1 Gas Quality & Interchangeability Update NARUC Annual Convention November 11-14, 2007.

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Presentation transcript:

1 Gas Quality & Interchangeability Update NARUC Annual Convention November 11-14, 2007

2 Gas Quality & Interchangeability: An LDC Perspective 1. Understanding the technical issues 2. Merging Policy & Science – NGC+ Reports 3. Utilization Issues – Do we really have the answers ? 4. Defining the implementation Process

Can We Reasonably & Rationally Meet The Challenges of The Second “Great Conversion” Supply Mix Is Changing……… LNG Imports Will Play A Major Role End-use Technology Has Evolved Begs The Question…. Is Yesterdays Research Sufficient To Examine Today’s Challenges ??

4 How Do Supply Compositions Vary? It’s Not Just Methane!

5 Global LNG Supply Profile Million Ton/annum Global Production Capacity 2006 Btu-content (btu/scf) TCF/annum Typical interstate pipeline gas in USA LNG supplies

6 What is Gas Interchangeability? The ability to substitute one gas for another without impacting end use The ability to substitute one gas for another without impacting end use Adjustment GasAdjustment Gas Substitute GasSubstitute Gas End Use Impacts End Use Impacts Flame CharacteristicsFlame Characteristics EmissionsEmissions EfficiencyEfficiency SafetySafety Equipment/system integrityEquipment/system integrity

7 Interchangeability IS NOT a New Concept…. Dates back to early days of manufactured gas as well as SNG and current peak shaving operations AGA Bulletin ’s Experience of Brooklyn Union, PSE&G, Boston Gas, Commonwealth, Baltimore Gas, SOCAL, GTI ……to name a few Recent work of TIAX for the proposed Crown Landing facility and the reactivation of Cove Point and Elba Island

8 Potential LDC Gas Quality Issues Day-to-Day gas distribution operations Domestic peak shaving liquefaction Conventional gas combustion equipment Electric production (Gas Turbines) Distribution System Infrastructure Concerns NGV’s, & Engines

9 Did The White Paper Help ??? Interim Guidelines Include: Historical Wobbe +/-4% Capped at 1, ,110 HHV Butanes+ 1.5 % Total Inerts 4 % Wobbe Alone May Not Be The Answer !!

10 Utilization Considerations Real or Perceived ? Appliances Appliances Power Generation - DLE Gas Turbines Power Generation - DLE Gas Turbines Vehicle & Stationary Engines Vehicle & Stationary Engines Infrastructure Issues Infrastructure Issues Feedstock Applications Including LNG Liquefaction Peak Shavers Feedstock Applications Including LNG Liquefaction Peak Shavers

11 Interchangeability Concerns for Turbine Operators GT combustion technology has advanced significantly yet manufacturers fuel specifications have not Fuel compositions may vary beyond design / startup fuel composition analysis Emissions, combustion dynamics & tuning to address variation in fuel composition become critical parameters We need relatively consistent fuel compositions!!!!

Footnote: (Glassman 1996) Flame Regime Illustration

13 Preferred Interchangeability Parameters to Address Combustion Turbine Issues Wobbe Index most robust, however Wobbe alone is not the answer for all applications including gas turbines Modified Wobbe (MWI) for turbines vs Wobbe offers turbine operators some flexibility as MWI can be adjusted via pre-heat Additional parameters such as heating value coupled with MWI & MWI time-rate-of-change may be required for turbines Specific constituent limits such as C4(+) and inerts may be required based on specific manufacturers requirements.

14 Distribution System Infrastructure Concerns Compositional changes may contribute to changes within certain infrastructure components (elastomers in compression couplings etc..). These changes alone do not necessarily result in component failures (leaks), rather there are “synergistic” effects (temperature, pressures, installation practices etc..) that may lead certain component designs to experience performance changes.

15 LNG Liquefaction Feedstock Remains an Issue 62 Plants in North America which make up a critical component of LDC supply Infrastructure. Specific Limits on Non-Methane Hydrocarbons are necessary to ensure continued reliable and efficient operations. Nitrogen added by terminals for BTU stabilization also impacts operation.

16 Northeast LNG Liquefaction Plants - 7 Plants spanning New York through MA - Critical component of regional supply infrastructure - Over 66 MM / Day potentially impacted - Retrofits will most likely be required – some substantial

17 Merging Policy & Science Impact of Recent FERC Decisions FERC has recognized that the NGC+ White Paper needs to be considered – not simply the interim guidelines FERC has recognized that the NGC+ White Paper needs to be considered – not simply the interim guidelines Don’t forget Finding #10 & Recommendations #6 & 10 !!! Don’t forget Finding #10 & Recommendations #6 & 10 !!! Stop whining unless your directly connected to the pipeline under consideration Stop whining unless your directly connected to the pipeline under consideration MUST SHOW IMPACTS BASED ON SOUND ENGINEERING and DATA……………… No “What if’s” MUST SHOW IMPACTS BASED ON SOUND ENGINEERING and DATA……………… No “What if’s” End Use retrofit cost recovery is not within FERC’s jurisdiction ?? End Use retrofit cost recovery is not within FERC’s jurisdiction ??

