Draft AB 1257 Natural Gas Act Report

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Draft AB 1257 Natural Gas Act Report

• Rachel MacDonald
• Supply Analysis Office
• Energy Assessments Division
• IEPR Lead Commissioner Workshop
• California Energy Commission
• September 21, 2015

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About the presentation

• This presentation provides an overview of the
  Draft AB 1257 Natural Gas Act Report.
• Comments are welcome
• Produced through multi-division collaboration
  with subject experts
• Written comments are due October 1, 2015
• Assembly Bill 1257 (Bocanegra, Chapter 749,
  Statutes of 2013) requires the California Energy
  Commission to identify strategies to maximize the
  benefits of natural gas as an energy source.

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Ch. 1 Introduction

• Energy Commission staff has addressed the
  following areas relating to natural gas
• Natural gas delivery infrastructure, safety, and
  reliability
• Natural gas for electric generation
• Combined heat and power using natural gas
• Natural gas as a transportation fuel
• Efficient natural gas use in heating and cooling,
  water heating, and appliances
• Natural gas and zero net energy buildings
• Other low emission natural gas resources and
  biogas
• Methane leakage associated with the natural gas
  system

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Ch. 2 Pipeline Safety and Natural Gas
Infrastructure

• Pipeline safety continues to be at the forefront
• The passage of Senate Bill 705 (Leno, Chapter
  522, Statutes of 2011), requires utilities to
  submit safety plans.
• The CPUC ordered the gas utilities to submit
  Pipeline Safety Enhancement Plans (PSEPs) by
  August 26, 2011
• Inspect or replace programs still underway
• Energy Commission funding pipeline integrity
  management and inspection technologies research
• Micro electro-mechanical sensors
• Piezoelectric sensors
• Ultrasonic transducers to monitor/inspect gas
  pipelines girth welds/defects

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Ch.2 The Southern System Minimum Issue

• The Southern System Minimum (SoSysMin) flow
  requirement ensures enough gas is delivered
  through the region to meet the load in the SoCal
  Gas southern system.
• Necessary because of suppliers delivering
  sufficient gas to meet demand.
• Southern system suffers from isolation, limited
  interconnection, and no direct access to gas
  storage.
• Loss of San Onofre increases demand for gas,
  increasing curtailment risk.
• CPUC granted SoCal Gas permission to purchase
  make-up gas intended to be infrequent small
  amounts as a short-term solution.

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Ch. 2 The Southern System Minimum Issue continued
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Ch. 2 Proposed solutions to SoSysMin

• SoCal Gas has filed application with the CPUC for
  the North-South Pipeline.
• 60 miles of 36 inch diameter pipeline with a
  capacity of 800 MMcf/d
• Creates ability for customer gas delivered into
  northern system to reach southern system
• Alternative projects proposed by other parties
• Transwestern
• TransCanada
• Kinder Morgan
• Evidentiary Hearings just concluded
• The CPUC is expected to issue a decision by the
  end of 2015

.
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Ch. 2 Pipeline Safety and Natural Gas
Infrastructure

• Challenges
• Need greater data exchange and transparency
  between utilities and agencies doing research.
• Need additional analysis such as summer peak
  conditions and line-pack conditions in the
  afternoon.
• Need continued public outreach regarding natural
  gas infrastructure and safety. One of the most
  common causes of pipeline failure is third-party
  excavation damage.

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Ch. 3 Natural Gas Generation

• Roughly 40 of Californias natural gas use is
  for electricity generation
• Federal regulations expected to reduce coal and
  increase natural gas demand, mostly outside of
  CA
• Mercury and Air Toxics Standards (MATS)
• Clean Power Plan (111d)
• Need to ensure sufficient gas delivery to
  electric generation in high load conditions.

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Ch. 3 Natural Gas Generation and Renewables

• In 2013 roughly 21 of retail electricity sales
  were from renewables.
• Intermittent wind and solar generation varies
  hour by hour, often minute by minute
• California ISO must operate with enough
  dispatchable natural gas resources to address
  increasing variation from renewables.
• Natural gas generation typically meets
  reliability needs for local capacity and
  ancillary services.

