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Clearing Up / Bearing Down

[January 4, 2019 / No. 1883]

Exploring Consequences of the October B.C. Gas Pipeline Rupture

SUMMARY: The Oct. 9 explosion and rupture of a major natural gas pipeline in British Columbia happened more than 300 miles north of the U.S.-Canada border, but its effects reverberated beyond the province into the U.S. Northwest. This first of a two-part column explores the incident and its aftermath, consequences and implications.

Maps fascinate me, in any form: political boundaries, geographic features, infrastructure, transportation routes, human and animal migrations, informational overlays, ancient depictions of unknown territories, golf courses (a special affection)—you name it. They pique curiosity while providing a comforting sense of orderliness.

Some years ago I looked at a map of the natural gas pipeline system in the U.S. Pacific Northwest and Western Canada, and noted a striking feature: a single pipeline running north-south roughly along the Interstate 5 corridor from the Canada/U.S. border to southern Oregon, joined near Portland by another single pipeline linking to points east.

Hmmm, interesting, I thought, mentally filing it for later exploration.

Then came Oct. 9, 2018, and an explosion and rupture of a major British Columbia gas pipeline known as T-South, part of the BC Pipeline system owned and operated by Enbridge. Although the incident happened near Prince George, 300-plus miles north of the international border, its effects have reverberated beyond the province into the U.S. Northwest.

T-South is the primary artery delivering B.C. natural gas into the U.S. Northwest. It connects at the border, at the Huntingdon (B.C.)/Sumas (Wash.) hub, with the Williams Northwest Pipeline system—that single gas-transmission line along the I-5 corridor, with its eastward link.

B.C. supplies slightly more than 50 percent of the gas used in our region, according to the Northwest Gas Association's 2017 outlook.

For further perspective, natural gas-fired power generation represents about 22 percent of regional generating capability, defined as "the maximum amount of energy the plants are capable of producing over the course of an average year," according to the Northwest Power and Conservation Council. Meanwhile, natural gas-fired baseload provided about 12 percent of regional energy production in 2016, according to Council figures.

The 2018 Northwest Regional Forecast from Pacific Northwest Utilities Conference Committee noted gas plays an important peaking role, along with hydro and coal. And among planned resources in coming years, gas is the single-largest category identified in the forecast, with 943 MW anticipated cumulatively by 2028; undefined capacity, likely to also include some gas, totals 929 MW.

"Gas-fired power generation in the Northwest is expected to increase over the next several years and play a more significant role as a source of baseload power and renewable integration," said a Nov. 6 memo from Steve Simmons, a senior economic analyst at the NWPCC. "As such, natural gas and the associated infrastructure may play an increasingly key role in future electricity pricing and electric reliability for the region."

Given these circumstances, a question arose in my mind after the B.C. pipeline break: How reliable is gas supply entering the U.S. Northwest from our northern neighbor?

The answer, I found, is nuanced, although generally reassuring. The worst-case scenario of a significant regional gas-supply shortage for an extended time is highly unlikely, although not impossible.

I'll explore the reliability question further in an upcoming column; this piece focuses on the incident and its aftermath, consequences and implications.

B.C. Pipeline Rupture and Aftermath

The Oct. 9 eruption occurred on a 36-inch pipeline in a rural area eight miles north of Prince George, according to Garth Johnson, BC Pipeline director for Enbridge, speaking at a Washington UTC briefing Nov. 8.

There were no reported injuries from the 5:45 p.m. incident, according to Enbridge, although the company reported precautionary evacuations of about 100 members of the Lheidli T'enneh First Nation.

The cause remains under investigation by the Transportation Safety Board of Canada, Enbridge spokeswoman Tracie Kenyon confirmed via email on Dec. 21, and findings "could take a number of months." She declined comment on information submitted by Enbridge to the agency.

Both the 36-inch and a parallel 30-inch line were shut down after the rupture. Enbridge received National Energy Board approval to restart the 30-inch line the evening of Oct. 10, following a "comprehensive integrity assessment," the company reported.

Repairs to the 36-inch line were announced as finished Oct. 31. On Nov. 17 Enbridge reported NEB approval to increase the line's maximum allowable operating pressure from 80 percent to 85 percent of normal, which the company expects "will allow us to gradually increase capacity from the current 0.9 Bcf/d to approximately 1 Bcf/d at the Huntingdon area" in the coming days.

Enbridge's Kenyon said Dec. 21 that the pipeline "typically transports about 1.7 Bcf/d on the T-South system to Huntingdon area during the winter months," and noted, "Currently we are transporting about 85 percent of the gas that's historically been transported on the system during winter months."

She added that a "comprehensive integrity program" to "validate its safety" was in progress, "prior to returning select sections of the system to full operating pressure."

The Oct. 9 rupture took out about 800 million cubic feet, or roughly two-thirds of the load at the time, for lower B.C. and western Washington and Oregon, according to Randy Friedman, senior gas supply director for NW Natural.

