Power plant owners claim that differences between the quality of imported liquefied natural gas and that of pipeline natural gas could damage their equipment and increase emissions. The generators are asking the California Public Utilities Commission to impose tighter gas quality standards than proposed by Sempra - an LNG importer. Sempra responds that such a requirement could prevent certain imports. Power plant owners and Sempra are petitioning regulators to act soon on the matter because it affects near-future operations. Craig Chancellor, Calpine gas regulatory vice-president, said that Sempra could process the gas so that it can be used in power plants without suffering damage. But because Sempra won't process the gas, the end user could suffer harm from lower-quality gas, he added. Sempra and its regulated gas utilities maintain that studies show that their proposed standards would result in negligible increases in air pollution and not damage generation equipment. The company adds that smaller gas-burning equipment used in businesses and homes, such as stoves, would not be at risk either. "Our proposal strikes a balance," said Lee Stewart, SoCal Gas senior vice-president for gas operations. Speaking for both SoCal Gas and San Diego Gas & Electric, Stewart said that unless the gas quality standard is sufficiently flexible, it could prevent some imports of LNG and result in gas price hikes for ratepayers across Southern California. Imported LNG will have a different chemical composition than the gas burned in California today, Stewart explained. It will contain more ethane, propane, and butane, which have higher heating values and burn hotter than traditional pipeline gas, according to a white paper by the Natural Gas Council. The 2005 white paper said the introduction of "hot" gas as LNG imports grow could damage turbines. Minor modifications, coupled with limits on butane and propane, can solve these problems. The council suggested that the standard backed by the Sempra utilities would prevent damage to turbines. However, the report was not adopted unanimously by a council task force. There were dissents and differing interpretations of data, said Chancellor. In considering whether to approve a new gas quality standard, the CPUC will be examining its potential effect not only on the state's gas supply but on a broad range of equipment, including home appliances as well as power plants, vehicles, and other gas-burning equipment, said a source with the commission. Domestic gas producers typically process their gas before putting it into interstate pipelines to remove much of the hotter constituents, leaving higher levels of methane, said Stewart. They sell the hotter gases as fuels or use them as chemical feedstocks. In areas of the world where LNG is produced, there is rarely a market for the hotter gases as a secondary commodity, so it makes little sense to remove them, said Stewart. The situation is similar at some planned LNG import terminals, including what is likely to be the West Coast's first LNG terminal - a joint venture between Sempra and Shell set to open in 2008. Building a plant to remove the hotter gases at the terminal in Baja California, known as Costa Azul, would cost $50 million, said Chancellor. However, the ethane would have to be disposed of as a waste product because there is no nearby market for it. Alternatively, if it is sent down the natural gas pipeline, it will increase the heating value of natural gas in California. That could mean customers may boil water on their stoves with less gas than it takes today. However, on an industrial scale, it could damage power plant turbines. "There has not been any real testing or even modeling done on the impact on electric generation," said Chancellor. He said that the gas quality standard proposed by utilities to accommodate liquefied natural gas falls outside the gas quality range specified by makers of turbines used in Calpine plants. The gas could cause equipment to "trip off" and could wear out the nozzles on turbines more quickly, he said. Moreover, "swings" in which a slug of hot gas comes down the pipeline after LNG is delivered could cause catastrophic damage to turbines, according to Southern California Edison. The utility, which uses Sempra's natural gas to power its generators, maintains that it would be unreasonable to ratepayers to require electric utilities to spend money to deal with changing gas quality standards. The South Coast Air Quality Management District, the air pollution control agency for greater Los Angeles, told the CPUC January 18 that it performed tests of how hot gas would change pollution levels. It found that the gas can increase emissions of nitrogen oxides, which form ozone and fine particle pollution, by 20 percent in microturbines and 11 to 17 percent in boilers. Accordingly, the agency wants a tighter standard than proposed by the Sempra companies. In counterpoint, SoCal Gas consultant Joseph Hower testified to the CPUC that injecting 1 bcfd of liquefied natural gas into the utility's system would increase nitrogen oxide emissions in the South Coast Basin by only 1.2 tons per day, an increase of 0.11 percent. Total nitrogen oxide emissions were 1044.8 tons per day in 2003. Sempra's competitors in the liquefied natural gas market take different stands. Sound Energy Solutions, for instance, plans to strip out the hot gas prior to shipping it into the SoCal Gas system from its proposed terminal at Long Beach. BHP Billiton - which is planning to build an offshore terminal near Ventura - wants the CPUC to set a single state standard that would allow it to market gas anywhere in the state, said Craig Moyer, who represents the Australian company as an attorney with Manatt Phelps & Phillips. The question of how increased use of LNG will affect gas customers and air quality has been under study at both the state and national levels for years. The issue will need to be resolved before LNG comes to California, say many involved in the controversy. "We have a couple years to do this," said Chancellor.