C A L I F O R N I A E N E R G Y C O M M I S S I O N Draft AB 1257 Natural Gas Act Report Rachel MacDonald Supply Analysis Office Energy Assessments Division.

C A L I F O R N I A E N E R G Y C O M M I S S I O N

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


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: IntroductionEnergy 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 California’s 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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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. 3: Natural Gas Generation


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 Brown’s 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 ARB’s 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 NGV’s 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 California’s 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

• CA’s 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 ResourcesChallenges:

– 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 don’t 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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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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• Federal: President Obama’s 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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Challenges and uncertainties estimating emissions:

– Measurement and sample bias– Quantifying super emitters– Attributing emissions between oil and gas sectors

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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 (PG&E)– “Picarro” a vehicle mounted leak sensor system (PG&E)

•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_energypolicy/

• Or submit written comments by emailing to the dockets office here: [email protected]

• Or handwritten comments may be submitted to:

California Energy Commission Dockets Office, MS-4

RE: Docket No. 15-IEPR-041516 Ninth Street

Sacramento, CA 95814-551229


Staff Contact Information

Rachel MacDonald(916) 654-4862

[email protected]

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C A L I F O R N I A E N E R G Y C O M M I S S I O N Draft AB 1257 Natural Gas Act Report Rachel MacDonald Supply Analysis Office Energy Assessments Division.

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