Nonbinding interest in a recently completed open season may cause the sponsors of a proposed new intrastate transmission pipeline in Oregon to increase its maximum capacity from 1 Bcf/d to 1.5 Bcf/d, according to a senior executive at PG&E Corp. speaking Thursday on a first quarter earnings conference call.
PG&E announced an increase in earnings to $256 million, or 71 cents/share, compared with $214 million, or 60 cents/share for the same period in 2006. "We're well on our way to becoming the leading utility in the nation," said PG&E CEO Peter Darbee.
While emphasis was on the expansion of "low-risk, attractive value" activities in its core utility, Pacific Gas and Electric Co., PG&E is pursuing a number of utility-related merchant projects in the West, including the proposed 230-mile, 36-inch diameter pipeline between Coos Bay and Malin, with interconnects to Williams' Northwest Pipeline near Myrtle Creek, Avista Corp.'s pipeline near Shady Cove, as well as PG&E's gas transmission system, Tuscarora Gas Transmission and Gas Transmission Northwest, all located near Malin (see Daily GPI, March 9).
The pipeline project is a partnership of Williams Pacific Connector Gas Pipeline LLC, PG&E Strategic Capital Inc. and Fort Chicago LNG II U.S. LP.
In response to a question from an analyst, PG&E utility CEO Tom King reiterated that the sponsors think a 1.5 Bcf/d pipeline ultimately may be built, depending on what happens with the level of market interest in supplies from a proposed liquefied natural gas (LNG) receiving terminal along the southern Oregon coast at Coos Bay. The Jordan Cove LNG sponsors are proposing to build a new, state-of-the-art import terminal that will be located in the now-developing International Port of Coos Bay in Coos County, OR. It would be jointly owned by Fort Chicago and Energy Projects Development, LLC. Fort Chicago is a 50% owner of the Alliance Pipeline from Western Canada into Chicago.
Both the LNG terminal and connecting pipeline are expected to make filings to the Federal Energy Regulatory Commission by the end of the second quarter, King said during the conference call.
Analysts questioned both King and Darbee on PG&E's longer-term interest in making major mergers or acquisitions (M&A), such as purchasing another major utility company, and Darbee reiterated what he has said in several recent financial forums -- namely, the company is "scanning the horizon," but its highest priority remains growing its core utility business and pursuing a hybrid alternative energy-powered transportation development strategy, taking precedent over the M&A opportunities.
"We continue to focus on attractive, low-risk opportunities," said Darbee, in the process of affirming previous earnings guidance ($2.70-2.80/share this year and $2.90-3/share next year), along with noting that the utility has completed some new renewable resource acquisitions, such as an added geothermal supply contract.
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