California Forced To Embrace Natural Gas

Severe droughts and wildfires this year have pushed California to turn to natural gas in order to secure its energy supplies this winter, Reuters has reported, with the California Public Utility Commission to vote this week on expanding the gas storage facility in Los Angeles.

Droughts severely cut hydropower generation in the state, while wildfires compromised electricity imports, which are a big part of California's energy mix. The state also has plans to shut down four gas-fired plants and its nuclear plant, and last month the PUC ordered utilities to start buying renewable power and battery storage, the Wall Street Journal reported.

"While the companies are moving quickly to contract for power, the California Energy Commission and the state's grid operator have recently expressed concern that the purchases may not be enough to prevent electricity shortages in coming summers," the report said.

Per the Reuters report, also this week, regulators will vote on increasing the amount of gas stored at the biggest gas storage facility in California—Aliso Canyon. The facility is problematic: six years ago, a months-long leak made headlines, and there have been suggestions that it must be shut down.

The problems with Aliso Canyon have contributed to California's tight gas supplies along with a lack of pipelines. But, according to PUC Commissioner Martha Guzman Aceves, a small boost in capacity "will allow us to get through this winter while we continue our progress toward planning how to reduce or eliminate our use of Aliso Canyon by 2027 or 2035, or any time in between."

Until that happens, the planned closure of gas-fired plants could be delayed yet again. Initially, they were scheduled for retirement last year, but fears of blackouts in the evenings, when demand rises but solar power output declines, prompted a postponement. Now, one will be shut down this year and the other three in 2023.

By Irina Slav for Oilprice.com

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