Arizona utilities sign up for gas pipeline project, spurred by data center development

Arizona Public Service Co. and Salt River Challenge will purchase capability on Transwestern Pipeline’s just-announced Desert Southwest enlargement challenge, which goals to ship pure gasoline from the Permian Basin in Texas to Arizona, the utilities said Wednesday.

APS, the challenge’s anchor buyer, will use gasoline from the pipeline for gas-fired energy vegetation that may help deliberate knowledge facilities within the utility’s service territory, stated Ted Geisler, chairman, president and CEO of Pinnacle West Capital Corp., APS’ father or mother firm, throughout a Wednesday earnings name.

Two Fortis utilities — Tucson Electrical Energy and UniSource Power Providers — and the Metropolis of Mesa, Arizona, are finalizing negotiations with Transwestern, an Power Switch unit, in accordance with the utilities.

All current interstate gasoline pipelines serving Arizona are totally subscribed, in accordance with the utilities.

Transwestern owns a 2,590-mile gasoline pipeline that may ship 0.9 billion cubic toes a day from southwest Texas to Arizona. APS, SRP and TEP purchase gasoline that’s delivered on the pipeline.

Transwestern plans to spend about $5.3 billion to increase its system by constructing 516 miles of 42-inch pipeline and including compressor stations in Arizona, New Mexico and Texas, Energy Transfer said Wednesday. The challenge would add 1.5 Bcf/day of capability to the Transwestern system, in accordance with the corporate. Power Switch goals to finish its challenge by late 2029.

Power Switch stated it’s going to launch an open season this quarter and expects the remaining capability on the pipeline enlargement to be totally subscribed. Relying on the outcomes of the open season, the challenge might be expanded, the Dallas-based oil and gasoline infrastructure firm stated. Transwestern is contemplating greater than doubling the pipeline’s capability by utilizing 46-inch pipe, Marshall McCrea, co-CEO of Power Switch, stated Wednesday throughout an earnings convention name.

APS expects to spend $7.3 billion over 25 years shopping for gasoline on Transwestern’s enlargement challenge, Pinnacle West stated in a filing with the U.S. Securities and Change Fee.

The Phoenix-based utility plans to deliver energy vegetation on-line when the pipeline challenge begins working, in accordance with Geisler. APS’ contract with Transwestern is versatile so the utility can purchase extra gasoline if it wants it, he stated.

APS has near 4.5 GW of dedicated, excessive load buyer demand, primarily knowledge facilities and a few manufacturing, in its interconnection queue, with a further 20 GW of uncommitted, potential giant load clients, Geisler stated.

The utility set a peak demand file of about 8.5 GW on July 9, up 300 MW from final yr’s peak, in accordance with Geisler.

APS expects its electrical gross sales will develop by 4% to six% a yr via 2027, primarily pushed by the addition of huge hundreds onto its system, in accordance with Pinnacle West’s earnings presentation. The utility expects to speculate about $2.7 billion in technology from 2025 via 2027.

APS is securing roughly 2 GW of energy provide via a request for proposals issued in November.

In response to speedy load development, APS revised its carbon emissions discount objectives on Wednesday. “Dependable service for our clients is our prime precedence, which has led us to replace our clear vitality objective from zero carbon [emissions] to carbon impartial by 2050,” Geisler stated. “We’re additionally transitioning away from interim [emissions reduction] targets to higher replicate our near-term focus of reliability and affordability for our clients.”

Final yr, gas-fired energy vegetation produced 45% of Arizona’s in-state electrical energy, adopted by nuclear energy at 27%, photo voltaic at 13%, coal at 8%, hydroelectric energy at 4% and wind at 2%, in accordance with the U.S. Energy Information Administration.

In the meantime, Power Switch is seeing rising demand for gasoline from energy vegetation and knowledge facilities, in accordance with Tom Lengthy, the corporate’s co-CEO.