Allegations that large capacity-holders on El Paso Natural Gashave deliberately withheld pipeline capacity from the market todrive up gas prices in California, and that the pipeline wasinvolved in a “conspiracy” in 1996 to block new interstate pipecapacity from entering the state are unfounded, said a companyspokeswoman.
“We would like to take this opportunity to clarify the record,”said spokeswoman Norma Dunn in a prepared statement late Friday.These accusations “overlook critical facts and are demonstrablyuntrue.”
“It is not possible for any holder of capacity on the El PasoNatural Gas pipeline to cause a significant increase in Californiagas prices by refusing to use that capacity,” she said. Dunnspecifically noted that all of the capacity held by affiliate ElPaso Merchant Energy, the largest capacity-holder on the pipeline,has been used or made available for use by others to serveCalifornia and other western markets.
As for allegations of a conspiracy in 1996, she said, “the factsshow that all new pipelines considered during the 1990s were eitherbuilt or were not viable projects because they lacked sufficientcustomer support to justify their construction.” Dunn citedTenneco’s failed Altamont project as an example of the latter.
In 1996, she noted the excess pipeline capacity into Californiaranged up to 2 Bcf/d. It “was misplaced reliance on the continuingavailability of such excess capacity that prompted the CaliforniaPublic Utilities Commission to encourage PG&E, SoCal Edison andSoCal Gas, beginning in 1996 and continuing into 1998, torelinquish over 1.5 Bcf Bcf/d of firm transportation capacity onthe El Paso Natural Gas pipelines.”
As recently as last year, Dunn said there were periods whensignificant quantities of unused capacity were available on ElPaso, but shippers failed to take advantage of this. “If Californiahad taken advantage of the opportunity in 2000 to store the samevolumes of natural gas that had been stored in 1999, reliance onthe spot market would have been reduced and the steep rise inprices at the California border could have been substantiallymitigated or avoid,” she noted.
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