For immediate release: May 25, 2001
Contact: Claudia Chandler ­ (916) 654-4989

Energy Commission Report Projects
Improved Natural Gas Supplies For the State



May 25, 2001

Tight supplies and high prices for natural gas have raised the question: will California have enough of the clean-burning fuel for next winterÔs heating season, even as the State adds new gas-fired generators to meet this summerÔs peak electricity demand?

A report just released by the California Energy Commission gives a qualified Ńyesń to the question, provided improvements are made to the system that supplies natural gas. If current plans to add supply do not materialize, however, the report suggests that State action may be needed.

The source of the problem is outlined in Natural Gas Infrastructure Issues, a report released on May 22, 2001. In it the Energy Commission notes that CaliforniaÔs natural gas supply system was designed years ago to provide enough gas to meet winter peak heating demand. Nearly 84 percent of the natural gas used in California comes from outside the State through interstate pipelines. These pipelines can deliver slightly more natural gas than intra-state gas pipelines -Šthose within our StateÔs borders -Šcan receive. As a result, there are bottlenecks in getting some supplies to gas consumers.

This year, Pacific Gas and Electric Company (PG&E) and Southern California Gas Company (SoCal Gas) are improving and expanding their intra-state pipeline systems to help eliminate these constraints. According to the report, planned expansions of the interstate pipeline network should increase natural gas delivery to the State beginning next year, and additional improvements to the natural gas system should help to mitigate the current higher-than-normal natural gas prices that California is experiencing.

Since California typically uses more natural gas in the winter than interstate pipelines can provide, gas storage plays an important role in balancing supply and demand. If the amount of natural gas put into storage in the summer does not keep pace with significantly increasing storage withdrawals in the summer, the capability to meet the winter demand could be weakened. For this reason the report recommends that the Energy Commission continuously assess storage levels and monitor infrastructure improvements throughout the rest of the year.

Natural gas supplies in North America appear to be sufficient to meet demand in California and the rest of the United States for the next 50 years. The report says that the Energy Commission should continue to monitor drilling rig activity and production levels for the long-term outlook. It also recommends that the Energy Commission, along with the Public Utilities Commission, should find ways to encourage and increase the in-state supply of natural gas.

The Energy Commission will hold a hearing to allow the public and industry to comment on the new report. The hearing will be held as follows:

Electricity and Natural Gas Committee Hearing
10 a.m.
Tuesday, June 5, 2001
California Energy Commission
Hearing Room A
1516 Ninth Street
Sacramento, California

(Wheelchair Accessible)


The report itself can be found on the Energy CommissionÔs Web Site at www.energy.ca.gov/reports
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