Implications and Policy Options of California's Reliance on Natural Gas

By Mark A. Bernstein; Paul D. Holtberg et al. | Go to book overview

3
California's Natural Gas Supply

Import Dependence

California is dependent on imports of natural gas, from Canada and the Rocky Mountains. California gas production meets only 15 percent of demand. In the coming decade, domestic California natural gas production is not expected to keep up with growth in demand, so its share will decline accordingly. The increase in natural gas imports will occur at a time when the Pacific Northwest and Mountain regions are also growing and looking toward natural gas as a primary source for meeting energy demand growth. Adequate natural gas resources appear to exist in regions accessible to California to meet demand growth. Therefore, questions about supply adequacy principally involve issues of sufficient investment to turn those resources into deliverable gas and the ability of the pipeline (intrastate and interstate) and storage infrastructure to deliver that gas to customers.

Table 3.1 summarizes the sources of California's natural gas supplies between 1995 and 2000. On average, California imported 1,750 billion cubic feet of natural gas per year or 85 percent of its total demand. The primary sources of these imports were supplies from the Rocky Mountain states and Canada. During the late 1990s, imports from the Rocky Mountain states and Canada met 50 percent and 35 percent of California's consumption, respectively. These areas are expected to continue to be the primary source of California's supply over the next decade.

As depicted in Figure 3.1, California relies upon four basins in the Western United States and Canada for its natural gas. The San Juan basin, which straddles the border between northern New Mexico and southern Colorado, is the largest supplier of natural gas to the state (see Figure 3.2). Canadian production (Alberta/BC) dwarfs that of most U.S. basins; this area is the primary supplier of natural gas to the Pacific Northwest (Choe 2001) and the Midwest. California consumes 11 percent of this basin's production. California and the Pacific Northwest compete for access to the Rocky Mountain production. Historically, California also consumed gas from the Permian basin in Texas. Though the state

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