Within the larger context of expanded capacity and a newly unbundling transmission/storage system, Sempra Energy’s Southern California Gas Co. utility has identified potential future constraints on its intrastate transmission pipeline system in the Imperial and San Joaquin Valleys where power plants and large industrial customers operate. These areas are potentially tight only on a seasonal basis, such as the summer in Imperial and winter in the San Joaquin valley, according to SoCalGas’ Steve Watson, capacity planning manager, who spoke Tuesday at a GasMart/Power panel discussion in Reno.

“We’ve told noncore customers in open season processes if they are willing to sign long-term contracts for specific backbone quantities with take-or-pay provisions, and we get sufficient interest in subscriptions, we will expand those systems,” said Watson, who shared the program with Bill Wood, the California Energy Commission’s chief natural gas forecaster, in discussing “Natural Gas Infrastructure and Margin Capacity in the California Market.”

Both speakers also discussed liquefied natural gas (LNG) as a potential wild card that might displace the need for some added interstate pipeline capacity going into the northern half of the state. “We’re looking at LNG coming in as an additional supply source and if it can meet the requirements into California itself, and if not, into North Baja as an additional supply to compete for the state’s market,” Wood said.

Watson said that from SoCal’s perspective additional supplies are good, but the utility is “not necessarily going to expand its intrastate system to accommodate it,” adding that what he called a “mismatch” is a good thing from a California utility ratepayer’s perspective.

“If you have 9 Bcf of gas that could potentially come into your system, the gas that we’re ultimately going to have to fire is beating each other up through price competition,” Watson said. “So that is why I think it would ultimately be good for Southern California if we had LNG. We think the market will ultimately decide.

“We’ve identified three viable places to bring gas into our system — one off the California coast, another at Los Angeles Harbor and a third along the North Baja coast. We’ve told all interested LNG suppliers that if they are willing to cover all the interconnection, safety and environmental costs, then we are willing to interconnect with any LNG supplier, and we would be willing to do any detailed studies needed by those suppliers, and in fact, we already have one under way. So, we’re more than happy to have an LNG supplier hooked up to our system.”

In response to questions and comments about the northern half of the state needing more storage longer term, Watson also said he thought SoCalGas’s 115 Bcf of underground storage could handle the added need through displacement, and in fact, under the new restructuring of the SoCal system, anyone connected to the PG&E, Kern or Mojave pipeline systems can get their storage needs met by SoCal. “We’ll have a specific tariff in place to offer deliveries that will supplement our storage capabilities,” Watson said. “And our storage is a lot cheaper than PG&Es or Wild Goose [merchant underground storage].”

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