Last week the Arizona Corporation Commission held a hearing into the early February natural gas outage that left 4,500 customers in Sierra Vista and 10,000 in Tucson without heat for days. Representatives from Southwest Gas said that record-low temperatures and a plant shutdown in Texas were to blame for what's being called the "worst gas outage in the history of Southern Arizona."
The Commission agreed, and instead focused on the question, "Could it have been avoided?" Many say that had Arizona had storage facilities, the outage could have been at least mitigated. That led Commissioner Pierce to call for the construction of underground natural gas storage facilities in the state, "I think we absolutely have to have underground storage. Absolutely have to."
Natural gas storage in Arizona
The issue of natural gas storage is not new in Arizona, but despite the fact that it has been on and off the table for years, the state still has no storage facilities. (See the figure below, from our Arizona Infrastructure Needs and Funding Alternatives report.)
Could the Southern Arizona natural gas outage have been avoided?
Natural gas providers in New Mexico are likely facing the same kinds of "Could it have been avoided?" questions. And while the conversation is essential, it's important to remember that those days in early February gave these Western areas temperatures never seen before in recorded history (it was 3° in Sierra Vista).
Utility providers can't plan for every possible circumstance; there is some point at which the costs of preparing for a highly-unlikely-but-not-inconceivable weather event are simply too high. The utilities work hard to maintain enough supply to cover peak loads (and then some) in case of extreme weather or other circumstances. But those days of sustained record-low temperatures were simply too much for the system to bear.
I'm not saying that the utilities shouldn't plan for extreme weather events; I'm saying we should balance the costs of adequately planning for the most extreme cases with the costs of not planning for them. And, more importantly, I'm saying we should separate the discussion surrounding natural gas storage facilities in Arizona from this early February outage. There have long been very compelling reasons to build storage facilities here - reasons that will continue to persist well after February's events are forgotten.
Consider these statistics, again from our Infrastructure Needs and Funding Alternatives report:
- Demand for natural gas will nearly double over the forecast period (2008-2032)
- The gap that prevails in Arizona today is a security of supply and storage gap
Closing Arizona's natural gas security of supply gap
At the Corporation Commission hearing last week, representatives from Southwest Gas and its supplier, El Paso Natural Gas, said that having a natural gas storage area in the state might have prevented the outage. Jim Boa, from Arizona Natural Gas Storage, would be happy to oblige: that company has recommended a storage facility near Eloy, which would take three years to build and cost about $350 million.
The authors of the Infrastructure Needs and Funding Alternatives report, economists at ASU, had three recommendations for closing the security of natural gas supply gap in Arizona:
- "First, there is a clear need for new natural gas storage facilities. The dearth of storage facilities in the West represents an important - and arguably the most pressing - pipeline and fuel infrastructure need. A facility with 3 billion cubic feet (Bcf) or 4 Bcf storage capacity is clearly needed."
- "Second, the access to the Permian basin (West Texas) could be expanded with the construction of the Picacho pipeline capable of carrying 1.3 Bcf /day to the State."
- "Third, linkages with Liquid Natural Gas(LNG) ports could be established, through TransCanada's North Baja line (or other new lines proposed by other companies) to tap ports in Mexico - providing an alternative to North American sources should demands from across the region or U.S. deplete currently abundant North American supplies."
At the end of the day, improving the security of supply of natural gas in Arizona isn't really about preventing another outage like happened in early February (though it might) - it is, far more importantly, about having a natural gas infrastructure in Arizona that can support the forecasted doubling of demand.