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Ch. 3 Natural Gas Generation

• Challenges meeting changing conditions for
  renewable integration
• Line packing can be done on a limited basis.
  Line packing is when the gas line intentionally
  holds more gas than is being used at a given
  moment. Line packing is ultimately limited by the
  Maximum Allowable Operating Pressure (MAOP) of
  the pipelines.
• Drafting is the opposite of line packing. If
  relied on too much can lead to loss of pressure
  in the pipeline.

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Ch. 4 The Role of Natural Gas as a Fuel for
Combined Heat and Power Systems

• CHP policy
• 2008 Climate Change Scoping Plan 4,000 MW of
  installed CHP capacity by 2020
• 2010 AB 1613 Waste Heat and Carbon Emissions
  Reduction Act
• 2010 Governor Browns Clean Energy Jobs
• CPUC Settlement agreements D.10-12-035 (2010) and
  D.15-06-028 establishes IOU procurement
  requirements for CHP

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Ch. 4 The Role of Natural Gas as a Fuel for
Combined Heat and Power Systems Continued

• Economic Barriers include
• Non-bypassable charges
• Grid Interconnection
• Contract difficulties
• Research needed to better understand
• Monetization of the cost and benefits of CHP
• Infrastructure cost and operations
• Regulatory and market framework to align the true
  value/benefits of CHP with utility incentives

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Ch. 5 Natural Gas as a Transportation Fuel

• Transportation roughly 36 of states GHG
  emissions
• Natural gas vehicles (NGV) with low NOx engines
  can use natural gas or biomethane
• Most NGVs are in fleet services and in the medium
  and heavy duty vehicle sector
• Lack of NG fueling infrastructure is a challenge
  to greater NGV deployment

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Ch. 5 Natural Gas as a Transportation Fuel
Continued

• Research is needed to
• Support the ARBs Low-Carbon Fuel Standard
  Intensity Value.
• Expand natural gas and biomethane fueling
  infrastructure.
• Understand methane leakage from infrastructure.
• Develop and demonstrate functionality of large NG
  engines.
• Better quantify the impacts of NGVs on the
  environment.

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Ch. 6 Natural Gas and End-Use Efficiency
Applications Policy

• Assembly Bill 758 (Skinner, Chapter 470, Statutes
  of 2009) Assembly Bill 758 requires the Energy
  Commission with the CPUC and stakeholders, to
  develop a comprehensive program for energy
  efficiency in existing residential and
  nonresidential buildings.
• The Final Californias Existing Buildings Energy
  Efficiency Action Plan in September 2015
• Includes plans prioritize to strategies and
  approaches to double the rate of efficiency
  savings in buildings in California through 2030.
• Recognizes the importance of saving natural gas
  energy efficiency.

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Ch. 6 Natural Gas and End-Use Efficiency
Applications

• CAs households and small businesses consume
  about 1/3 of the total natural gas usage.
• Residential for space and water heating
• Commercial for process loads
• Industrial sector consumes about 25 of total
  natural gas usage.

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Ch. 6 Natural Gas and End-Use Efficiency
Applications

• Research is needed to
• Understand cost effectiveness of switching
  technologies, i.e. replacing a natural gas water
  heater with solar thermal.
• Develop smart appliances to improve efficiency
  while reducing equipment cost and air emissions.
• Improve space heating/cooling technology and
  efficiency to address technology cost and local
  environmental air quality requirements.

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Ch. 7 Natural Gas Use for Zero Net Energy
Buildings

• The simplest explanation of a ZNE building is
  that it uses only as much energy as it produces.
• ZNE buildings have high levels of energy
  efficiency of both the structure and appliances,
  combined with clean, renewable power generation,
  typically solar photovoltaic (PV).

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Ch. 7 Natural Gas Use for Zero Net Energy
Buildings

• Challenges
• Uncertainty and lack of clarity regarding natural
  gas and ZNE
• The Energy Commission should continue to explore
  the connection between end-use natural gas
  applications and the increased electrification
  of buildings and electric appliances.

