lngs role of expanding natural gas supplies€¦ · california energy commission presentation...

California Energy Commission

LNG’s Role for Expanding Natural Gas SuppliesPresented to

Prevention First 2006An Onshore and Offshore Pollution Prevention

Symposium & Technology ExhibitionSeptember 12-13, 2006

Pat Perez, Manager, Special Projects OfficeCalifornia Energy [email protected]

(916) 654-4527


Presentation Topics

California Economy-Energy RelationshipPursuing Energy Efficiency & Renewables in Accordance with State of California’s Energy PolicyOverseas Natural gas as a New Natural Gas Source for CaliforniaDomestic and Canadian Natural Gas Supply to CaliforniaEfforts to Reduce Demand Will Still Fall ShortNatural Gas Prices are RisingDiversifying Natural Gas Supply Sources for the FutureLNG Interagency Working Group

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The “Nation State” of California

6th largest economy of the world5th largest consumer of energy in the worldConsumes 2% of the world’s natural gas productionAverage daily natural gas demand: 6 billion cubic feet (10 billion cubic feet per day in winter)Population expected to grow from 36 million now to 45 million by 2025

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California’s Natural Gas Situation

California imports 87% of its natural gasU.S. and Canadian sources expected to decline in the futureCalifornia demand expected to growLNG provides another source of natural gasDelivery of gas from a West Coast terminal could hedge against supply/price problems in rest of country (e.g., hurricanes)

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Interstate Pipelines Serving California

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Natural Gas Pipelines

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Source: U.S. Energy Information Administration10


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Well Depletion Rates

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California Natural Gas Consumption by Sector

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0100020003000400050006000700080009000

Jan 20

01

Jan 20

02

Jan 20

03

Jan 20

04

Jan 20

05

Year

Con

sum

ptio

n M

illio

n C

ubic

Fe

et P

er D

ay

Residential Consumption Commercial Consumption

Industial Consumption Power Generation


California’s Projected Natural Gas Demand

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0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Year

Mill

ion

Cub

ic F

eet P

er D

ayPowerGeneration

IndustrialDemand

CommercialDemand

ResidentialDemand


U.S. Drilling Rig Counts vs. Well Head Price and Marketed Production

$7.51

$5.46

$4.88

$2.95

$4.00$3.68

$2.19$1.96

$2.32$2.17

$1.55

0

5000

10000

15000

20000

25000

30000

35000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Year

Wel

ls D

rille

d P

er Y

ear

0.00

5000.00

10000.00

15000.00

20000.00

Pro

duct

ion

BCF

U.S. Rig Count U.S. Marketed Production (bcf) Gas Price per MCF

Source: U.S. Energy Information Agency

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Projected Natural Gas Consumption by Residential Customers in California, by Utility Service Territory

0

100

200

300

400

500

600

700

800

900

1000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Mill

ion

Cub

ic F

eet P

er D

ay

SoCalGas PG&E SDG&E

Source: California Energy Commission, Natural Gas Office

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Projected Residential Natural Gas Prices

Source: Pacific Gas and Electric Company and Southern California Gas Company

$7.00

$8.00

$9.00

$10.00

$11.00

$12.00

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

2004

$/M

cf

PG&ESoCalGasSDG&E

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Why Consider LNG?

California is connected to U.S. NG marketU.S. NG supply not keeping up with demandNG prices are rising very rapidlyCalifornia imports 87% of its supply

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LNG Proposals on the West Coast (that would provide California with LNG)•)

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Pipelines/Sempra Energy Costa Azul Facility

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A West Coast LNG Import Terminal would enable California to access

Pacific Rim supplies.

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Potential Value to CaliforniaLNG identified as a supply option

New pipelines also identified

LNG imports specifically analyzed

LNG provides significant economic benefit to California

Potential overall price reductionSupply diversityAdditional import capacity

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LNG Interagency Working Group

MissionEstablish close communication among and support for agencies potentially involved in the permitting process of any LNG facility in California.

Working group has met monthly since September 2003.

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LNG Interagency Working GroupGoals:

Identify permitting responsibilities for various aspects of an LNG projectIdentify potential resources available to the State that can be used to assist the lead and responsible agencies that review an LNG facility applicationEstablish a support network to ensure all affected agencies can operate efficiently and complete their work in a timely mannerProvide clear guidance to potential developers on the State’s LNG permitting processServe as an information resource on LNG by offering workshops toagencies or the public and maintaining a website on LNG (http://www.energy.ca.gov/lng/index.html)

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LNG Interagency Working GroupMembers include federal, state and local agencies:

FederalU.S. Air ForceU.S. Army Corps of EngineersU.S. Coast GuardU.S. Environmental Protection AgencyU.S. Marine CorpsU.S. Navy

StateAir Resources BoardCoastal CommissionCoastal ConservancyDepartment of Fish & Game/Office of Spill Prevention & Response

(continued)

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LNG Interagency Working GroupState (continued)

Department of General ServicesElectricity Oversight BoardEnergy CommissionGovernor’s Office of Emergency ServicesGovernor’s Office of Homeland SecurityOffice of Planning and ResearchPublic Utilities CommissionSan Francisco Bay Conservation and Development CommissionState Lands Commission

LocalCity of OxnardCounty of VenturaPort of Long Beach26


Different Review Processes for Offshore and Onshore Projects

Different federal laws and standardsDifferent federal agency leadsDifferent state agency leadsDifferent timelines for reviewDifferent role for GovernorDifferent approaches for modeling risk

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lngs role of expanding natural gas supplies€¦ · california energy commission presentation...

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