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PG&E CEO: NW Power, Gas Pipe Projects Stalled

May 11, 2009
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With a potential equity and energy interest in both, Pacific Gas and Electric Co. (PG&E) views major interstate natural gas pipeline and electric transmission projects in the Pacific Northwest as treading water, awaiting other key market and regulatory developments, according to PG&E Corp. CEO Peter Darbee, speaking on a conference call with financial analysts last Wednesday. For now, the projects are in what Darbee called the San Francisco-based combination utility's "far-end guidance period" (2012-13).

One proposal calls for a major new interstate high-voltage transmission line from British Columbia (BC) in Canada to California, for which California regulators authorized PG&E to spend up to $14 million for detailed feasibility studies. The second project is the so-called Pacific Connector natural gas pipeline that would be connected to the proposed Jordan Cove liquefied natural gas (LNG) receiving terminal along Oregon's Pacific Coast at Coos Bay.

Regarding the Pacific Connector natural gas pipeline from Oregon to California, the application is now at FERC, and the federal regulators released last Friday a favorable final environmental review of Jordan Cove Energy Project LP's proposal to build an LNG import terminal and associated pipeline facilities to serve the Pacific Northwest, Northern California and northern Nevada.

"I think the key issue has to do with lining up the contracts for the LNG," Darbee said. "This pipeline project will only move forward if the partners are able to line up product to move through that pipeline. There is also some local permitting that has to be completed in and around Coos Bay in Oregon."

The project manager for the Jordan Cove project, Bob Braddock, told NGI late Wednesday that he expects FERC to certify the environmental assessment by the end of July, and that near late summer or early fall he hopes to have an announcement on potential LNG supplies. With those two milestones, Jordan Cove is still on target to begin construction in the fall of 2010, Braddock said.

On the BC to California power transmission line "We've been working with the other utilities on the specific geography for the transmission line route," Darbee said. "We have also been in discussions with the counterparties in Canada -- both on the generation and the transmission sides."

But, "there are quite a number of hurdles for this to go," Darbee said.

Still to be completed in the study are the detailed cost and other issues revolving around a multi-billion-dollar project of this magnitude. During the past two years PG&E has spearheaded efforts to analyze alternatives that have included both 500-kV and 765-kV alternating current (AC) and high-voltage direct current (HVDC) lines via overhead or undersea routes between British Columbia and Northern California. The transmission would improve California's access to hydropower supplies.

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