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Natural Gas Quality & InterchangeabilityDocket No. PLO4-3
Jay Ellzey, Director
Production Services & Regulatory Affairs
Chevron Natural Gas
May 17, 2005 Technical Conference
Discussion Points
Obstacle
Recommendation
Practical application
Policy Objective
Public Interest
Obstacle: Regulatory Uncertainty
Wasted Energy Capital Investment
Unnecessary Supply Loss Risk
Inefficient Supply Response
Europe – 4%
203 Tcf
Asia Pacific – 8%
445 Tcf
Middle East – 36%
1980 TcfAfrica – 8%
418 Tcf
South America – 5%
250 Tcf
North America – 5%
256 Tcf
Source: U.S. DOE – EIA (2003 figures)Resources (Tcf)
World Consumption = 251 Bcfd
South America
4%
FSU24% Europe
20%
Africa3%
Middle East8%
North America
29%
Asia Pacific12%
FSU – 35%
1953 Tcf
Recommendation
Grant the Petition for Rulemaking Filed Yesterday
Adopt Nationwide Gas Quality and Interchangeability Regulatory Specifications– CHDP 15 Degrees Fahrenheit Minimum– 1400 Wobbe Index– 4% Maximum Inert– 1.5% Maximum Butanes Plus
Create Non-Discriminatory “Safe Harbor” Tariff Mechanism Maximizing Supply
Practical Application
Adopt Nationwide Specification for Certainty
Require Tariff Safe Harbor Concept for Supply Flexibility
Require Tariff Language Establishing the Use of Aggregation, Blending and Pairing on a Non-Discriminatory Basis
Maintain Tariff OFO as Safety Mechanism
Use Economic Analysis to Determine Appropriate Remedial Action on As-Needed Basis
Ensure Availability of Natural Gas Quality Data
Policy Objective
Maintain Infrastructure Safety and Integrity
Continue Supply Flexibility
Increase Regulatory Certainty
Position U.S. to Safely Access New Domestic and Imported Supplies
Develop Flexible and Various Supply
Deploy Energy Capital Efficiently
Avoid Distorted Market Signals for Processors
Conclusion: Satisfy Public Interest With Workable Regulatory Solution
SafetySafety OFO MechanismOFO Mechanism
Maximize SupplyMaximize Supply Regulatory Certainty Regulatory Certainty
National Specifications National Specifications Tariff Safe Harbor Tariff Safe Harbor
Economical Remedial Economical Remedial ActionAction