While scores of pipelines are jockeying to supply gas to newpower generators in the Northeast market, PG&E Gas Transmission— the 7th largest pipeline in the nation — is turning itsattention to the rapidly growing generation markets in the PacificNorthwest and Texas, where the competition from rival pipelines ismuch less fierce.

“We’ve got a pretty good shot at picking up a big piece” of thenew generation capacity that’s projected for these markets, saidTom King, president and COO of PG&E Gas Transmission, abusiness unit of PG&E Corp. that includes the PG&E GasTransmission-Northwest system, as well as a network of intrastatefacilities in Texas. With the exception of Williams, “thecompetitors are limited” for the developing gas-fueled PacificNorthwest generation market.

“We are ‘the’ pipe except for [BC Hydro’s and Williams’] veryrecently announced Vancouver project that’s tied to the AlbertaBasin. We can very effectively and efficiently expand the system at[an] appropriate cost and still meet the market need relative topricing and basis differential,” he told reporters last Tuesdayduring a press briefing at the company’s office in Washington, D.C.But rather than going up against each other head-to-head, King sees”more of a need [for] cooperation between the two systems” inbuilding expansions to meet new generation load.

Conservatively, he projects PG&E Gas Transmission will needto incrementally expand its existing 6 Bcf/d system by as much as200 MMcf/d over the next few years. That may be small potatoescompared to some of the mega-projects being announced, but Kingnoted the initial expansion estimate is based only on the powergeneration projects that PG&E Gas Transmission is certain willhappen.

The Pacific Northwest expansion would meet the needs of sixproposed generation projects (2,600 MWs) that will be “directlyconnected” to PG&E GT-NW’s system, King said. It doesn’tinclude nine other prospective projects (with 3,900 MWs of newcapacity).

Capacity-wise, a spokeswoman said PG&E Gas Transmission isin good shape to serve the expanding generation markets in Texas.King noted four new generation projects are scheduled to go intoservice either later this year or in 2000, adding an aggregate of3,100 MWs of new generation capacity. He estimated that another 12projects are on the drawing-board in Texas, and said he plans toaggressively pursue those.

In the Lone Star state, “we…..launched e-commerce about amonth or two ago” for intrastate pipelines. “This is a big deal forthe intrastates” because it moves them into the interstate pipelineworld, he said. “We’re the first ones to really step out and do itfor intrastates.” And next year “we’re going to target noms andscheduling electronically through our Web site.” The company’sintrastate system is PG&E Gas Transmission-Texas.

It is “also looking at [offering] new services within theintrastate system,” such as parking and lending, and services toaddress generation load swings, King noted. Moreover, it’s lookingto expand its storage capacity in Texas by 3 Bcf over the nextthree years.

Before moving ahead with the system expansion, however, Kingsaid PG&E Gas Transmission will hold — probably within thenext month — a reverse open season, enabling customers to turnback unused capacity to the pipeline. He said he believes this willbe completed within 60-90 days, with the incremental expansiontargeted for operation by 2001-2002.

“The drive behind our open season is to rationalize ourcapacity-holders. And that is going to give us a very clearindication of how much…..expansion we need. We got about 40MMcf/d uncontracted. And there [is] 50-100 MMcf/d immediate marketcoming on board here.” King doesn’t think FERC’s preference forincremental rate treatment for new expansions will be a problem.”We have the ability to expand…..without jeopardizing our abilityto cover the cost…..And we are willing to take a morerisk-oriented profile than we have in the past.”

As on the East Coast, the public isn’t exactly rolling out thewelcome mats for new pipeline projects in the Pacific Northwest, hesaid. “Probably the biggest battle that we’ll have on our hands” isdealing with the fallout from an explosion caused by a productspipeline in Bellingham, WA, last June, which killed three.

“That has heightened the [concerns of] residents, governmentalofficials and regulatory officials on the issue of pipeline safety.That accident will cause us to have a little more of abattle…..than we’ve had historically,” he noted. King believesthe fallout eventually is going to be felt by gas pipelinesnationwide. “The entire industry, not just in this region, …..isgoing to have a much more difficult time [with expansions] due tothat explosion.”

As for entering new markets, King said affiliate PG&EGenerating is eyeing “some opportunities” in the Midwest,specifically in Ohio and in Wisconsin. It’s looking at generationprospects that would be “accretive to earnings immediately.” Hewouldn’t say whether PG&E Gas Transmission plans any newpipeline projects to serve generation load in that region.

Susan Parker

©Copyright 1999 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.