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New Natural Gas-fired Plants may Remedy NW Shortage by Tom Detzel, The Oregonian staff The Oregonian, May 17, 2001

WASHINGTON -- While the Northwest looks warily toward a shortage of hydropower this year, a boom in natural gas-fired generating plants is sweeping the region, promising both more power and a new set of energy challenges.

On the drawing boards of energy planners are more than 15,000 megawatts worth of new generating plants, all driven by natural gas, a relatively clean-burning fuel that many environmentalists embrace. Each megawatt is enough to power about 1,000 homes.

Of the 29 projects that have been proposed, only nine are under construction and are predicted to come on line over the next two years.

As such, they aren't expected to solve this year's drought-caused power shortages.

But if only a third of the plants are built -- it's doubtful all will be -- they would easily cover a 3,000 megawatt power deficit in the Northwest that planners predicted before the California-induced power crunch kicked off.

"It's a huge addition to our generating capacity, and it's also a huge addition to our gas use if they run flat out," said Phil Carver, a senior policy analyst with the state Office of Energy.

For a region that will continue to depend on water to make the bulk of its electricity, the shift to more gas generation poses new longer-term problems, including where to get the gas, how to deliver it and how to keep prices stable.

It also highlights an issue that will be in the spotlight today when President Bush unveils his much-anticipated national energy strategy, which emphasizes boosting gas and oil supplies and building new power plants, refineries and pipe- lines.

Vice President Dick Cheney, who led the task force that wrote the plan, has often cited industry estimates that more than 38,000 miles of new pipelines will be needed in the next 20 years to keep up with demand.

As it turns out, much of that demand will come from the boom in gas-fired generators, which the government predicts will be the fastest-growing source of electricity during that time.

Nationwide, power from gas-fired plants is forecast to grow by 7.2 percent in the next two decades compared with 1 percent for coal and nuclear and an 8 percent drop for oil-fired generators.

By 2015, electricity generation will surpass all other uses of gas. And demand for natural gas at power plants will grow 12.4 percent next year, or five times the next-fastest use in industrial processes.

The tremendous growth along with wellhead gas prices that have more than doubled in the past two years explain why a record number of drilling rigs are loose across the United States and in British Columbia and Alberta, the Canadian provinces where the Northwest draws most of its natural gas.

The shift to gas-fired generators to produce electricity is a national trend brought on by a combination of factors: deregulation of the electric industry, which allowed private parties to build plants and sell the power; technological advances in gas turbines, and low gas prices until two years ago.

Environmental benefits also factor in. Compared with coal, the new gas plants emit a fraction of the carbon dioxide and other greenhouse gases and can replace dirtier boilers in co-generation plants.

A 484-megawatt project coming on line July 1 in Klamath Falls, for example, will provide power for several public utilities in the region and an electricity marketing subsidiary of PacifiCorp, which will sell in the Northwest and California. Steam from the project is sold to a forest products plant nearby.

Plants near pipelines
Most of the proposed plants are in the vicinity of the two main natural gas pipelines that crisscross the region like a giant "X," intersecting near Spokane.

As planners peer into the region's energy future, it's pipeline capacity that draws the most near-term concern. If only half the gas-fired plants now proposed are built, they would boost gas consumption by 50 percent, according to a new report by Washington's trade and economic development office.

"There's enough gas in the ground, but pipeline capacity is pinched right now," said David Stewart-Smith of Oregon's energy office, echoing findings in the report.

Pipeline operators are in expansion mode. In January, PG&E National Energy Group solicited bids for a capacity expansion of just under 10 percent of its pipeline. But requests poured in for more than 10 times the volume offered, and the company now is soliciting bids for an even larger expansion.

"For some time now, we've run very, very full," said Sandra McDonough, company spokeswoman. "What's going on is that the Northwest historically has not used natural gas for generation, and now most of the new plants being sited are natural-gas fired. You need to get more gas to serve those plants."

Northwest Pipeline Corp., which owns the region's other line, also recently solicited bids for an expansion big enough to supply two 600 megawatt power plants.

Fields less productive
Then there is the issue of availability.

Most forecasts predict near-term supplies of gas will increase as the current drilling boom bears fruit. But the fields in Northern British Columbia and Alberta on which the Northwest heavily depends are gradually becoming less productive, analysts say.

That has all eyes looking north to the biggest known supply of untapped gas on U.S. soil: the Prudhoe Bay oil fields in northern Alaska.

Industry officials and some environmentalists expect the Bush energy plan to endorse the granddaddy of all pipeline expansion proposals, a new natural gas line from Prudhoe to Alberta, where it could feed lines south.

Proved reserves in the area are 35 trillion cubic feet, compared with 164 trillion cubic feet of total U.S. reserves.

At least two oil company and pipeline consortiums are studying pipeline projects. One route, the Alaska Highway Natural Gas Pipeline, would extend 1,998 miles along the existing Trans-Alaska oil pipeline and the Alaska Highway.

The $10 billion project has been endorsed by Alaska Gov. Tony Knowles, the Western Governors Association, and some conservation groups as the most environmentally sound path.

Hydropower prevails
About 1,800 megawatts of gas-fired generation is expected to come on line by the end of this year in the Northwest and roughly the same amount in 2002, according to the Northwest Power Planning Council.

Longer-term, many of the plants that are proposed probably won't be finished as pipeline capacity and supplies are locked up, electricity supplies in the West balance out, and the falling power prices turn some investors away.

Gas-fired generation probably will always be dwarfed by hydropower in the region, said Dick Watson, director of power planning for the council. In an average year, he said, about 78 percent of the Northwest's power is from dams.

Over time, new gas plants "might move this down to 60 percent," Watson said, "but we're still going to be a predominantly hydro in the region."