Extreme weather and questionable interstate natural gas pipeline capacity for the peak demand could compromise California energy reliability this summer, according to an outlook report from the Energy Security Analysis, Inc. (ESAI) in its latest assessment of North American natural gas capabilities. California’s chief gas forecaster, however, isn’t worried about this summer because demand for gas from generators will be down compared to last summer.

“Given the relatively modest expansion of interstate pipeline capacity expected by the summer of 2002, the 10% expansion of gas-fired generating capacity which has occurred since the summer of 2000, and the potential siphoning off of gas for out-of-state generating units, there is reason for concern that pipeline capacity might be tight this summer,” the ESAI regional outlook concluded.

However, in its overriding conclusion, the analysis agrees with Bill Wood, the California Energy Commission’s chief natural gas forecaster, that a combination of increased in-state generating capacity, near-normal hydro-electric supplies and a continued decrease in peak demand through various conservation and energy efficiency programs collectively should add up to “few shortages and less price volatility this summer.”

“We’re not going to have the big electricity generation requirements we had last year,” Wood said, “mainly because we have all the good hydro up in the Pacific Northwest, and that is what triggered most of our problems last year — being dry [up there]. If there had been an average hydro year, then we wouldn’t have had the problems we had for the last two years in terms of generation loads and getting the gas into the state to meet those loads.”

“So, there are three factors at work: (1) generation requirements should be lower because of the hydro, (2) we are looking for at least a 7% conservation factor again carrying over which will further reduce generation requirements, and (3) we have about 4,000 to 5,000 new megawatts of capacity that has come on line in the last year that is all very efficient, about 30% more efficient, so there is a lot of savings there. Instead of burning 240 MMcf/d for the old units, we’ll be burning more like 148 MMcf/d with the new units.”

Wood counts an added 200 MMcf/d receiving capacity on the Pacific Gas and Electric Co. transmission pipeline system and more than 350 MMcf/d increase on the Southern California Gas Co. system, along with added capacity out of state on the Kern River Pipeline (an increase of 134 MMcf/d).

ESAI uses state energy commission historic summer peaks to show a decline the last two years in California, after an all-time record of 53,163 MW in 1999, the peaks slipped to $52,588 MW in 2000 and down to 47,820 MW last summer. However, the analysis goes on to note that despite up to 900 MMcf/d of additional interstate capacity. California will not have exclusive rights to the new interstate capacity, “and most of the 2002 additions will come on-line after the peak summer electric generator demand,” the report said.

“The status of the individual out-of-state generation projects and their contractual relations with the pipelines are not fully known. However, if all of the planned generation projects were to be completed–an unlikely scenario–there gas requirements would be many times the (pipeline) capacity expansions planned to serve California.”

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