Natural Gas Demand Projections and
First, we develop a range of natural gas growth estimates for California. A plausible range for growth, not a precise projection, is needed to investigate the adequacy of the gas supply and transportation infrastructure and identify potential policy problems and solutions. Much of the projected natural gas demand growth is for electricity generation, which has a different seasonal load profile from those of the residential, commercial, and industrial sectors. The difference in seasonal load has significant implications for the natural gas delivery infrastructure.
2002 to 2010
From 1990 to 1999, natural gas demand in California grew more rapidly (2.2 percent per year) than the national average (1.9 percent per year). Increased demand for natural gas for electric power generation (both utility and non-utility sources) was one of the primary causes. Figure 2.1 illustrates that from 1996 to 2000, annual natural gas demand for electricity generation grew from approximately 570 billion cubic feet to almost 950 billion cubic feet. This strong growth was at least partially driven by weather-related factors, including warm summers and the ongoing drought in the Pacific Northwest that reduced hydroelectric capacity. Demand for power generation is expected to be the source of much of the gas demand growth in California over the next decade because of the construction of an unprecedented amount of new central station gas-fired generating capacity.
Two projections were used to estimate the range of gas demand growth. The 2001 Edition of the GRI Baseline Projection (GRI Baseline) was used to establish the upper range of the gas demand; and the 2001 EIA Annual Energy Outlook (AEO) (EIA 2001c), which assumes that California continues to meet much of its electricity demand with imports, was used to establish the lower range of the gas demand. The CEC's projection of gas demand (CEC 2001a) falls within this range. The projected range is presented in Figure 2.2.
Both the GRI Baseline and AEO projections are based on highly detailed econometric and engineering models and on project demand by sector (e.g.,