With the opening of expanded gas storage and deliverability thisweek at jointly-owned Jackson Prairie in southwest Washingtonstate, interstate pipelines like Williams Northwest are trying todevelop better services for electric generation plants, which areexpected to multiply significantly in the coming years.

The aquifer storage site that is owned equally by Northwest,Puget Sound Energy and Avista completed a $30 million expansionthat added 3 Bcf of working capacity for a total of 18 Bcf, andadded 300 MMcf/d of withdrawal capability for a total of 850MMcf/d. The work included the addition of new and expanded wellsand compression at the 2.5-square-mile field.

“We’ve retained our one-third interest (1 Bcf and 100 MMcf/dwithdrawal) for operational and balancing purposes,” said KirkMorgan, business development director in Salt Lake City forWilliams’ Kern and Northwest Pipelines.

“That gives us the ability to offer some very flexible balancingservices that are attractive to power generators. I’d love to havethat type of storage down on Kern (River in California) right now.It’s market area storage. But we’re not connected to storage downthere at present.”

Morgan, lamenting the monopoly power that Southern CaliforniaGas maintains on underground storage in the southern half ofCalifornia, said that the ongoing settlement talks as part of thestate’s gas industry restructuring could eventually allow KernRiver to offer more flexibility to new power generators sinceunbundled storage and various balancing proposals are “on thetable.” Netting and trading imbalances, along with poolingarrangements, could emerge in future settlements.

“All of those things in one form or another provide moreflexibility to the end-user and a greater ability to manage theirday-to-day usage,” Morgan said. “In general, we want to make the(Kern and Northwest) pipeline(s) as friendly to electric generationas we can.”

Morgan said Kern River plans to exploit its efficiencyadvantages as a relatively new, state-of-the-art system built inthe early 1990s. He rates its efficiency at: 1.1% supplies lost intransport; compared to El Paso’s 5% and Transwestern’s 4.75%.

“That ends up being a 7 to 7.5 cents/Mcf price advantage,”Morgan said. “We’re a real-time pipeline. Every bit of ourmeasurement is electronic and communicated instantaneously viasatellite to our gas control center.” Williams’ two interstatepipelines in the West have formed an internal study group that iscurrently assessing its options for developing more “power friendlytypes of services,” including addressing the areas it thinksgenerators are most concerned about: (1) price, (2) pipelinepressure and (3) flexible receipt and delivery points.

Morgan said Kern’s “term differential rates” (TDR), for which itwill apply to FERC by the end of the year, will be part of its”low-price” offering to generators, offering a 37% decrease incurrent rates for customers who want to extend contracts for five-and ten-year terms. Kern also hopes to have FERC approval soon onits proposal to vary from a straight fixed variable rate by movingsix cents of its demand charges to a commodity charge.

With more rate flexibility, options on receipt and deliverypoints and flexible balancing/peaking services, Morgan said Kernhopes to get more generators to see the advantages of connectingdirectly to its pipeline and bypassing local LDCs. It also offersthem options for dealing with their contracted gas capacity duringnon-burn times, which all power plants experience no matter howhigh their load factor, he said.

“Real-time access to information is critical to generators, andKern River can expand very cheaply. It would drive rates furtherdown for all shippers.We’re also very bullish on Rocky Mountaingas prices staying down for the short- and medium-term. We thinkKern River is in a sweet spot right now.”

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.