Growing reliance on natural gas to produce electricity throughout the West is presenting planning challenges to energy planners in California, a panel of government and utility representatives told an industry workshop in San Francisco Tuesday, the first day of a two-day look at “Natural Gas Market Outlook, 2006-2016.”
Hydro-electric availability, mothballing of older, inefficient plants, and the adequacy of electric transmission all are major variables that can swing natural gas demand by as much as 600 MMcf/d in California alone, speakers from Pacific Gas and Electric Co., Southern California Gas Co. and Wild Goose Storage indicated in a panel presentation.
Calling the natural gas portion of California’s newly crafted statewide Energy Action Plan “less complete” than other parts, Michael Peevey, president of the California Public Utilities Commission, said the two-day workshop can help put more meat on gas in the state plan. In later discussion the first day, Peevey said the increasing emphasis on renewable sources of power generation and the state’s reluctance for environmental reasons to return to dual-fuel generation must be considered in planning for adequate gas supplies in the state.
Gas peak demand periods now come in both the winter and summer in the West, and particularly California, changing the nature of storage into a two- or three-cycle annual operation, according to Michael Day, an attorney for Wild Goose and former official with the CPUC at the workshop, which was jointly sponsored by the regulatory panel and California Energy Commission.
While gas use in electricity generation is expected to increase substantially, overall demand is expected to decline after this year, the two utility representatives said. Overall demand might get back to 2002 levels around 2016.
Different scenarios for gas demand are heavily impacted by hydro-electric supplies particularly, the speakers emphasized. In the 2000-2001 drought period in the Pacific Northwest, PG&E’s utility used an additional average of 400 MMcf/d of natural gas for power generation as a result. In a more normal, “1-in-10-years” scenario for hydro levels, the northern California utility uses an average of 200 MMcf/d of added gas supplies for power.
In addition to the shorter term issues of weather and power plant retirements and mothballing, longer term issues involve where the power plants are built and what transmission capacity is available, Energy Commission Chairman William Keese said. Other speakers noted that the overall power demand load for gas in Southern California is dropping as more new plants are being developed in Nevada and Arizona that help meet the growing electricity demand.
“We’ve seen a decline in energy-intensive industrial operations in Southern California — partly due to business operations, economics and environmental factors,” said Jeff Hartman, Sempra Energy’s utility energy markets director.
By 2005, 100 Bcf of new natural gas storage will be needed in North America, according to National Petroleum Council estimates cited by Wild Goose’s Day, who advocated more attention to storage in the state’s future planning. “Inventory levels in storage are not the best measures of whether a given area can meet peak demand,” he said. “We’re concerned that regulators and the industry as a whole are taking some false comfort from the last year when we saw a late surge in storage injection, and eventually inventory levels were raised to historic averages last year; but the question is — what was the context in which that occurred (mild weather, stalled economy, demand response strong to 2000-01 price spikes)?
“We got our storage full again, but we did it at a very easy time to do it. If conditions were adverse and we had increased economic activity, that is where we could be facing a serious deliverability challenge.”
©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |