Production and Distribution*

Xcel Energy’s role in natural gas distribution and purchasing

Natural gas production, gathering and supply

Natural gas transmission, distribution and storage

Xcel Energy’s role in natural gas distribution and purchasing

Xcel Energy delivers natural gas to 1.8 million customers in eight states. The company purchases natural gas from producers, marketers and brokers. It contracts with pipeline companies to transport the gas to Xcel Energy’s distribution system where we deliver it to our customers.

In general, the natural gas industry includes:

• Production and gathering companies;
• Marketing companies and brokers;
• Transmission pipeline companies; and
• Local distribution companies, or LDCs. (Xcel Energy is an LDC)

Xcel Energy purchases its natural gas supply from producers and marketers and contracts with transmission pipeline companies for capacity to move the gas to our distribution facilities. The market sets the price for the natural gas supply; the Federal Energy Regulatory Commission or state regulatory commissions set the price for its transportation.

Xcel Energy passes through the costs of purchasing and transmission of the natural gas to customers with no markup or profit.

Natural gas production, gathering and supply

Production

The natural gas that Xcel Energy purchases comes primarily from four gas supply basins:

• Rocky Mountain Basin, located in Colorado, Montana and Wyoming;
• Anadarko Arkoma Basin, located in the mid-continent states of Texas, Oklahoma and Kansas;
• Western Canada Sedimentary Basin, located in Alberta and Saskatchewan, Canada; and
• Permian Basin in Texas and New Mexico.

Gathering

At those production fields, natural pressure brings natural gas to the top of a well, where it goes into gathering lines. Gathering lines deliver natural gas to a processing plant, where impurities such as water or carbon dioxide are removed. Once the natural gas meets the pipeline quality standards, it is ready to go into the interstate transmission pipeline system.

Supply

Marketers work with the producers to sell and transport some of the natural gas to end users, such as large industrial companies, electric generating facilities and LDCs such as Xcel Energy.

Natural gas transmission, distribution and storage

Transmission

Natural gas is transported through the transmission pipeline system, which is composed of large steel pipe ranging from 20 inches to 42 inches in diameter. The pressure ranges from 200 pounds to 1,500 pounds per square inch.

Most major pipelines are looped, which means two or more lines run parallel to each other in the same right of way.

Compressor stations are located every 50 to 60 miles along each pipeline. A compressor is an internal combustion engine or turbine that creates pressure to push the natural gas through the lines.

Along the pipeline route, depleted oil and gas wells, salt caverns and other natural geological formations are used to store natural gas for use during times of peak demand.

When the natural gas reaches a local natural gas utility — such as Xcel Energy — it passes through a gate station, where its pressure is reduced to a range between 100 pounds and as low as ¼ pound. An odorant is added, and the volumes of gas are measured.

Distribution

The natural gas then moves into distribution lines, or mains, that range from two inches to 24 inches in diameter. In general, the closer natural gas gets to the customer, the smaller the pipe and the lower the pressure. When the natural gas reaches a typical home, its service line is one inch or less in diameter and its pressure is between 60 pounds and ¼ pound.

Storage

In addition to storage facilities along the pipeline route, which are owned by the transmission pipeline companies, Xcel Energy also owns and operates several underground storage fields. Additionally, the company owns peaking plants, where natural gas or propane is stored in liquid form. These storage facilities enable us to meet customer needs on the coldest days, when demand is highest.

*Information for this page was supplied in part by the American Gas Association