A new pipeline may be needed in Southern California to eliminateimpending gas supply and infrastructure constraints, which couldbecome critical in the next few years, according to participants ata one-day roundtable set up by the California Public UtilitiesCommission (CPUC) Tuesday in San Diego. Demand is expected to farexceed supply in the burgeoning southern end of California and onboth sides of the U.S.-Mexican border, where population, industrialand energy growth are surpassing expectations,

San Diego’s looming capacity constraints would not be relievedby a currently shelved proposal for a southern extension of KernRiver Pipeline into the Los Angeles Basin or by Questar Corp.’spending proposal at FERC to convert an existing oil pipeline fromthe Four Corners area into the port city of Long Beach, roundtableparticipants said.

With electricity demand in San Diego Gas and Electric Co.’sterritory expected to grow 3%/year for the next five years,SDG&E’s gas delivery capability – which was nearly maxed outtwo years ago during record summer electricity demands – will beinadequate, according to R. Thomas Beach, a consultant withBerkeley, CA-based Crossborder Energy. Beach recently completed agas deliverability analysis of the area for PG&E Generating,which is sponsoring a proposed new 500 MW plant at Otay Mesa, southof San Diego.

“Based on the look we’ve taken at the reliability issue in theSan Diego area, there should be a significant concern about thereliability of future gas supplies in this area,” said Beach. Henoted San Diego’s summer peak gas load has been increasing with theincreased electrical load in the general area. Gas demand hit 515MMcf/d in July 1998, just 35 MMcf/d under the peak deliverabilitycapability of SDG&E. “The bulk of this peak load serves theelectric generating plants in the area. If future electrical loadgrowth is going to be met with gas-fired generation on theSDG&E system, there are going to be some real restraints on thegas availability during summer peak conditions.”

Aside from his prepared remarks, Beach said he thinks a newcompeting pipeline in the area, which is dominated by SDG&E andits parent Sempra Energy, would enhance both electricity and gasreliability.

Sempra is building a pipeline across the Mexican border to serveexisting and added power plants at Rosarito Beach, about 30 milessouth of the border to displace fuel oil now used at those plants.The proposed PG&E Generating plant at Otay Mesa would burnabout 85 MMcf/d, and Rosarito’s summer peak is estimated at 140MMcf/d. Beach estimates incremental gas supplies approaching 225MMcf/d will be needed in the next few years.

“Based on our study, by 2003 – with no new supplies – during anAugust peak day as much as 33% of the generating capability couldbe curtailed [for lack of gas supplies],” Beach told the CPUC’sfour commissioners and a state legislator who helped craft the 1996California electricity restructuring law (AB 1890). “This is goingto raise important public policy issues for the CPUC, including theneed to revise SDG&E’s rules for gas curtailments, which areoutdated.”

State Sen. Steve Peace, the author of AB 1890, said the fastestgrowing industrial area in the world is concentrated on the Mexicanside of the California-Mexico border south and east of San Diego.He said this has “tremendous implications” for California’senvironmental and energy planning, including the gas andelectricity requirements on both sides of the border.

Participants at the roundtable indicated that perhaps aresurrection of El Paso Natural Gas’ plans early in the 1990s for anatural gas pipeline spur off of its east-of-California interstatepipelines across Mexico to northern Baja would alleviate theimpending shortages. Another concept is for more cross-borderenvironmental air quality and energy planning.

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