Responding to tight energy supplies in the Pacific Northwest andCalifornia, PG&E Corp.’s National Energy Group revealed plansWednesday to begin an open season early next year, kicking off afive-year expansion effort. The first phase would add 200 MMcf/d offirm transportation capacity out of western Canada on its GasTransmission-Northwest (GTN) pipeline system. The PG&E GTNgroup expects the phase one expansion to be in service by November2002 at the latest.

“As we have been anticipating, the western natural gas market isat a critical point in the need for additional pipeline capacity,”said Thomas B. King, president of the PG&E National EnergyGroup (PG&E NEG) West Region. “Gas supplies into the PacificNorthwest and California are very tight. At the same time, themarket is strong and growing, and the PG&E Gas TransmissionNorthwest pipeline system has been operating at or near maximumcapacity levels for the greater part of the year. We believe GTN isnow positioned for an aggressive expansion period that will resultin additional supplies of natural gas — at competitivetransportation rates — in this region for both direct-usecustomers and electric generation by 2002.”

King noted that the phase one expansion of the GTN system wasbrought on primarily because of the state of disarray in theCalifornia market. He cited the growing use of gas to fuel electricgenerating facilities as the main reason new capacity is needed.

King added that the GTN pipeline system is the most direct andeconomic link for tapping the Canadian production basins, andbringing the load to California and the Pacific Northwest markets.He also emphasized that the expansions would help the marketprepare for new supply from Alaska.

“We are constantly talking to our customers about what is theright time for us to expand our pipeline system,” said SandraMcDonough, spokeswoman for PG&E Corp. “With the power plantdevelopment both in California and in the Pacific Northwest,including plants in the Northwest that are being built right nextto our pipeline, the time is clearly now to start expanding thesystem. We have gotten more bids for capacity than we have beenable to move recently.” McDonough told Daily GPI last week that thecompany was looking to expand its mainline in the near future (seeDaily GPI, Dec. 13).

To gauge demand, PG&E NEG plans to launch an open season forthe 200 MMcf/d expansion of the mainline beginning on Jan. 2, 2001.Bids are due by Feb. 15, 2001. Following the open season, thecompany will hold a capacity rationalization period, which willallow existing shippers to release capacity directly to customerswho have expressed an interest.

The 612-mile dual pipe GTN system begins at the Idaho-BritishColumbia border, travels through northern Idaho, southeasternWashington and central Oregon, and terminates at theOregon-California border where it connects with the Pacific Gas andElectric Co. intrastate pipeline system.

Currently, the GTN system is the largest U.S. transporter ofCanadian natural gas with 2.7 Bcf/d of capacity. The expansion wasdeemed necessary because the average contract term on the lineextends through 2013, and the pipeline has been operating atcapacity, or near capacity for most of 2000. The method ofexpansion had not been decided on yet, but it is expected toinclude additional compression and some looping.

McDonough said PG&E has been in contact with its upstreamproviders including TransCanada Pipelines Limited (TCPL) to ensurecoordination of capacity. Doug Baldwin, CEO of TCPL, saidTransCanada will work with PG&E NEG to examine and, ifappropriate, satisfy the needs of market participants in both thewestern United States and Canada.

If response to the open season is adequate, PG&E NEG hopesto move along with the project immediately. The November 2002 inservice date includes an anticipated one-year process to obtain aFederal Energy Regulatory Commission (FERC) permit.

“We also expect to have an incremental 265 MMcf/d of newdirect-connect gas-fired electric generation load along the GTNsystem in the Pacific Northwest by mid-2002,” King said. “We expectto follow the 2002 project immediately with additional pipelineexpansions to meet the need for additional gas supplies in thePacific Northwest, on both the east and west sides of the CascadeMountains.”

For the next five-to-eight years, PG&E Corp. expects to bebusy with pipeline expansions and new additions. The company hasplanned a second mainline expansion to be in service in 2004, witha new interconnect near Spokane, WA, which will serve the PugetSound/Seattle area. The last expansion phase will be brought onlinesometime after 2005. With Alaskan gas fields expected to be readyfor commercial service in the next five to 10 years, PG&E NEGwill build an expansion that will facilitate transportation of gasfrom Alaska and Canada’s Northwest Territories to markets in thelower 48 states.

“Overall what we are looking at is the potential to expand thesystem by 1 Bcf/d over the next decade,” McDonough said.

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