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CA Gas Infrastructure Could Be Overloaded

CA Gas Infrastructure Could Be Overloaded

Compression upgrades on parts of the Southern California Gas Co. pipeline infrastructure along with using cushion gas from several storage fields, including SoCal's idle Montebello field, may be the last and best hope of avoiding a meltdown in California's natural gas transmission pipeline infrastructure this summer under the weight of heavy demand from electric generators, a state energy expert told California legislators last Wednesday.

"If everything works right, under a base case scenario we could just barely sneak by," said Bill Wood, natural gas forecasting director at the California Energy Commission, who noted that his dire predictions for the summer did not factor in the possibility of the state having an extra 10 to 12 Bcf of gas available from SoCalGas' Montebello storage facility, which has been out of service and awaiting a now-deferred sale.

In a March 27 letter, SoCalGas Chairman Edwin A. Guiles informed California Public Utilities Commission President Loretta Lynch that the LDC is proposing some adjustments to its gas storage operations that will help increase the in-state supply of natural gas by 24 Bcf --- or enough gas to serve a half million residential customers for one year --- over the next year. It already has on file at the CPUC plans to abandon the Montebello storage field in Los Angeles County and withdraw the 10-12 Bcf of base and working gas that remains in the field. In addition, the company is planning to drill several new wells at its Aliso Canyon and La Goleta storage fields in order to remove 14 Bcf of base gas, split evenly between the two fields, and sell it into the market. The reduction in base gas is expected to have no impact on the amount of working gas capacity available in each field.

"That's gas that is already in the (SoCal) system, you don't have to get it through the bottlenecks to get it there," Wood said. "Montebello gives them an edge, and the next best edge is to add compression --- at least at one of the key receipt points. What we have here is a lot of 'depends', but it looks like SoCalGas is considering putting in some kind of temporary compression units. They have been bouncing around a number of options for this summer, but they need to start consciously moving in the direction of a short-term or a long-term fix."

Guiles also told Lynch the company had begun modifications to its system that will allow it to deliver an additional 175 MMcf/d by year end. He said SoCal plans to increase by 85 MMcf/d the receipt point capacity at Wheeler Ridge where it interconnects with Kern River and Mojave. At the Needles compressor station where it interconnects with Transwestern Pipeline, it plans to add 50 MMcf/d, and at a receipt point for in-state production in the San Joaquin Valley, the company plans to add 40 MMcf/d.

"In light of the uncertainties surrounding future demand for natural gas on The Gas Company's system, these modifications are the least cost way that we can be assured of meeting the gas demands of all of our customers and avoid any possibility for curtailments of service," said Guiles. He said the proposed 5% increase in capacity would be enough to serve another 1.3 million residential customers per day or to power 1,200 MW of new baseload electric generation.

"Our goal for this year is to have no curtailments of gas service to our customers, but we need to maximize the use of our existing intrastate capacity in order to reach our goal," said Guiles. "We're telling our large industrial and electric generation customers that the best way that they can avoid curtailments next winter is to make full use of the available pipeline space and put natural gas in storage whenever possible, particularly during the second quarter of this year. "I believe that, if undertaken, these proposals will have a positive impact on reliability next winter," said Guiles.

Wood told a special state Assembly natural gas oversight committee last week that four uncertain factors could put unprecedented pressure on the state's natural gas infrastructure this summer, especially in the southern half of the state: (1) delay in getting back online a 1,000 MW unit at the San Onofre Nuclear Plant that was taken out by a fire recently; (2) how much of the currently idle qualifying facility (QF) generators are back in service; (3) hydroelectric power conditions, now looking very bleak, from the Pacific Northwest and (4) new gas-fired generation in and outside the state.

"San Onofre represents a significant amount of gas demand, if it stays down (beyond the current June 1 target for restarting it) and if it is replaced entirely by gas," Wood said. "Nevertheless, a portion would have to be replaced by gas. If it doesn't come up until October, that would put more strain on the generation capacity inside the Los Angeles Basin."

Ultimately, weather will play a big factor, too, said Wood, concluding that "the SoCal system is very tight regarding its ability receive gas and also get gas into storage for summer generation requirements and next winter's requirements."

The California Public Utilities Commission has scheduled an April 17 workshop in San Francisco to begin collecting data on what needs to be done overall to the state's pipeline network. One of Wood's colleagues from the state energy commission will make a proposal at that session, he said.

With nine new generating plants under construction or approved --- all natural gas-fired --- the state energy commission has been saying for the past year that the state has to upgrade its natural gas infrastructure. Several merchant generators, such as Duke Energy, have repeated this at various forums with state and federal energy officials.

The temporary solutions for this summer will require "everything falling in line in two to three months," said Wood, citing the uncertainty of the availability of mobile compression units and the ability to streamline environmental and safety permitting in the local areas where the facilities were brought online.

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