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

Gas Quality & Interchangeability Update NARUC Annual Convention November 11-14, 2007. Gas Quality & Interchangeability: An LDC Perspective. Understanding the technical issues Merging Policy & Science – NGC+ Reports Utilization Issues – Do we really have the answers ?

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

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

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

  3. 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. 1200 1150 Btu-content (btu/scf) 1100 LNG supplies 1050 Typical interstate pipeline gas in USA 1000 0 50 100 150 200 Million Ton/annum TCF/annum 0 2 4 6 8 10 Global Production Capacity 2006 Global LNG Supply Profile

  6. What is Gas Interchangeability? • The ability to substitute one gas for another without impacting end use • Adjustment Gas • Substitute Gas • End Use Impacts • Flame Characteristics • Emissions • Efficiency • Safety • Equipment/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 36 1940’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 1,400 + 1,110 HHV • Butanes+ 1.5 % • Total Inerts 4 % • Wobbe Alone May Not • Be The Answer !! Wobbe

  10. Utilization ConsiderationsReal or Perceived ? • Appliances • Power Generation - DLE Gas Turbines • Vehicle & Stationary Engines • Infrastructure Issues • 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!!!!

  12. Flame Regime Illustration Footnote: (Glassman 1996)

  13. Preferred Interchangeability Parameters to Address Combustion Turbine Issues • Wobbe Index most robust, however Wobbe aloneis 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. 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 Northeast LNG Liquefaction Plants

  17. Merging Policy & ScienceImpact of Recent FERC Decisions • 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 !!! • Stop whining unless your directly connected to the pipeline under consideration • MUST SHOW IMPACTS BASED ON SOUND ENGINEERING and DATA……………… No “What if’s” • End Use retrofit cost recovery is not within FERC’s jurisdiction ??

  18. Interchangeability Implementation Process 3 2 4 5 1 Understand “Zone of Influence” Identify “Sensitive Receptors” Understand Historical Supply Settlement Agreement Assessment • - 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 - Assess sensitive equipment - Establish extent of retrofits - Negotiate fixes - LDC’s catalog potential sensitive customer equipment

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

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

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

  22. Interchangeability Implementation Strategy • Establish a Communications Strategy For Existing Customers • Establish Guidelines For Potential New Customers • Assess Installed Appliance Population • Evaluate / Establish Retrofits For LNG Liquefaction • 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” 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 • Non-methane Hydrocarbons 12% (C4+ capped at 1.5%) • Total Diluents 2.75% (Oxygen + Nitrogen with Oxygen capped at 0.2%) • Total Inerts & Diluents 4% (CO2 capped at 2.0%) • CHDP 15F Equivalent • 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 80-85% of reasonably expected global supply can meet the interim guidelines with approximately 2% nitrogen addition • KNOW YOUR ADJUSTMENT GAS !! • Work collaboratively with impacted Pipelines & Suppliers to establish appropriate tariff requirements based on the “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

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