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Ch. 8 Natural Gas and Biogas as Low Emissions
Resources

• Biogas is the raw, untreated gas produced during
  the anaerobic decomposition of biomass and
  composed of mostly methane and carbon dioxide.
• Biomethane is the treated product of biogas where
  CO2 and other contaminants are removed.
• Dairies, landfills, and wastewater treatment
  facilities produce biogas as a by-product of
  normal operation.

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Ch. 8 Natural Gas and Biogas as Low Emissions
Resources Policy

• Assembly Bill 1900 (Gatto, Chapter 602, Statutes
  of 2012) requires CPUC to adopt pipeline access
  rules to ensure nondiscriminatory, open access
  for biomethane, regardless of the type or source
  of the biogas.

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Ch. 8 Natural Gas and Biogas as Low Emissions
Resources

• Challenges
• Biogas typically contains greater levels of
  contaminates/ constituents allowed in natural
  gas.
• Regulatory uncertainty and problems securing
  long-term contracts.
• Location constraints
• Interconnection costly for projects that deliver
  a relatively small quantity of gas
• Some locations dont have enough gas in local
  pipe to allow blending
• Processing biogas into biomethane plus
  interconnection makes it significantly more
  costly than natural gas

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Ch.9 Greenhouse Gas Emissions and the Natural
Gas System

• The primary source of carbon dioxide (CO2)
  emissions is combustion in
• Power plants
• Appliances
• Industrial processes
• Vehicles
• Natural gas has the potential to reduce CO2
  emissions by shifting away from higher GHG
  emitting fuels like coal and gasoline or diesel.

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Ch.9 Greenhouse Gas Emissions and the Natural
Gas System

• Methane is a highly potent, short-lived GHG
• Methane is the second most prevalent GHG emitted
  in California, with CO2 being the most dominant.
• About 90 of natural gas is methane.
• California imports around 95 percent of its
  natural gas from productions areas located
  outside the state.
• Unintentional releases of methane fugitive
  emissions can come from multiple sources along
  the natural gas system, such as from leaking
  pipelines, flange seals on compressors, abandoned
  wells, or inefficient combustion.

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Ch.9 Greenhouse Gas Emissions and the Natural
Gas System

• Federal President Obamas Climate Action Plan A
  Strategy to Reduce Methane Emissions.
• California has taken significant steps in
  reducing short-lived climate pollutant (SLCP)
  emissions
• Senate Bill 1371 (Leno, Chapter 525, Statutes of
  2014) the CPUC with ARB, are developing rules to
  reduce emissions/leaks from gas transmission and
  distribution pipelines throughout the state.
• Senate Bill 605 (Lara, Chapter 523, Statutes of
  2014), ARB developing strategies by the end of
  2015 to further reduce SLCP emissions.

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Ch.9 Greenhouse Gas Emissions and the Natural
Gas System

• Challenges and uncertainties estimating
  emissions
• Measurement and sample bias
• Quantifying super emitters
• Attributing emissions between oil and gas sectors

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Ch.9 Greenhouse Gas Emissions and the Natural
Gas System

• Research to reduce the uncertainty of estimating
  methane emissions
• Bring convergence between methods (i.e. bottom-up
  and top-down)
• Improve allocation methods for attributing oil
  and gas emissions.
• Improve methane emission factors or other methods
  for use in research studies and inventories.
• Early detection technology for large methane
  leaks and source identification
• Pathfinder a Gas Distribution Asset Management
  Project (PGE)
• Picarro a vehicle mounted leak sensor system
  (PGE)
• Cost effective methane mitigation/recovery
  technologies to address known emission sources,
  such as leaks from pipelines and other equipment

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Filing Comments

• Please submit comments to the electronic
  commenting system here http//www.energy.ca.gov_e
  nergypolicy/
• Or submit written comments by emailing to the
  dockets office here docket_at_energy.ca.gov
• Or handwritten comments may be submitted to
• California Energy Commission
• Dockets Office, MS-4
• RE Docket No. 15-IEPR-04
• 1516 Ninth Street
• Sacramento, CA 95814-5512

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Staff Contact Information

• Rachel MacDonald
• [phone]
• Rachel.MacDonald_at_energy.ca.gov