May 8, 2018 / 6:10 PM / in a year

UPDATE 2-Southern California natgas supply could fall short, utility warns

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By Scott DiSavino

May 8 (Reuters) - Southern California Gas (SoCalGas) cautioned on Tuesday that pipeline outages and restrictions on the Aliso Canyon gas storage facility could reduce its ability to deliver natural gas this year to a level even lower than California state regulators and others have predicted.

On Monday, regulators, power companies and grid operators issued a technical report warning of a “moderate threat” to gas and electric reliability this summer and a “more serious threat” next winter.

“We remain concerned that some of the assumptions made in the technical assessment are overly optimistic,” SoCalGas spokesman Chris Gilbride said in an email. SoCalGas is a unit of California energy company Sempra Energy.

The SoCalGas system has been operating at less than full capacity because of the pipeline outages and restrictions on the use of Aliso Canyon, the utility’s biggest storage field, which suffered a devastating leak between October 2015 and February 2016.

“The potential for additional (pipeline) outages means that the situation may be getting worse, not better,” the Aliso Canyon Technical Assessment Group said in a report released Monday, noting SoCalGas avoided serious problems last winter due to unusually warm weather.

“With so many pipeline outages, it will be difficult for SoCalGas to fill storage to a level sufficient to ensure energy reliability throughout the coming winter,” the group said.

SoCalGas’ Gilbride said that “Service reductions or interruptions to electric generators may be necessary this summer and withdrawals from Aliso Canyon may be required to prevent more extensive customer outages.”

SoCalGas wants the state to lift some of the restrictions that were imposed on Aliso Canyon after the months-long leak which forced the evacuation of residents form a nearby Los Angeles neighborhood.

The state has limited the amount of gas SoCalGas can inject into the 86-billion cubic feet Aliso Canyon to just 24.6 bcf and only allows the utility to pull fuel from the field when other options are not available.

One billion cubic feet is enough to fuel about five million U.S. homes for a day.

To avoid power and gas interruptions this summer and next winter, the technical group recommended SoCalGas import liquefied natural gas from Costa Azul in Mexico and that state regulators allow the utility to boost the capacity and use of Aliso Canyon.

The report said this summer’s challenges stem primarily from continuing outages and reductions on key pipelines, including Lines 2000, 3000 and 4000 and 235-2.

The group projected capacity on SoCalGas’ system would total 3.555 billion cubic feet per day (bcfd) this summer, which includes 2.655 bcfd from pipelines and 0.900 bcfd from storage.

That is lower than the 3.638 bcfd available without Aliso Canyon last summer and well below the 4.668 bcfd maximum the system could send out without Aliso Canyon if all pipelines were available, the group has previously forecast.

This summer’s projected system capacity is just enough to cover forecast peak demand of 3.511 bcfd, the report said, warning higher gas usage or loss of additional pipelines could result in curtailments of the fuel to electric generators.

Reporting by Scott DiSavino; Editing by David Gregorio

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