3 Interchangeability Implementation Process 1 Understand Historical Supply 2 Identify “Sensitive Receptors” - LDC’s catalog potential sensitive customer equipment 4 Assessment - Assess sensitive equipment - Establish extent of retrofits - Negotiate fixes 5 Settlement Agreement - Establish interchangeability Tariff parameters - Establish most economical Retrofit strategy, & schedule cost sharing mechanism ? - Work with Pipelines to establish system adjustment gas Work with Pipelines and Suppliers Establish reasonable supply compositions Understand “Zone of Influence”

19 Survey Participants KeySpan KeySpan PSE&G PSE&G Connecticut Natural Connecticut Natural Southern Connecticut Southern Connecticut NISOURCE NISOURCE NStar NStar ConEd ConEd New England Gas New England Gas Middleboro Gas & Elec Middleboro Gas & Elec Bay State Bay State

20 Specific Industry Groups Include: - Commercial Food Processing - Chemicals & Allied Products - Rubber & Miscellaneous Plastics - Electronic & Other Equipment - Stone, Clay & Concrete - Primary Metals Industries

21 Other Applications Considered Distributed Generation Distributed Generation - Engines/Cogen - Engines/Cogen - Fuel Cells - Fuel Cells - Micro Turbines - Micro Turbines Power Generation Power Generation - Gas Turbines - Gas Turbines NGV’s NGV’s LNG Liquefaction Plants LNG Liquefaction Plants

22 Interchangeability Implementation Strategy Establish a Communications Strategy For Existing Customers Establish a Communications Strategy For Existing Customers Establish Guidelines For Potential New Customers Establish Guidelines For Potential New Customers Assess Installed Appliance Population Assess Installed Appliance Population Evaluate / Establish Retrofits For LNG Liquefaction Evaluate / Establish Retrofits For LNG Liquefaction Evaluate Potential Elastomer Impacts For Distribution Systems Evaluate Potential Elastomer Impacts For Distribution Systems

23 Implementation Experience & Summary  Work collaboratively with Pipelines & Suppliers to establish appropriate tariff requirements based on the “five step process” “five step process”  KNOW YOUR ADJUSTMENT GAS !!  Review & Understand FERC’s Policy Statement  Make sure you are talking to your supplier…. your OEM and that you are collecting data today you will need for tomorrow……….

24 Resulting Settlement Proposal Under Consideration – Taking a “Fresh Look” Wobbe & HHV Capped at 1400 / 1110 Wobbe & HHV Capped at 1400 / 1110 Non-methane Hydrocarbons 12% (C4+ capped at 1.5%) Non-methane Hydrocarbons 12% (C4+ capped at 1.5%) Total Diluents 2.75% (Oxygen + Nitrogen with Oxygen capped at 0.2%) Total Diluents 2.75% (Oxygen + Nitrogen with Oxygen capped at 0.2%) Total Inerts & Diluents 4% (CO2 capped at 2.0%) Total Inerts & Diluents 4% (CO2 capped at 2.0%) CHDP 15F Equivalent CHDP 15F Equivalent Appropriate Tariff Language to afford us all the certainty and flexibility we need to maximize supply while minimizing end use impacts……… Appropriate Tariff Language to afford us all the certainty and flexibility we need to maximize supply while minimizing end use impacts………

25 Research Holds The Key To Unlocking Supply Access As It Relates To End Use….. DOE challenged by FERC to help lead the research necessary to answer questions identified by the NGC+, particularly with DLE combustion turbines & engines. NYSEARCH & GTI are currently looking into infrastructure material impacts related to changing composition. GAMA & AGA are looking into new appliances. NYSEARCH has recently approved a project to study in-service appliances & potential risks associated with maladjustment SOCAL / CEC are leading research into Commercial / Industrial Burners with various industry stakeholders.

26 SUMMARY Recognition & Implementation of the White Paper, not simply the interim guidelines will help bridge the trust gaps…. Realization that not all LNG’s “fit” the U.S. marketplace Recognition & Implementation of the White Paper, not simply the interim guidelines will help bridge the trust gaps…. Realization that not all LNG’s “fit” the U.S. marketplace 80-85% of reasonably expected global supply can meet the interim guidelines with approximately 2% nitrogen addition 80-85% of reasonably expected global supply can meet the interim guidelines with approximately 2% nitrogen addition KNOW YOUR ADJUSTMENT GAS !! KNOW YOUR ADJUSTMENT GAS !! Work collaboratively with impacted Pipelines & Suppliers to establish appropriate tariff requirements based on the Work collaboratively with impacted Pipelines & Suppliers to establish appropriate tariff requirements based on the “five step process” “five step process” Settlement Agreements must consider both downstream and upstream effects on long haul systems & potential impacts with interconnecting pipelines as well as reasonably anticipated new supplies Settlement Agreements must consider both downstream and upstream effects on long haul systems & potential impacts with interconnecting pipelines as well as reasonably anticipated new supplies