PG&E Hangs on By a Thread, Still Desperate for Gas Supply

Despite the nine natural gas suppliers who bellied up to Pacific Gas & Electric's bar last week after the federal emergency order expired, the utility still faces "the possibility of a severe gas supply crisis."

Either more suppliers must step forward or the state will have to order neighboring LDC, Southern California Gas to provide emergency help, according to PG&E utility CEO Gordon Smith. In a letter to the California governor Smith outlined the situation.

"We are withdrawing approximately 600 MMcf/d of gas from storage (last Wednesday) in order to meet current demand of 1.8 Bcf/d. We have been able to purchase approximately 1.1 Bcf/d of flowing supplies, and we obtained the remaining supplies from a 'parking' arrangement worked out last weekend in Canada, when temperatures here were unseasonably warm.

"Our gas storage inventory is now approximately 38 Bcf. We project that we will deplete storage down to 22 Bcf by mid-March. This is the minimum level we believe we must retain in storage in order to meet demands for gas next winter."

State regulators last Thursday postponed ruling on a two-week-old PG&E request for the emergency supplies from SoCalGas, something the latter utility is strongly opposing. That same day, however, three other suppliers - TXU Canada, TXU Houston and Williams - agreed to continue supplying gas, giving PG&E nine new contracts among its 40-odd prospective suppliers under a new arrangement in which the utility's retail gas revenues provide security they will be paid.

Those who signed on earlier include: BP Energy, Texaco Natural Gas, Dynegy Marketing and Trade, Texaco Canada Petroleum, Dynegy Canada Marketing and Trade, and El Paso Merchant Energy.

Richard Nemec, Los Angeles

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