"We were looking for ways to bring on more supply or cut load to make up the difference," he told me.

In the immediate aftermath of the explosion/rupture came many public calls for conserving natural gas, including from FortisBC, Puget Sound Energy, Avista and Williams Northwest Pipeline, according to reporting by Clearing Up Editor Steve Ernst (CU No. 1872 [12]). Those asks included lowering thermostat settings and limiting water-heating and other natural gas-fired applications.

Weather conditions "really helped" limit gas demand, Friedman noted. Portland recorded a high of 65 degrees Oct. 9, rising into the upper 60s and low- to mid-70s in subsequent days, according to AccuWeather. Seattle and Vancouver, B.C., temperatures were a few degrees lower, but still temperate.

"We were all lucky that didn't happen on a very cold January morning," said David Mills, PSE senior VP of policy and energy supply. "Demand was still fairly low."

Demand-Side Responses

Friedman cited two other notable aspects of addressing the gas-supply deficiency, on the demand side.

One was cutting supplies to so-called interruptible customers, which pay lower rates in exchange for as-called-upon curtailments by gas providers under certain system circumstances.

"Our system stayed in balance, only because we curtailed," Friedman said. NW Natural curtailed about 100 million cubic feet per day of interruptible load, from the evening of Oct. 9 to 7 a.m. Oct. 11.

Interruptible customers are mainly industrial, FortisBC energy solutions director Jason Wolfe said at the Nov. 8 WUTC briefing. They typically have backup energy sources, such as diesel, so gas curtailments "are usually not too big a concern."

Fortis curtailed interruptible customers but also some "firm" customers as well, he said. Fortis' website said the curtailments affected industrial customers, including some multifamily high-rises, and were being lifted as of Oct. 12.

A month after the pipeline break, Fortis was receiving only half of its normal gas supply. "Due to weather, we are balanced fairly evenly," Wolfe told WUTC, adding the company is "certainly concerned going forward" if Enbridge's pipeline can't supply 1.3 Bcf per day or above.

As of late December, according to the Fortis website, "Thanks to your conservation efforts, coupled with Enbridge's pipeline returning to 85 percent operating capacity, mild winter weather and our healthy storage levels, BC's natural gas supply outlook is more optimistic."

It called for "mindful . . . energy use" but advised customers they can "resume your normal use of natural gas in your home or business." The company reported it is bringing in gas from Alberta, securing more gas in the marketplace, switching compressed natural gas vehicles to gasoline, and trucking in CNG to the lower mainland region.

‘We were all lucky that didn’t happen on a very cold January morning. Demand was still fairly low.’

Curtailment plans are governed by tariffs, according to Dan Kirschner, executive director of Northwest Gas Association. As a general principle, he said, "If you have to curtail X volume, the sweet spot is going to be the fewest number of customers that can make up that volume. What you don't want to do is lose 500,000 residential customers or even 1,000 residential customers, if you can make that up by curtailing one industrial customer . . . Preserving the core market is the priority."

As of year-end 2017, according to NWGA figures, Washington, Oregon, Idaho and British Columbia tallied a total of 3.2 million residential customers, 322,000 commercial customers and 7,148 industrial customers.

FortisBC's Wolfe indicated to WUTC that shutting off residential gas service would be a last resort; restoring such service could take months. (Interrupted residential gas service requires manual relighting to resume, Mills said.)

Another significant measure was ramping down gas-fired power plants, several sources noted.

"Gas-fired power generation in the region was dialed back" after the pipeline rupture, Simmons told the Council Nov. 14. "There was a hydro response" to help compensate for the reduced gas-fired power, he added.

Total regional gas-fired capacity is about 9,200 MW, Simmons told the Council; roughly half that capacity lies west of the Cascade Range, although a slight majority of annual regional gas-fired energy generation—55 to 60 percent—comes from plants east of the Cascades.

On the supply side, underground gas storage played a key role in ameliorating near-term effects of the pipeline break. The region's largest storage facility, Jackson Prairie in southwest Washington, was shut down for maintenance on Oct. 9, but plant personnel returned it to service within 24 hours of the pipeline rupture, according to Mills. (PSE operates the facility and co-owns it with Avista Utilities and Northwest Pipeline.)

"Absent Jackson Prairie's ability to come back and inject a lot of gas [into the system], at a minimum, Fortis would have started losing retail customers up in Vancouver," he said.

Jackson Prairie has a capacity of 25.5 million decatherms, roughly half the Northwest's total gas storage capacity, according to NWGA's Outlook. Another major storage source is NW Natural's Mist facility in northwest Oregon, with capacity of 16.5 million Dth.

Mist also contributed after the B.C. pipeline rupture. In a matter of hours came a switch from injections into Mist at a rate of 80 million cubic feet a day to gas withdrawals at an average daily rate of slightly more than 100 million cubic feet, according to Friedman. "It basically decreased significantly what we were taking off Northwest Pipeline," he said.

