GAS SUPPLY SOURCES
California-Source Gas: Northern California-source gas supplies come primarily from gas fields in the Sacramento Valley. In 2005, PG&E's customers obtained on average 117 MMcfId of California source-gas.
U.S. Southwest Gas: PG&E’s customers have access to three major U.S. Southwest gas producing basins--Permian, San Juan, and Anadarko--via the El Paso, Southern Trails, and Transwestern pipeline systems. PG&E’s customers can purchase gas in the basins and transport it to California via interstate pipelines. Customers can also purchase gas supplies at the California-Arizona border or at the PG&E Citygate from marketers who hold inter- or intra-state pipeline capacity.
Canadian Gas: PG&E’s customers can purchase Canadian gas from various suppliers in western Canada (British Columbia and Alberta) and transport it to California primarily through Gas Transmission Northwest Pipeline. Customers can also purchase these supplies at the California-Oregon border or at the PG&E Citygate from marketers who hold inter- or intra-state pipeline capacity.
Rocky Mountain Gas: PG&E's customers have access to gas supplies from the Rocky Mountain area via the Kern River Pipeline and via the Gas Transmission Northwest Pipeline interconnect at Stanfield, Oregon.
Storage: In addition to storage services offered by PG&E, Wild Goose Storage Inc. and Lodi Gas Storage, LLC provide storage services from the Wild Goose and Lodi facilities, respectively.
New Gas Supplies: PG&E anticipates that sufficient new supplies will be available from a variety of sources at market-competitive prices to meet existing and projected market demands in its service area. The new supplies could be delivered through a variety of sources, including new interstate pipeline facilities and expansion of PG&E's existing transmission facilities, or PG&E's or others' storage facilities.
In the near term (2008-2015), the most likely new source of supply will be liquefied natural gas (LNG) imports. Such imports will provide a new supply source whether directly connected to the PG&E system, or delivered across other systems to PG&E. The mere presence of large LNG supplies in the West, Southwest, and Gulf Coast areas will increase supply and at a minimum make other supplies more available if the LNG takes market share away elsewhere. Supplies of LNG can be expected to have a favorable impact on price in that they, in the worst case, can be expected to dampen price increases, and in the best case, produce lower prices than currently exist.
The project nearest to California furthest along in development is Sempra LNG's Costa Azul project, on the Mexico's Baja Peninsula. Deliveries from the project are expected to begin in 2008, and will likely move both directly into southern California, as well as on to interstate pipelines that can access northern California. The facility will also serve markets in Mexico. While the project is currently sized at 1.0 Bcfld, Sempra has announced plans to expand the project significantly.
Other projects along both the Mexican coast and the US west coast are in various stages of preliminary development but have not received final permits to begin construction. It is quite feasible that one or more of these other projects will move to completion and begin deliveries, but this is not likely to occur before 2010, at the earliest.
On a longer term horizon, 2015 and beyond, the most likely other possibility of new supply appears currently to be gas from near the Arctic Circle delivered through an Alaska pipeline, or via a pipeline through Canada's McKenzie Delta in the Northwest Territory, or both. These pipelines could be capable of transporting several Bcfld each to Canadian and US markets, including those in California. Neither pipeline has received final approvals, and completion is likely to be about 10 years away.
INTERSTATE PIPELINE CAPACITY
Overview: Competition for gas supply, market share, and transportation access has increased significantly since the late 1990's. Implementation of PG&E's Gas Accord in March 1998 and the addition of interstate pipeline capacity have provided all customers with direct access to gas supplies, intra- and inter-state transportation, and related services.
Almost all of PG&ESs noncore customers buy all or most of their gas supply needs directly from the market. They use PG&E's transportation and storage services to meet their gas supply needs.
Interstate Gas Pipeline Capacity: As a result of pipeline expansion and new projects, California utilities and end-users benefit from improved access to supply basins and enhanced gas-on-gas and pipeline-to-pipeline competition. Interstate pipelines serving northern and central California include the El Paso, Mojave, Transwestern, Gas Transmission Northwest, Southern Trails, and Kern River pipelines. These pipelines provide northern and central California with access to gas producing regions in the U. S. Southwest and Rocky Mountain areas, and in western Canada.
U.S. Southwest and Rocky Mountains: PG&E's Baja Path (Line 300) is onnected to U.S. Southwest and Rocky Mountain pipeline systems (Transwestern, El Paso. Southern Trails, and Kern River) at and west of Topock, Arizona. The Baja Path has a firm capacity of 1.140 MMcflday.
Canada: PG&E's Redwood Path (Lines 4001401) is connected to Gas Transmission Northwest at Malin, Oregon. The Redwood Path has a firm capacity of 2,021 MMcflday.