Monday, January 01, 2001, 12:00 a.m. Pacific
Power plants to fire up natural-gas industry
by Seattle Times Staff
Just two years ago, the natural-gas industry was stuck in the doldrums. U.S. producers idled drilling rigs and laid off thousands of workers as glutted markets drove down prices.
But during the next two decades, producers are expecting an epic boom as a new generation of turbines in the Northwest and all over the country turn hydrocarbons into electrical power.
In Washington alone, new gas-fired plants built in the next five years are expected to produce enough electricity to power a Seattle-sized city.
The power will help ease the threat of brownouts and blackouts as the region's population continues to grow, and the high-tech industry expands its networks of energy-guzzling "server farms" jammed with computers and cooled with air conditioners.
For a region long used to turning water into low-cost power, the future likely will feature a much more expensive source of electrical generation - one whose prices are subject to much more volatility. Market prices for natural gas have more than tripled during the past two years.
Those prices are coming home to consumers. In addition to skyrocketing electricity prices, the cost of natural gas for home heating is being pushed up as demand outstrips supply.
Bellevue-based Puget Sound Energy, for example, asked state regulators to approve a 25 percent rate adjustment for natural gas starting in January, the third increase in 15 months, totaling 85 percent.
Gas retailers in the West have been hit particularly hard because of a new pipeline that has diverted gas produced in Alberta, Canada, to the lucrative Midwest market.
The strain could become greater as natural gas is increasingly used to create electricity as well as being used as a direct fuel.
"Natural gas is inevitably part of the solution. But we don't want to become too dependent. That's clearly where we are headed - and fairly rapidly," said Mark Glyde of the Northwest Energy Coalition, a Seattle group representing consumers, environmental groups and some regional utilities.
Glyde is hoping to see wind power also play a significant role in electrical generation, offering more stable priced power that won't spew carbon-dioxide emissions and contribute to global warming.
Several large wind-power plants already are running in the Northwest; a plant near Walla Walla features dozens of blades that spin atop metal towers. And more than a half-dozen other major wind plants are planned for Washington, Oregon and other Northwest states.
But the total output of the proposed wind plants would be less than 500 megawatts. That's substantially less than the 1,600 megawatts expected to come on line from new gas plants during the next five years in Washington.
Over a longer term, natural-gas power plants capable of producing more than 5,000 megawatts are proposed in Washington state, with 2,300 megawatts proposed in Oregon, 500 megawatts in Idaho, and 760 megawatts in Montana.
The new power plants will create a demand juggernaut for natural gas, with U.S. consumption expected to climb from 21.4 million trillion cubic feet in 1999 to almost 35 trillion cubic feet by 2020. That's a 62 percent increase, according to federal Department of Energy forecasts.
The forecasts have ignited a scramble to tap new sources of natural gas.
Energy companies also are planning to boost gas production in Canada, and there is a surge of new exploration in other parts of the United States.
In the Lower 48, many of the prime areas are off limits due to environmental restrictions.
One of the biggest wagers on natural-gas production is likely to be made in Alaska, where oil companies appear ready to invest at least $8 billion to build a pipeline to bring Prudhoe Bay reserves to market.
The gas is trapped within the same geological structures that have produced the gushers from the state's North Slope.
There's 30 trillion cubic feet of natural gas and additional exploration is expected to yield an additional 70 to 72 million trillion cubic feet.
During the '90s, with demand soft and prices weak, Prudhoe Bay oil had no incentive to bring the natural gas to market.
Instead, they re-injected it into the ground to help keep the field pressurized. The greater the pressure, the greater the flow rate of oil.
But earlier this month, the three major Prudhoe Bay operators - BP Exploration (Alaska), ExxonMobil Production and Phillips Alaska - agreed to launch a yearlong study to determine the best route for building a pipeline.
The shortest route would bring the pipeline east - with a stretch buried beneath the Beaufort Sea - and then down through Canada's Northwest Territories, where it could also tap into Canadian gas supplies. But burying a pipeline at the bottom of this northern sea could face major permitting hurdles.
An alternate route would head south to Fairbanks - paralleling the trans-Alaska oil pipeline - and then head east into the Yukon. This route would bring more of the construction-boom benefits to Alaska, and is favored by Gov. Tony Knowles.
The three oil companies hope to make a route selection this year. And in a best-case scenario, that gas would be on the market in 2007.
But no one expects the Alaska gas pipeline to bring back cheap natural gas - or cheap electrical power.
The pipeline would deliver about 1.5 trillion cubic feet of gas annually, and sate only a fraction of the increased demand. Natural Gas Week, an industry publication, projects the price of natural gas at more than $4 per thousand cubic feet in 2007, still more than double the price of just a few years ago.
And big projects often run up big delays, so there's a good chance that pipeline won't be built by 2007.
"This is a very aggressive timetable and a lot of things have to go right to make that possible, not half of which is the permitting process," said Paul Laird, a spokesman for BP Exploration. |