Nonetheless, storage is a limited supply resource. The 2017 Outlook shows storage at 10 percent of the region's total supply diversity. "Jackson Prairie or Mist or LNG facilities can only do so much," especially for a longer-duration situation, Shawn Hill, Fortis regulatory affairs director, told WUTC.

Econ 101—Gas Supply Down, Prices Up

Another consequence of the pipeline rupture falls under Econ 101—rising prices.

Immediately after the break, electricity prices at the Mid-C trading hub surged from $35/MWh on Oct. 9 to as high as $150/MWh on the afternoon of Oct. 10, Clearing Up reported, citing EnergyGPS.

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Clearing Up also reported natural gas trading at Sumas at $4.96/MMBtu Oct. 15, and up to $6.87/MMBtu Oct. 18 and $7.78/MMBtu Oct. 22. Imports at that key hub as of late October were down about 50 percent since the rupture, according to the U.S. Energy Information Administration; gas supplies to northwest Washington power plants had dropped by a similar percentage. Meanwhile, it was reported, Northwest Pipeline flows were earmarked for delivery to the Seattle-Tacoma area rather than into storage, and Ruby Pipeline deliveries to the California-Oregon border at Malin reached their highest rate since November 2015.

The Washington Department of Commerce's December energy newsletter reported November prices at Sumas averaged $17.50/MMBtu, up from $2.57/MMBtu a year prior, because of reduced natural gas flows. "Gas storage in the Pacific region, in part because of the storage draw following the pipeline incident, was 27 percent below the 5-year average," it also noted.

As of mid-December, however, Sumas prices had moderated, trading in the range of $4-$5/MMBtu, according to NewsData's Dec. 13-20 weekly gas price summary based on Enerfax data.

Implications of Pipeline Rupture

So, what to make of this event?

The T-South pipeline rupture has generated economic consequences—in the gas marketplace, for affected gas entities and for customers (curtailed and otherwise). The Bellingham Herald in mid-December reported Cascade Natural Gas has asked the Washington UTC for a 17.2-percent increase in natural gas prices, citing increased costs "due to the operational constraints from the Enbridge incident and the impacts on natural gas supplies." (A Jan. 4 report in The Daily News of Longview, however, said Cascade "is reconsidering" the proposed rate increase.)

Fortis also is raising rates, owing mainly to the pipeline break forcing the company to acquire added gas supply. "FortisBC and the regional gas market as a whole experienced increased volatility because of the Enbridge rupture," its website said. "Market instability and uncertainty, coupled with supply and demand, are factors that contributed to an interim adjustment to rates."

The incident has also heightened attention (and not just from me) on the region's gas-supply infrastructure. Puget's Mills said a high-executive-level meeting of regional gas-industry officials was planned for mid-December to review the B.C. pipeline break and lessons learned. "This [incident] has taken [our attention] to another level, not just reliability, but safety."

Yet at the same time, the B.C. pipeline rupture caused no reported injuries (thank a higher power) or structural damage beyond the pipeline; no known power outages; limited gas-service curtailments; and, by all accounts, led to a successful working of the regional gas industry's voluntary mutual assistance arrangement for emergencies.

NW Natural's Friedman described a "high-tech phone tree" that kicked into service shortly after the Oct. 9 event. He said he got a phone call at 7:47 p.m., about two hours after the explosion, and at 9 p.m. a joint phone call took place including representatives of pipeline companies, gas and electric utilities, electric generators, industrial customers and BPA.

The situation was explained and action quickly ensued, including gas power-plant shutdowns, curtailment of interruptible customers, power-grid balancing by BPA, calls for gas conservation and more.

"I've never been prouder of the industry than the way we acted" cooperatively after the pipeline break, said Friedman, who has worked at NW Natural since 1989. "I don't think there's a finer example of people working together for the common good and for keeping service going to firm customers."

Under different circumstances—say, in location, timing, magnitude or response—this pipeline explosion could have brought much, much worse consequences.

Mark Vasconi, WUTC director of regulatory services, in a Dec. 14 email called the rupture "concerning but manageable." Supply was constrained but "core load did not need to be curtailed," he said, although the commission is monitoring Sumas gas-price spikes and their effects, such as increased costs for distribution utilities lacking storage.

Ben Kujala, the Council's power planning director, in mid-October called this "a big event, but it was also an event we didn't really have any huge fallout from at this point. We kind of weathered that pretty well."

Still, he noted, the Council will continue to examine the regional gas system . . . as will we, in an upcoming column further examining gas-supply infrastructure serving the Northwest.
[Mark Ohrenschall]

Bearing Down is excerpted from NewsData's Clearing Up publication. If you aren't a current subscriber, see for yourself how NewsData reporters put events in an accurate and meaningful context -- request a sample of Clearing Up.

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