from Western Canada, and the abandonment of other competing pipelines into the region (Blue Bridge and Palomar), new gas infrastructure likely will not get built in the region until late this decade, a Washington state-based gas utility resource executive said.
A lot depends on the economy, according to Randy Friedman, Portland, OR-based NW Natural's gas director. Slow growth and low price volatility combined make it tough to justify new infrastructure projects, but "once the economy picks up, so should storage development," he said.
"Part of that is driven by the electric sector. For example, economic growth equals more generation, which in turn equals more renewables and more wind-following generation, which equals more gas generation paired with storage."
Bob Braddock, general manager of the Jordan Cove liquefied natural gas (LNG) project along the south-central Oregon coast, reiterated the need to determine what the new gas flow patterns will be. Only then, he said, can the industry identify bottlenecks and new projects to eliminate them.
"The development of shale gas resources has not only changed the overall production profile in North America, it also will change the flow patterns of gas through the existing pipeline grid," Braddock said. "As an example, the growth of production in the Marcellus [Shale] will result in lesser amounts of gas moving into [the East] region from the West and Gulf of Mexico regions. It is only when the new gas flow patterns become well defined that it will become clear where the bottlenecks in the transportation grid exist."