U.S. Needs More Pipelines to Fuel New Power Plants

Friday, February 16, 2001

By Spencer Swartz

SAN FRANCISCO (Reuters) - While a week rarely passes without a proposal to build a new gas-fired power plant to meet the nation's voracious appetite for energy, analysts warn there may not be enough pipelines to deliver fuel to those plants.

"This has been a concern for two years. We have a lot of gas-fired generation expected to come on line in the next few years, and we will need increased gas pipeline capacity to feed these plants," said Jerry Halvorsen, President of the Interstate Natural Gas Association of America (INGAA).

Analysts noted there are some 300,000 megawatts of proposed new power generation for this decade, most of which are gas, and even if just two-thirds of the power is built, annual gas demand could jump 30 percent to near 30 trillion cubic feet.

And while pipeline projects have been completed or are well into development in areas like Florida and the Midwest, other regions, like California and New England, need to build or expand capacity to meet the expected growth in gas demand.

Policymakers consistently tout the economic and environmental benefits of less polluting gas-fired plants, but have often failed to plan for the pipelines to deliver the fuel.

The National Petroleum Council (NPC) last year estimated in a report to Congress that 38,000 miles of interstate transmission lines and about 255,000 miles in intrastate distribution lines will be needed in the U.S. over the next 15 years to meet the huge appetite for gas.

WHERE NEW LINES ARE NEEDED

In California, which is expected to see gas-fired generation rise from 30 percent of its total power supply to more than 40 percent by 2005, gas pipelines already are operating at near full capacity.

There are some pipeline projects planned, but more will be needed to meet California's growing dependence on gas-fired generation and to avoid the type of curtailments imposed last month on some large industrial customers in San Diego to ease stress on the local gas system.

Last week California Gov. Gray Davis, in a bid to boost much-needed electric supplies in the power-starved state, streamlined the plant permit approval process to 21 days to expedite construction of an ambitious 20,000 megawatts of mostly gas-fired generation by July 2004.

California will likely have to come up with more than 3 billion cubic feet of gas a day to fuel all of the new generation. That amount is almost half the total the state uses daily to meet residential, industrial and power plant needs.

"People have lost sight of the gas problem that's developed in California because of the power situation," said Steve Thumb, analyst at Virginia-based Energy Venture Analysis, adding the Golden State along with New England and New York were the areas most in need of new pipeline infrastructure.

In New England, a study commissioned by the region's power grid operator released recently said more gas pipelines were needed to meet a projected jump in gas-fired generation.

The New England grid operator forecasts gas-fired generation to jump to 45 percent of the region's total electric power by 2005, up from around 16 percent currently.

THE DIFFICULTIES

But adding new gas pipelines has raised eyebrows recently following pipeline explosions last year in New Mexico, where 12 people were killed, and in Washington, where three people died.

In New Jersey, policymakers have been wary of building gas pipelines since an explosion in 1994 injured more than 100 people, demolished eight buildings and scorched dozens more in an apartment complex.

That incident, which raised concerns over safety, was one reason cited when a 90-mile pipeline project by Okla.-based Williams Cos. was blocked in New Jersey last autumn.

The pace of approving pipeline projects has increased in recent years but it is still not as fast as industry would like, some analysts said.

According to the most up to date numbers, the Federal Energy Regulatory Commission has approved new pipeline projects totaling more than 7,000 miles of gas transmission pipelines between January 1997 through September 2000.

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-- Martin Thompson (mthom1927@aol.com), February 16, 2001