Bids far exceed capacity on El Paso's California pipeline


By the OGJ Online Staff

HOUSTON, Feb. 28, 2001—A unit of El Paso Corp. Wednesday said it received bids totaling 14.4 bcf/day for 1.22 bcf/day of available capacity on its pipeline system serving California.

As a result, the company said it plans to announce another open season to determine if there is sufficient support to expand its pipeline system serving the region. The Houston energy company recently denied allegations its El Paso Merchant Energy unit withheld capacity from the market driving up prices or that a "conspiracy" existed in 1996 to limit construction of new interstate pipeline serving California.

El Paso Natural Gas Co. said it awarded contracts to 30 distinct corporate entities for 1.22 bcf/day of capacity on its system. The company posted for sale capacity held by El Paso Merchant Energy-Gas LP, subject to right of first refusal, Jan. 12. The bidding closed Feb. 12.

El Paso said the contracts were awarded following expiration of a right of first refusal that was not exercised. It said contracts were awarded in accordance with the guidelines for this open season, which provided for proration when requests exceed available capacity.

The contracts, which range in duration from 17 months to 15 years, were awarded at the "just and reasonable" published tariff rate approved by the Federal Energy Regulatory Commission (FERC), the company said.

Lawsuits filed Dec. 18 in California Superior Court in Los Angeles allege units of Sempra Energy and El Paso illegally conspired not to compete against each other in the southern California gas market. El Paso owns one of the largest interstate gas pipelines which transports gas from the producing basins to the California border. Its affiliate El Paso Merchant Energy was awarded the right to a majority of that pipeline's capacity in a bidding process early in the spring.

El Paso has reiterated its contention that as recently as last year, there were periods when significant quantities of unused capacity were available on the pipeline. Notwithstanding its availability, the company said, this capacity was not used by shippers to California to fill in-state natural gas storage facilities for future use.

Storage down in 2000
If California had stored in 2000 the same volumes of natural gas stored in 1999, El Paso said, "reliance on the spot market would have been reduced and the steep rise in prices at the California border could have been substantially mitigated or avoided."

El Paso said capacity held by El Paso Merchant Energy has been used or made available for use by others to serve California and other Western markets. The Houston energy firm said it isn't possible for any holder of capacity on the El Paso pipeline to cause a significant increase in California gas prices by refusing to use that capacity.

The pipeline is required by law to post availability of any unused capacity on its public bulletin board and is obligated to sell that capacity for no more than the published tariff rate found to be just and reasonable by the FERC, the company has said.

Moreover, El Paso said there was no "conspiracy" in 1996 to limit new interstate pipeline capacity into California. It says all new pipelines considered during the 1990s were either built or were not viable because they lacked sufficient customer support to justify construction.

In 1996, according to estimates, there was 1-2 bcf/day of excess gas transportation capacity on existing interstate pipelines serving California. El Paso said misplaced reliance on the continuing availability of excess capacity prompted the California Public Utilities Commission to encourage Pacific Gas & Electric Co, Southern California Edison Co. and Southern California Gas, beginning in 1996 and continuing into 1998, to relinquish over 1.5 bcf/day of firm transportation capacity on the El Paso pipeline.

Sponsored by FLSmidth

Related Articles

Employment in power sector declines, except for renewable generators

According to the latest data available from the Bureau of Labor Statistics (BLS) as published on the website of the U.S. Energy Information Administration (eia), the electric power generation sector lost more than 5,800 jobs from January 2011 to June 2014, despite a gain of nearly 1,800 non-hydro jobs in the renewable energy sector.

Top 10 most read articles from 2014

We take a look back at the stories that you, the reader, read the most this year.

Follow Power Engineering on Twitter
Latest News

MHPS to supply M501J gas, steam turbines to new combined-cycle power plant in Korea

Mitsubishi Hitachi Power Systems (MHPS), jointly with Marubeni Corp., has received an order f...

Business leaders throw support behind coal plant proposal

Business leaders on Thursday outlined the economic devastation they say could come if New Mex...

TVA seeks public comment for future coal ash storage at Bull Run

The Tennessee Valley Authority (TVA) is asking for public input on plans to expand dry onsite...

California Public Utilities Commission Approves NRG Energy’s Carlsbad Energy Center

California Public Utilities Commission (CPUC) has approved the SDG&E Power Purchase and T...

Vermont joins international effort to fight climate change

Gov. Peter Shumlin says Vermont has signed on to what he called a first-of-its-kind agreement...

Products May 2015

Callaway Energy Center's Replacement Reactor Vessel Closure Head Project

Replacing heavy equipment is one way utilities can extend the life and increase the reliabili...

Managing CCRs and Process Water: Why Handling Bottom Ash Wet May Remain The Best Option

The U.S. coal-fired electric generation industry once again finds itself in the crosshairs of...

Power Engineering Current Issue

01/01/2015
Volume 119, Issue 1
1501pe-cover-lg
Products Showcase
Dynamic Fluoride Ion cleaning DFIC of industrial natural gas turbines Hi-Tech Furnace Systems

Dynamic Fluoride Ion Cleaning of IGT Parts

The Dynamic Fluoride Ion Cleaning (DFIC) Process from Hi-Tech Furnace Systems is able to clean deep, narrow cracks of oxides by cycling between negative, atmospheric, and positive pressure.

Archived Articles

2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015

Buyers Guide Company Listings

Power Industry Wire News

MIC President Marybeth Miceli Named to AATA Board of Directors; AATA to Provide Free NDT Job Training to Vets, Disadvantaged Young Adults

MIC President Marybeth Miceli Named to AATA Board of Directors; AATA to Provide Free ND...

Alexium Anticipates Potential Addressable Revenue of More Than US$10M for 2015

Alexium Anticipates Potential Addressable Revenue of More Than US$10M for 2015

Upcoming Greenhouse Webinar Teaches Companies How to Engage Engineers in Hiring Top Tech Talent

Upcoming Greenhouse Webinar Teaches Companies How to Engage Engineers in Hiring Top Tec...

Perma-Fix Environmental Services to Present at the Marcum MicroCap Conference

Perma-Fix Environmental Services to Present at the Marcum MicroCap Conference

Blue Earth Receives Notice From NASDAQ That the Company Is No Longer Subject to a Possible Delisting

Blue Earth Receives Notice From NASDAQ That the Company Is No Longer Subject to a Possi...

Power Engineering

Article Archives for Power Engineering Magazine

Continuing Education

Professional Development Hours

To access a course listing associated to a specific topic listed below, click on the topic of choice from the list below.

Latest Energy Jobs

View more Job Listings >>