case studies

California's Pipeline Program: A Triumph in Gas Market Analysis

During the early 1990s, the California Energy Commission (CEC) initiated an effort to bring additional pipeline capacity to California. They feared they would be simply driving gas price up in California because of the multibillion dollar cost of the pipres. “High transport costs caused high rates” they reasoned. They hadn’t embraced the economic notion that if more pipelines enter the California market, maybe gas-on-gas competition would moderate California gas prices. They hadn’t really thought through the competitive ramifications of new pipelines entering the state's gas market and whether that alone might lower gas prices for consumers. The central inquiry revolved around the extent to which the main pipeline participants, namely Kern River and PGT Expansion, could influence the reduction of gas prices or whether they would just impose high costs.

altCalifornia's Pipeline Program: A Triumph in Gas Market Analysis

Challenges

  • 01

    Supply & Demand

In the early 1990s, the California Energy Commission (CEC) launched sought to decrease gas prices by way of increasing supply and competition in the state. But, how many new pipeline entrants would be required to drive prices down in the state of California?

The advanced North American multiregional gas supply-transport-demand model held the key to unlocking insights that would shape the future of California's gas market.

The solution

The predicted outcomes soon became self-evident, and California and its citizens reaped the rewards of their analytic-drive and data-assisted choices.

Results and Benefits

01

Price Forecasting

The study also unveiled a remarkable twist—the introduction of these pipelines would result in an increase in gas prices at their upstream terminus. Moreover, the analysis indicated that the entry of either Kern River or PGT Expansion would redirect the flow of gas from the San Juan and Permian basins, causing it to reverse course and flow eastward rather than its traditional westward direction.

Results and Benefits

02

Market Analysis

The study also unveiled a remarkable twist—the introduction of these pipelines would result in an increase in gas prices at their upstream terminus. Moreover, the analysis indicated that the entry of either Kern River or PGT Expansion would redirect the flow of gas from the San Juan and Permian basins, causing it to reverse course and flow eastward rather than its traditional westward direction.

Results and Benefits

03

Economic Analysis

The study also unveiled a remarkable twist—the introduction of these pipelines would result in an increase in gas prices at their upstream terminus. Moreover, the analysis indicated that the entry of either Kern River or PGT Expansion would redirect the flow of gas from the San Juan and Permian basins, causing it to reverse course and flow eastward rather than its traditional westward direction.

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