Despite the nine natural gas suppliers who bellied up to PacificGas & Electric’s bar last week after the federal emergencyorder expired, the utility still faces “the possibility of a severegas supply crisis.”

Either more suppliers must step forward or the state will haveto order neighboring LDC, Southern California Gas to provideemergency help, according to PG&E utility CEO Gordon Smith. Ina letter to the California governor Smith outlined the situation.

“We are withdrawing approximately 600 MMcf/d of gas from storage(last Wednesday) in order to meet current demand of 1.8 Bcf/d. Wehave been able to purchase approximately 1.1 Bcf/d of flowingsupplies, and we obtained the remaining supplies from a ‘parking’arrangement worked out last weekend in Canada, when temperatureshere were unseasonably warm.

“Our gas storage inventory is now approximately 38 Bcf. Weproject that we will deplete storage down to 22 Bcf by mid-March.This is the minimum level we believe we must retain in storage inorder to meet demands for gas next winter.”

State regulators last Thursday postponed ruling on atwo-week-old PG&E request for the emergency supplies fromSoCalGas, something the latter utility is strongly opposing. Thatsame day, however, three other suppliers – TXU Canada, TXU Houstonand Williams – agreed to continue supplying gas, giving PG&Enine new contracts among its 40-odd prospective suppliers under anew arrangement in which the utility’s retail gas revenues providesecurity they will be paid.

Those who signed on earlier include: BP Energy, Texaco NaturalGas, Dynegy Marketing and Trade, Texaco Canada Petroleum, DynegyCanada Marketing and Trade, and El Paso Merchant Energy.

Richard Nemec, Los Angeles

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