PG&E GT-NW Unveils Multi-Phase Expansion Plan

Responding to tight energy supplies in the Pacific Northwest and California, PG&E Corp.'s National Energy Group revealed plans last week to begin an open season early next year, kicking off a five-year expansion effort. The first phase would add 200 MMcf/d of firm transportation capacity out of western Canada on its Gas Transmission-Northwest (GTN) pipeline system. The PG&E GTN group expects the phase one expansion to be in service by November 2002 at the latest.

"As we have been anticipating, the western natural gas market is at a critical point in the need for additional pipeline capacity," said Thomas B. King, president of the PG&E National Energy Group (PG&E NEG) West Region. "Gas supplies into the Pacific Northwest and California are very tight. At the same time, the market is strong and growing, and the PG&E Gas Transmission Northwest pipeline system has been operating at or near maximum capacity levels for the greater part of the year. We believe GTN is now positioned for an aggressive expansion period that will result in additional supplies of natural gas --- at competitive transportation rates --- in this region for both direct-use customers and electric generation by 2002."

King noted that the phase one expansion of the GTN system was brought on primarily because of the state of disarray in the California market. He cited the growing use of gas to fuel electric generating facilities as the main reason new capacity is needed.

King added that the GTN pipeline system is the most direct and economic link for tapping the Canadian production basins, and bringing the load to California and the Pacific Northwest markets. He also emphasized that the expansions would help the market prepare for new supply from Alaska.

"We are constantly talking to our customers about what is the right time for us to expand our pipeline system," said Sandra McDonough, spokeswoman for PG&E Corp. "With the power plant development both in California and in the Pacific Northwest, including plants in the Northwest that are being built right next to our pipeline, the time is clearly now to start expanding the system. We have gotten more bids for capacity than we have been able to move recently." McDonough told NGI last week that the company was looking to expand its mainline in the near future (see NGI, Dec. 18).

To gauge demand, PG&E NEG plans to launch an open season for the 200 MMcf/d expansion of the mainline beginning on Jan. 2, 2001. Bids are due by Feb. 15, 2001. Following the open season, the company will hold a capacity rationalization period, which will allow existing shippers to release capacity directly to customers who have expressed an interest.

The 612-mile dual pipe GTN system begins at the Idaho-British Columbia border, travels through northern Idaho, southeastern Washington and central Oregon, and terminates at the Oregon-California border where it connects with the Pacific Gas and Electric Co. intrastate pipeline system.

Currently, the GTN system is the largest U.S. transporter of Canadian natural gas with 2.7 Bcf/d of capacity. The expansion was deemed necessary because the average contract term on the line extends through 2013, and the pipeline has been operating at capacity, or near capacity for most of 2000. The method of expansion had not been decided on yet, but it is expected to include additional compression and some looping.

McDonough said PG&E has been in contact with its upstream providers including TransCanada Pipelines Limited (TCPL) to ensure coordination of capacity. Doug Baldwin, CEO of TCPL, said TransCanada will work with PG&E NEG to examine and, if appropriate, satisfy the needs of market participants in both the western United States and Canada.

If response to the open season is adequate, PG&E NEG hopes to move along with the project immediately. The November 2002 in service date includes an anticipated one-year process to obtain a Federal Energy Regulatory Commission (FERC) permit.

"We also expect to have an incremental 265 MMcf/d of new direct-connect gas-fired electric generation load along the GTN system in the Pacific Northwest by mid-2002," King said. "We expect to follow the 2002 project immediately with additional pipeline expansions to meet the need for additional gas supplies in the Pacific Northwest, on both the east and west sides of the Cascade Mountains."

For the next five-to-eight years, PG&E Corp. expects to be busy with pipeline expansions and new additions. The company has planned a second mainline expansion to be in service in 2004, with a new interconnect near Spokane, WA, which will serve the Puget Sound/Seattle area. The last expansion phase will be brought online sometime after 2005. With Alaskan gas fields expected to be ready for commercial service in the next five to 10 years, PG&E NEG will build an expansion that will facilitate transportation of gas from Alaska and Canada's Northwest Territories to markets in the lower 48 states.

"Overall what we are looking at is the potential to expand the system by 1 Bcf/d over the next decade," McDonough said.

Alex Steis

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