Wednesday, January 31, 2001, 12:00 a.m. Pacific

Next energy crisis: natural-gas supply

by Lynda V. Mapes Seattle Times staff reporter Meet the next energy crunch: natural gas.

Energy planners see continued high gas prices and potential shortages within the next few years unless both pipeline capacity and gas supplies can keep up with potentially explosive new demand.

A proposed $10 billion natural-gas pipeline in Alaska might help address the problem, but that help is more than seven years away, planners say - and even if the pipeline is built, it's not clear whether the Northwest will have access to the gas flowing through it.

The Alaskan pipeline will be on the agenda Friday when governors from around the West, including Washington's Gary Locke, convene with the U.S. secretary of energy and several Federal Energy Regulatory Commission members at a Portland forum on the energy crisis convened by the Western Governors' Association.

Alaska Gov. Tony Knowles is expected to make his pitch for the $10 billion pipeline, which has already been endorsed by the association.

In Washington state, natural gas is primarily used by residential and commercial customers. But the current energy crisis has added a major new user: gas-fired plants to produce electricity.

At least a half-dozen gas-fired turbines are now in the proposal or permitting stage in Washington. If all of them are built, statewide natural-gas consumption is projected to increase 147 percent by 2010, according to the state Office of Trade and Economic Development.

It's not clear how that volume of natural gas could come to the state because both major gas pipelines serving Washington are already running near capacity.

One major pipeline company, PG&E Gas Transmission Northwest, is already mulling a new cross-Cascades line to meet future demand. The company is also beginning the first of what could be several expansions of its existing line, said Sandra McDonough, a vice president of PG&E National Energy Group in Portland.

"Basically our pipeline is very full right now to meet demand in the Northwest and California," McDonough said.

Energy planners concerned about gas supply have turned their eyes north to Canada, where there are less than 10 years of proven reserves, even based on current demand.

Gas prices in Washington state are already spiking, soaring last month on the spot market as high as $17 for a million cubic feet. Few see a return to the prices of less than $2 per million cubic feet that were routine just two years ago.

New plants would boost demand

Washington gets most of its natural gas from the Western Canada Sedimentary Basin. But gas that's easy to reach and process has already been tapped. Now suppliers are mostly drilling deeper wells and finding smaller pools.

Yet we may have seen only the beginnings of future demand.

"If we are going to put all our eggs in the turbine basket, or even any of them, we are going to need a way to increase delivery of more gas to the state in a quick fashion," said Dave Warren, director of the energy-policy office at the state Office of Trade and Economic Development.

"We have concerns about being able to meet our demands in the next five or six years if all of these generators come online, or even any of them."

But how helpful an Alaskan natural-gas pipeline could be to the Northwest depends on two things: how soon it is built, and what access Washington would have to the gas. The pipeline has been intended to tap abundant natural gas in Alaska's Prudhoe Bay and bring it to the Midwest.

On the most ambitious schedule, the pipeline could be delivering gas within seven years, said Wilson Condon, commissioner of the Alaska Department of Revenue.

And regional energy planners are likely to lobby at this week's governors conference for access to that Alaskan gas.

"It's obviously a potential piece of the solution," said Warren, who will be at the conference.

Planners caught by surprise

The natural-gas issue has taken some energy planners by surprise.

"It was a sleeper," Warren said. "We started doing our analysis and looking at the data and said, `Uh-oh.' The whole pipeline infrastructure was not planned in anticipation of gas-turbine generation."

Mark Glyde of the Northwest Energy Coalition, made up of environmental groups and some utilities, warned that the region is making a big mistake if it seeks to solve its electricity woes by going whole-hog for natural-gas power plants.

"Let's not solve one crisis by creating another," he said.

A smarter course, Glyde said, would be a diversified menu of sources, including wind power - currently cheaper than natural gas, per kilowatt-hour - and conservation to reduce demand.

Paula Pyron, executive director of the Northwest Industrial Gas Users in Portland, sees several reasons for the gas-price increase and potential shortages ahead.

As of November, Canadian suppliers began sending gas east that the Northwest used to have sole access to. A new pipeline to Chicago means there is new demand for Canadian gas when the weather is cold both here and in the Midwest.

Increasing the pressure has been demand by power plants in California, which is already sucking in huge amounts of natural gas.

Finally, dry weather in the Northwest has raised the demand for gas to meet energy needs that can't be served by dams whose reservoirs are low.

Nonetheless, Carol Jolly, deputy policy director for Washington's governor, said the name of the game is not to endlessly increase supply but to get more efficient.

"We don't want to focus on the providing-more-supply side of the equation," Jolly said. "We want to focus on reducing demand. It's like highways. Building more doesn't mean you solve the traffic problem."

The convergence of two industries - natural gas being used to generate electricity - is also creating new interest by the public and private sectors in making a reality what for 20 years was only a pipe dream: the pipeline to tap natural gas in Prudhoe Bay. The North Slope has proven natural-gas reserves of 35 trillion cubic feet, the country's mother lode of natural gas.

By year's end, oil companies with rights to the gas are expected to spend $75 million studying the project.

Lynda V. Mapes covers energy and environmental issues for The Seattle Times. She can be reached at 206-464-2736, or at lmapes@seattletimes.com.

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-- Martin Thompson (mthom1927@aol.com), January 31, 2001

Answers

Energy planners concerned about gas supply have turned their eyes north to Canada,....

At present, sixty percent of Alberta's natural gas is being sent to the U.S., playing a role in the more than quintupling of their price Albertans have seen in the past few months.

-- Rachel Gibson (rgibson@hotmail.com), January 31, 2001.