US northwest utilities explore gas-growth

OREANDA-NEWS. June 26, 2015. Natural gas demand is set to grow in the US Pacific northwest by 1.2pc per year for the next decade for a total increase of nearly 93 Bcf by 2024, a regional industry group said.

Demand to fuel new power plants will drive the 256mn cf/d growth, followed by modest increases from core residential, commercial and industrial gas customers, according to a 10-year outlook released by the Northwest Gas Association (NWGA), a regional group that represents six gas utilities and four pipeline companies.

NWGA expects a 2.5pc annual increase in gas demand to support power generation, below the 3.3pc growth forecast in last year's report, as utilities in British Columbia, Washington, Oregon and Idaho lowered their expectations.

While 1,200MW of northwest coal-fired generation is expected to retire by 2020, updated planning documents filed with state regulators by electric utilities show slower power-demand growth than a year ago, NWGA said.

NWGA's "expected case" for the region also forecast an 0.8pc annual growth in gas demand for residential use, slightly below the 2014 outlook thanks to more efficient homes and appliances. The group sees a 0.7pc annual growth for commercial customers and a 0.8pc increase in the industrial sector.

Annual gas use would rise to 902 Bcf in 2024, or 2.5 Bcf/d, up from 2.2 Bcf/d last year.

In addition to its "expected case," NWGA developed additional scenarios to explore "plausible, but currently unaddressed growth" that could boost gas demand and strain regional infrastructure.

The scenarios include more coal plant retirements and more rapid growth from industrial customers, including LNG export facilities and some large methanol plants already being developed.

If both those scenarios unfold, annual demand could rise by 527 Bcf, to 1.4 Tcf, or 3.9 Bcf/d, in 2024.

"The accelerated demand scenarios in the 2015 outlook point toward the potential for significant growth in generation, industrial and export loads," said NWGA executive director Dan Kirschner.

Abundant shale gas resources in western Canada and the US Rocky Mountain region can keep pace with growing demand, assuming prices are high enough to support Canadian production, the region's major supply source, NWGA said.

Existing infrastructure can serve current load but significant growth will accelerate the need for incremental delivery capacity which can take five years or more to plan, permit and build, Kirschner said.

The coal replacement scenario assumed 800MW of new combined-cycle gas generation above the expected case forecast that includes Portland General's 440MW Carty Generating Station.

The accelerated industrial demand scenario assumed construction of three methanol plants, phased in between 2018 and 2022. If built as proposed, the plants would consume nearly 1 Bcf/d or almost half the region's 2014 average daily load, NWGA said.

Load from the methanol plants is roughly equal to that of an LNG export facility.

"The type of load will determine the type of expansion capacity that needs to occur," said Kirschner. The addition of large industrial load would likely help drive pipeline expansion while gas demand to supply flexible power plants could drive additional gas storage development, he said.