As part of its 53 long-term electricity contracts, California’s Department of Water Resources (DWR) is shopping for a portfolio of natural gas supplies of various duration to use in about half the deals that give the state the option of providing its own fuel supplies when it can beat prevailing market rates used by its power suppliers.
So far, it has seven gas deals in various stages of development with six different marketers, according to Sacramento-based DWR spokesperson Oscar Hidalgo. Two contracts are in effect now with PanCanadian Energy Services for July and August strips of gas supplies. At this point, DWR will not talk about how much gas and/or electric supplies are involved.
“We have a total of seven ‘enabling agreements’ that allow us to purchase supplies into the future without re-doing the whole contract process each time,” Hidalgo said. “What we have now are two executed contracts with PanCanadian for gas.
“It doesn’t mean we have to supply gas for the generator (in our long-term contracts), it just means if we can buy gas at a better rate, we have an option to do so. So we’re in the early stages of building a gas portfolio that will allow us to bring gas to the deal if it is cost-effective for us to do so.”
DWR is looking at possible storage services as part of its gas deals, said Hidalgo, noting that the state’s power-buying agency wants to hedge by having some bulk power deals tied to fixed prices and others using gas tolling arrangements.
In addition to the Canadian company, the five other gas marketers with which DWR is talking are: BP Energy Co.; Coast Energy Group; Occidental Energy Marketing, Inc.; Dynegy Marketing and Trade; and Texaco Natural Gas, Inc.
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