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

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

APS, the undertaking’s anchor buyer, will use fuel from the pipeline for gas-fired energy vegetation that may assist deliberate information facilities within the utility’s service territory, stated Ted Geisler, chairman, president and CEO of Pinnacle West Capital Corp., APS’ guardian firm, throughout a Wednesday earnings name.

Two Fortis utilities — Tucson Electrical Energy and UniSource Vitality Companies — and the Metropolis of Mesa, Arizona, are finalizing negotiations with Transwestern, an Vitality Switch unit, in response to the utilities.

All present interstate fuel pipelines serving Arizona are absolutely subscribed, in response to the utilities.

Transwestern owns a 2,590-mile fuel pipeline that may ship 0.9 billion cubic toes a day from southwest Texas to Arizona. APS, SRP and TEP purchase fuel 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 undertaking would add 1.5 Bcf/day of capability to the Transwestern system, in response to the corporate. Vitality Switch goals to finish its undertaking by late 2029.

Vitality Switch stated it’ll launch an open season this quarter and expects the remaining capability on the pipeline growth to be absolutely subscribed. Relying on the outcomes of the open season, the undertaking may very well be expanded, the Dallas-based oil and fuel infrastructure firm stated. Transwestern is contemplating greater than doubling the pipeline’s capability through the use of 46-inch pipe, Marshall McCrea, co-CEO of Vitality Switch, stated Wednesday throughout an earnings convention name.

APS expects to spend $7.3 billion over 25 years shopping for fuel on Transwestern’s growth undertaking, Pinnacle West stated in a filing with the U.S. Securities and Alternate Fee.

The Phoenix-based utility plans to carry energy vegetation on-line when the pipeline undertaking begins working, in response to Geisler. APS’ contract with Transwestern is versatile so the utility should purchase extra fuel if it wants it, he stated.

APS has near 4.5 GW of dedicated, excessive load buyer demand, primarily information facilities and a few manufacturing, in its interconnection queue, with an extra 20 GW of uncommitted, potential massive load prospects, Geisler stated.

The utility set a peak demand file of about 8.5 GW on July 9, up 300 MW from final 12 months’s peak, in response to Geisler.

APS expects its electrical gross sales will develop by 4% to six% a 12 months via 2027, primarily pushed by the addition of huge hundreds onto its system, in response to 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 fast load progress, APS revised its carbon emissions discount targets on Wednesday. “Dependable service for our prospects is our high 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 prospects.”

Final 12 months, 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 response to the U.S. Energy Information Administration.

In the meantime, Vitality Switch is seeing rising demand for fuel from energy vegetation and information facilities, in response to Tom Lengthy, the corporate’s co-CEO.