Intrastate Pipes Needed in California

The problem is not natural gas pipeline capacity going 'to' California, rather it is a lack of pipelines 'within' the state, particularly to power generation plants, that is aggravating problems in the state electric power market, according to Kevin Petak, director of Energy and Environmental Analysis Inc. (EEA).

Petak noted FERC's request last week that El Paso consider adding capacity to California, specifically by using a crude oil pipeline it recently bought and is planning to convert to gas as a supplement to its system, rather than as replacement capacity (see Daily GPI, Jan. 5).

El Paso seeks to convert a 785-mile segment of the oil lne from McCamey to Ehrenberg, AZ, to gas. The pipeline proposed the Line 2000 project as a loop line to replace existing compression, and not as a system expansion. However, shippers have protested having to pay for it as a replacement project and suggested both converting the line and replacing the compressors on the old line. El Paso is said to be considering that option (see Daily GPI, Sept. 1, 2000).

"But the discussion has yet to focus on the need for additional intrastate transportation capacity, which is critical to ease the bottlenecks that are creating the current conditions in the gas market," Petak said. There already is additional capacity available going to the border on the current pipelines, El Paso, Transwestern, Kern River and Mohave. However, the gas has a hard time reaching end users, particularly power generators.

The analyst for EEA, based in Arlington, VA, also suggested that "development of new California deep gas production at East Lost Hills would assist in easing some of the pressure on California gas supply and therefore on gas prices, but only if intrastate pipeline capacity is available to move the gas to end-users." Developing the in-state gas supplies, however, would take time.

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