Xcel Energy currently operates about 2,200 miles of transmission and 33,800 miles of distribution gas pipelines to serve our customers in Colorado and the Upper Midwest. We continue to take advantage of the low cost of natural gas to meet customer demand at a competitive price, and we have managed to accelerate upgrades to our natural gas system with minimum impact to customer bills. From now until 2018, we expect to spend $1 billion for natural gas pipeline asset health and replacement work, on more than 1,000 miles of pipeline. We have our own Transmission Integrity Management Program (TIMP) and Distribution Integrity Management Program (DIMP), which each operating company uses to address the specific risks identified for its area. There are regulatory obligations that require operators to continually identify and assess risks, remediate conditions that present potential threats to pipeline integrity, and to monitor program effectiveness.
2013 Natural Gas Pipelines (measured in miles)
|WestGas Interstate (WGI)1||11.5||0|
|1 WGI is an interstate natural gas pipeline company that is part of our continuing regulated utility operations.|
In 2013, we continued work on several multi-year pipeline replacement projects in Colorado.
Visit the Call Before You Clear website.
Xcel Energy is not a producer of natural gas, but we do rely on a consistent supply of the fuel for generating electricity and for distributing to customers for use in homes and businesses. Natural gas is a commodity we purchase that is generally not tied to any specific well or production technique. All produced gas is blended into the national pipeline system.
Today our customers benefit from lower natural gas prices. In addition to reduced fuel costs, we are able to make system investments to improve our service with less impact on customer costs. We are adding natural gas-fueled generating plants that will modernize and diversify our system while also enhancing our ability to integrate intermittent renewable energy resources. To improve the safety and reliability of our natural gas distribution system, we are investing in pipeline replacements and other projects.
The use of natural gas for electric generation also provides for improved environmental performance including a reduction in carbon dioxide emissions by about 50 percent for each megawatt-hour that we generate from natural gas where we would otherwise use coal generation. Generation from natural gas also significantly reduces the emissions of sulfur dioxide, nitrogen oxides, mercury, particulate matter and other emissions that would otherwise occur when generating from coal. From a resource standpoint, using natural gas for generation also reduces water use significantly on a per-megawatt-hour basis.
The reduction in commodity price is the result of natural gas production methods that have significantly increased supply. Hydraulic fracturing ("fracking") is a technique gas producers use to fracture rock to stimulate the flow of natural gas to the well bore so it can be more easily produced. Combined with horizontal drilling, this technique allows producers to reach a significant supply of natural gas that was previously inaccessible with conventional drilling.
Natural gas production is governed by federal, state and local regulations, with additional regulations under consideration. The gas production industry currently faces intense scrutiny and continues to refine its practices while the U.S. Environmental Protection Agency (EPA) and other scientific groups conduct more analysis around water safety, air emissions and gas production.
We expect the natural gas that we purchase and distribute to be produced responsibly and in compliance with the law. We encourage gas producers to adopt best practices and continue to reduce the environmental impact of natural gas production. It is important that additional regulation be done in a reasonable manner that assures continued access to affordable natural gas, and we have seen evidence that this is possible, particularly at the state level.
Xcel Energy has participated in two influential energy policy projects to evaluate, among other things, the availability, environmental benefits and impacts, and safety of extraction processes for natural gas. We were contributing members to the National Petroleum Council’s study, Prudent Development: Realizing the Potential of North America's Abundant Natural Gas and Oil Resources. We were also participants in the Natural Gas and the Transformation of the U.S. Energy Sector: Electricity study performed by the Joint Institute for Strategic Energy Analysis, housed at the National Renewable Energy Laboratory.
We continue to work with the gas production industry and environmental organizations to understand emissions from the natural gas distribution system. Participating in these research endeavors is important to us so that we can understand the full scope of potential issues associated with the natural gas we purchase to provide energy services for our customers. In 2014, we signed on to the Natural Gas Downstream Initiative, a collaborative effort, facilitated by MJ Bradley & Associates. It will support the work of leading natural gas local distribution companies to identify and encourage advanced programs that accelerate infrastructure investment and lead to the effective management and reduction of methane emissions within natural gas distribution systems. The initiative is focused on opportunities that can substantially reduce methane emissions and support safe, reliable and cost-effective service.
Learn more about hydraulic fracturing.