In October, a natural gas pipeline ruptured outside a British Columbia town called Prince George, sending a fireball skyward. The aftershocks from that blast are still being felt in Portland.
Last week, the Oregon Public Utility Commission held a special meeting to consider the implications of the rupture, which extend far beyond short-term price spikes.
"We haven't expanded our capacity to move gas since the early 1990s," says Ed Finklea, who represents large industrial customers. "If this region is really serious about switching to renewable energy, gas has to be really reliable."
Here are five takeaways from the disruption:
1. Despite a glut, natural gas prices will be higher this winter. Oregon produces virtually no natural gas, and two-thirds of the gas we consume comes from Canada. Prices spiked immediately after the rupture, briefly trading at up to 30 times the pre-explosion price, according to Randy Friedman, NW Natural's director of gas supply. They have since softened but remain about 25 percent higher than pre-explosion prices. Prices for residential buyers are set before the heating season—and this year were at 15-year lows. They will be adjusted upward next summer to reflect the explosion. Friedman says the supplies will remain tight for months as the pipeline gets repaired. "We are not going to be out of this situation until the winter is over," he says.
2. Oregon is particularly susceptible to disruption. Oregon gets gasoline delivered by pipelines, ships and trucks. But there's only one way for natural gas to get here: pipelines. That makes us vulnerable to any kind of disruption. Friedman says explosions or other outages are rare—but geologists say Oregon will suffer a cataclysmic earthquake in the future, which could sever existing pipelines. Bob Jenks of the Citizens' Utility Board notes that NW Natural's massive gas storage facility in Mist, Ore., was full when the explosion happened, highlighting an approach to mitigating Oregon's dependence on pipelines. "One option is to build more storage," Jenks says.
3. The state's transition to green energy presents challenges. Oregon has aggressively developed wind and solar electrical generation capacity over the past decade. Meanwhile, the region's two existing coal plants, in Boardman, Ore., and Centralia, Wash., are slated for closure, and pressure is mounting to close the Northwest's only remaining nuclear plant, the Columbia Generating Station near Richland, Wash. Coal and nuclear power present environmental dangers, but they are reliable; wind and solar are intermittent. Finklea, who represents the Alliance of Western Energy Consumers, says those plants saved the Northwest from catastrophic outages in October. "What would the region have done," Finklea asks, "if the two unpopular sources of electricity, coal plants and the Columbia Generating Station nuclear facility, were not online or if they had already been retired?"
4. The world is awash with natural gas, but Oregon businesses won't benefit. At the PUC meeting last week, Finklea raised the loudest concerns. He explained that many industrial gas users shut down their factories or switched to diesel briefly after the explosion, averting the possibility that entire cities—including Portland—could have seen their pilot lights extinguished. That would have required a lengthy and expensive door-to-door relighting, taking weeks or even months. Fracking has caused record gas supplies, but Finklea says the Northwest will suffer because it lacks sufficient pipeline capacity. "Our region is now experiencing high prices," Finklea says, "not from an actual supply shortage but from an infrastructure constraint."
5. Environmentalists will oppose any new pipelines. A decade ago, NW Natural and others set out to build new capacity—the proposed Palomar pipeline—to connect plentiful Rockies gas to planned liquefied natural gas export facilities. None of it got built, in part because of environmental opposition. That opposition has only grown stronger, as backers of the Jordan Cove LNG project near Coos Bay can attest. Doug Moore, executive director of the Oregon League of Conservation Voters, says industry should invest instead in storage and clean technologies. "We should be transitioning to a post-carbon environment," Moore says. "Let's focus on storage and technology instead of investing in capacity that's going to be out of date very soon."