The objective of the research and analysis contained within this report was to identify and assess new and alternative natural gas storage technologies and to determine how they can best be utilized to provide safe, reliable, and cost effective natural gas to California consumers into the foreseeable future. Natural gas consumer demand forecasts provided by California operating utilities, Southern California Gas Company and Pacific Gas and Electric, are analyzed and illustrated within. The analysis indicated that although natural gas demand is expected to continue growing in both Northern and Southern regions of California, natural gas supply from a transmission pipeline capacity perspective on an aggregate, statewide basis is expected to remain adequate (approximately 30% reserve margins in peak day demand scenarios) over the forecast period. A critical assumption behind this statement is that other state’s natural gas demand and other potential commodity shortages will allow for adequate natural gas to reach California transmission and distribution networks in peak demand conditions.
Also investigated were potential peak day demand solutions to supplement local infrastructure capacity as well as deliverability enhancements to traditional underground gas storage assets. Identified was several point source, or “dispersed energy”, alternative gas storage technologies designed to provide incremental and supplemental natural gas to consumers in peak demand operating scenarios. These technologies, each in various stages of development and commercialization, were investigated for operational and economic feasibility. Results indicated potential alternatives to costly traditional local infrastructure enhancements that may be able to provide operational flexibility at competitive costs while satisfying forecasted peak day demand system requirements.
Finally, the report also focused on identifying and reviewing any potential regulatory barriers to implementing new technologies investigated as well as expansion of valuable traditional gas storage assets. No major regulatory barriers were identified for the alternative gas storage technologies described above. However, it was recommended that a broader market definition approach be taken to the market power HHI index to include not only storage deliverability but also deliverability from California natural gas pipelines and instate wells to promote the expansion of traditional underground storage assets.