A new nonutility natural gas supply network and someenvironmental concessions to local agricultural interests are twonew twists to a major 500 MW merchant natural gas-fired power plantproposed for northern California in proximity to the SacramentoValley gas fields. As a result, the project sponsor, CalpineCorp., has agreed to invest an additional $20-$25 million in theestimated $300 million project to use a more environmentally benignair cooling system at the plant instead of the traditionalwater-based evaporative cooling approach.

The move is strictly to assure “local community support,” whichincludes organized labor and environmental groups, according to RonWalter, Calpine’s senior vice president for business development.The air-vs.-water approach eliminates three environmental concernsin the rural area north of Sacramento: use of ground water,discharge into the water runoff system and vapor plumes thatdevelop from traditional evaporate cooling at power plants.

In addition, the proposed plant will stimulate an average 80MMcf/d natural gas requirement that will be fulfilled by acombination of Calpine-owned local supplies and a variety of short-and long-term deals on the open market. Walter noted that aboutthree-quarters of the gas will come from contracts now being linedup, some of which he thinks will come from Canadian sources.

Similarly, Calpine is negotiating possible gas storage serviceswith the two proposed merchant storage operators in the area,Canadian-backed Wild Goose and U.S. private investor-backed WesternHub Properties.

The rest of the gas will come from local sources that Calpineowns or has contracts for in the greater Sacramento Valley gasfields and will be delivered through a pipeline system it isdeveloping. An additional 10-mile pipeline link, Walter said, willbe built to connect existing Calpine-owned gathering andtransmission pipelines in the Western part of the Valley north ofPittsburg, CA, and another pipeline system connected to supplies itowns north of Sacramento closer to the proposed power plant, calledthe Sutter Project.

Some of the latter suppliers already are serving two existingsmaller (Greenleaf) cogeneration operations that Calpine has in theSacramento Valley. Walter said the use of Calpine’s gas andtransmission helps make the power projects in the area morecompetitive because it avoids the transportation charges on thePacific Gas and Electric transmission system and mark-up of thegas. The Calpine gas also can be non-pipeline-quality supplies andstill be used since it is being used exclusively for powerproduction, Walter said.

However, the supplies being negotiated on the open market as aportfolio of supplies-spot and longer term-will be shipped throughPG&ampE’s utility transmission system, requiring that Calpine paytransportation charges.

Richard Nemec, Los Angeles

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