California’s pipeline diversions could boost its supply of gas

California repeatedly warned about spiking gas prices, fragile supply. But fixes never came.

The state has long relied on gas-fired plants to meet its energy needs, but supply of the fuel itself is a problem, particularly out where pipelines converge. California is trying to increase its own supply, both of natural gas and of electricity. But the state has relied on pipeline diversions to boost gas supplies.

A major U.S. pipeline company was trying to expand to the state, TransCanada Corp, to build a new pipeline from west Texas to California, but TransCanada backed off after the U.S. government refused to certify the project’s environmental impact. As a result, the company found itself in a legal limbo: it could not construct the pipeline in California, and the only alternative was to build it in a different state.

So the company backed off plans to build the TransTexas pipeline, and TransCanada instead filed an application to build its first pipeline in California. It would transport gas from western Canada and Mexico — where most of the oil that California relies on for its energy comes from — to California’s northern border.

California was ready to start building the pipeline this spring, and it plans to invest $20 billion in its transportation infrastructure if the deal goes through.

California’s gas suppliers were concerned that it would use the TransCanada deal to get more supplies and thus drive up prices. At the same time, critics pointed to the impact the pipeline could have on the environment and the economy. The project even caught the attention of the Obama administration, which asked TransCanada to seek federal approval and added language to a pending Keystone XL pipeline project that would require environmental review.

Still, California’s environmental regulators were prepared to approve the pipeline. It would help bring gas to its southern border, which is where the state expects most of its energy needs to come from. The pipeline also would improve gas deliveries from Canada and Mexico.

A federal regulatory report released last week said TransCanada’s project could help California meet its energy-security goal of importing 20 percent of its energy needs from areas with more gas

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