State Energy Policy Blueprint Predicts Flat Gas Production

The Integrated Energy Policy Report--the state’s mandated basis for making legislative and executive decisions about energy policy--likely will reflect flattening natural gas production. Meanwhile, demand may increase due to use of natural gas power plants to cover for less hydro-based production and less use of coal power plants, as well as an increasing number of ethanol production facilities. In a California Energy Commission workshop on the document August 16, the commission also revealed that the final draft report is expected to be pushed back a month to late September. It is not expected to be adopted by the commission until November 21. CEC staff cited limited liquefied natural gas imports in the state, as well as little in-state production. However, they predict there will be increased Canadian production. And, when Sempra’s Rockies Express pipeline in the Midwest is completed, it’s expected to free up gas deliveries around the nation, staff added. If, however, one assumes that natural gas will be used in the Midwest and Eastern states to substitute for coal-fired power plants that are expected to come under federal greenhouse gas caps, then the new pipeline’s distribution could end up making natural gas prices in California higher, according to Katie Elder, R.W. Beck practice leader, natural gas and fuels. Elder maintained that the availability of natural gas will be sorely constrained in general. She predicted the nation would need up to 60,000 more new wells to satisfy demand in 2017. “We can produce as much gas as we’re willing to pay for,” she said. “It’s a matter of what price we’re willing to pay for it.” If California’s renewable portfolio standard works, she added, it could mean lower natural gas demand, softening the economic blow.

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State Energy Policy Blueprint Predicts Flat Gas Production

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