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

Day & Zimmermann land maintenance contract at Palo Verde Nuclear Generation Station

Day & Zimmermann (D&Z)'s Engineering, Construction & Maintenance group has been awarded a three-year contract by Arizona Public Service Co. (APS) to provide maintenance services at the 3,739-MW Palo Verde Nuclear Generation Station near Phoenix. 

SCE launches RFO for new renewable sources

In an effort to support its Preferred Resource Pilot (PRP), Southern California Edison (SCE) has launched a Request for Offers (RFO) to acquire up to 50-MW of renewable power in central and south Orange County.

Follow Power Engineering on Twitter
Latest News
Regulators approve modified plans for Carlsband Energy Center

Regulators approve modified natural gas-fired power plant plan

The California Energy Commission (CEC) approved amendments for construction of a planned natu...
DTE Energy to build solar power project at Metro airport

DTE Energy building airport solar power project

DTE Energy (NYSE: DTE) started construction on a solar power array at Detroit Metropolitan Ai...
On site power manufacturer buys distribution equipment company

On-site power manufacturer buys distribution equipment company

Pioneer Power Solutions Inc. (Nasdaq: PPSI) announced that its Pioneer CEP subsidiary acquire...
Pattern Energy Group owns 100% of Texas wind energy project

Pattern owns 100% of Texas wind energy project

Pattern Energy Group Inc. (Nasdaq: PEGI) completed the acquisition of the remaining ownership...
Alpha Natural Resources files for bankruptcy

Coal mining and production company files for bankruptcy

Alpha Natural Resources Inc. and some of its wholly owned subsidiaries filed for Chapter 11 b...
Black & Veatch report says IPPs distributed generation net metering to change electric landscape

Report: IPPs, DG, and net metering to alter generation landscape in coming years

Independent power producers (IPP), distributed generation (DG), and net metering are among th...
R.E. Ginna nuclear power plant files request with FERC

R.E. Ginna works out temporary reliability extension while negotiations continue

R.E. Ginna Nuclear Power Plant LLC on July 31 filed with the Federal Energy Regulatory Commis...
Obama Clean Power Plan nuclear gas wind solar energy efficiency carbon capture and storage

Final EPA Clean Power Plan seeks 32% CO2 cut by 2030

The Obama administration said over the weekend that the revised Environmental Protection Agen...

Power Engineering Current Issue

03/01/2014
Volume 118, Issue 3
1403PE-cover
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

Buyers Guide Company Listings

Power Industry Wire News

Lubricants Market to Reach $68.54 Billion by 2022: Grand View Research, Inc.

Lubricants Market to Reach $68.54 Billion by 2022: Grand View Research, Inc.

TX Holdings Reports Third Quarter 2015 Results

TX Holdings Reports Third Quarter 2015 Results

Magnum Hunter Resources Declares Monthly Cash Dividend on Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock

Magnum Hunter Resources Declares Monthly Cash Dividend on Series C Preferred Stock, Ser...

Emerald Oil Announces Venture With Koch Exploration, Results of Southern McKenzie County Wells & Midstream Joint Venture

Emerald Oil Announces Venture With Koch Exploration, Results of Southern McKenzie Count...

Fortress Opens $2.5 Million Frac Tank Wash Out and Truck Wash Facility to Serve Eagle Ford Shale Unconventional Oil & Gas E&Ps That Need Streamlined and Affordable Salt Water Disposal Services

Fortress Opens $2.5 Million Frac Tank Wash Out and Truck Wash Facility to Serve Eagle F...

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 >>