Wood Mackenzie Analysis Says LNG Would Benefit State Ratepayers

As North American natural gas production is expected to peak in the decade ahead, demand in California for gas is expected to rise due to the need for new gas-fired power plants to back up the state’s increasing reliance on intermittent renewable energy, according to a Wood Mackenzie analysis done for Pacific Gas & Electric. PG&E submitted the analysis to the California Public Utilities Commission January 24 in support of its position in a commission rulemaking that the state’s investor-owned utilities be allowed to enter long-term LNG supply contracts. North American production of natural gas is expected to remain between 67 and 71 Bcf/d through 2025, according to the Wood Mackenzie report. At the same time, demand for natural gas in California is projected to grow from 6.2 Bcf/d in 2006 to 7.6 Bcf/d in 2021. It also is expected to grow across the nation. So even with new pipeline capacity from the Rocky Mountains into California, another source likely will be needed to help fill the gap, the report said. That is because while Rockies gas may increase, Canadian and Southwest gas deliveries, respectively, are expected to decline and remain static. As a result, the state can expect to face increasing gas price volatility without a new supply, the report said. Liquefied natural gas can help fill the gap, the report said, providing California ratepayers with $1 to $4 billion a year in savings on their energy bills.

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Wood Mackenzie Analysis Says LNG Would Benefit State Ratepayers

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