The Energy Information Agency (EIA) and the California Energy Commission (CEC) both agree there is a bottleneck where the interstate and intrastate grids meet in California. However, the two agencies are miles apart on the size of that difference.

The limited take-away capacity of California intrastate pipes limits the amount of gas that can be delivered by interstate pipelines, according to a new EIA report: Electricity Shortage in California: Issues for Petroleum and Natural Gas Supply. EIA calculates the total constraint to be 590 MMcf/d. The CEC, however, estimates that only 200 MMcf/d is left at the border.

The EIA’s findings come amid continuing investigations by FERC into the California energy crisis and the recent record spikes in natural gas prices. Over the next three and-a-half years, 11 new pipelines projects or expansions are expected to be added to the California grid, the EIA said. That begs the question: will the projects all succeed and will they solve the problem?

On the PG&E system, interstate pipeline capacity levels exceed current customer needs even on peak days, according to the EIA. “PG&E’s daily requirements during the summer are usually below the certificated capacity at the northern California border (at Malin, OR, from PG&E Transmission – NW) by 20-to-30 MMcf/d, while during the winter season that rises to 90+ MMcf/d.” Still, PG&E plans to upgrade and expand its system in the near future to accommodate a planned increase in capacity on the PG&E Transmission – NW system of more than 300 MMcf/d in 2002. Citing that demand will grow sufficiently by then to justify the expansion, PG&E said it has no plans, however, to increase its capacity on its southern route, which transports gas into California from Arizona.

The EIA reported that the SoCal system, on the other hand, is often operating at or above full capacity. The high spot gas prices currently posted at southern California citygates seem to indicate to the EIA a lack of adequate pipeline capacity from the Southwest into the state. “Although it has been speculated that SoCal may be hesitant to expand its system because, once the hydropower resources return to normal (most likely in 1 to 2 years), less natural gas will be needed for electric power generation, SoCal has in fact announced several projects to expand delivery capacity within the State,” the EIA report said.

SoCal has recently filed for two expansion projects, both to be completed in late 2001. The first project would increase take-away capacity at three critical points on its system. Although capacity would only reportedly increase by only about 50-60 MMcf/d at each point, one would increase access to growing California gas production while the other two would upgrade currently constrained interconnections with the interstate network, the EIA said. The second project involves the building of a new 200 MMcf/d, 32-mile lateral that would link the southern part of the SoCal system with an interconnect with the Kern River-Mojave Pipeline located on the northern part of the SoCal system. Kern River announced it was soliciting shippers for the project earlier last week (see related story this issue).

EIA estimates that at least six projects have been proposed to bring additional pipeline capacity into California, but only two will be able to have immediate impact on the gas situation in the state. The Kern River Transmission Co. 2001 California Emergency Action Expansion (135 MMcf/d) and the El Paso Line 2000 Project (230 MMcf/d) are slated for completion this summer. Most of the other proposals will not have an impact on the California capacity market until 2002 or later.

Meanwhile, the EIA said the interstate natural gas pipelines serving California have adequate capacity to meet current demand within the state, although all but Kern River and Mojave have been operating at full capacity much of the time during the past several months. “The interstates have the capability to deliver more than 7.3 Bcf/d to the state if needed,” the report said. “According to the CEC, the major in-state natural gas service providers, PG&E and SoCal Gas, are fully utilizing their receipt capacity at the state border.”

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