Chevron Seeks Ruling on SDG&E; Contract Liability
Chevron has asked a Superior Court judge in San Francisco to determine if San Diego Gas & Electric illegally terminated a contract to buy geothermal brines that powered the utility’s geothermal electrical generating plant in Heber, Imperial County, the utility said Wednesday.
SDG&E; terminated the contract on June 24, alleging that Chevron Geothermal Co. of California, a Chevron subsidiary, had fallen nearly two years behind schedule on the drilling of wells that provided hot brines to drive the 50-megawatt demonstration plant.
Chevron Geothermal operated the drilling rigs that pumped hot brines from underground geothermal reserves owned by Chevron Geothermal and Unocal. SDG&E; closed the plant in June, saying it was not economical to operate the demonstration plant without the dozen or so wells that Chevron was to have drilled by June 24.
Chevron also denied that it was behind schedule.
The suit, filed July 15 in Superior Court in San Francisco, seeks a declaratory judgment but does not seek damages, Chevron spokesman Mike Marcie said.
In a related development Wednesday, SDG&E; confirmed that it wants to sell the $188-million demonstration plant that has operated at half-capacity for nearly two years.
However, the utility has not yet found a buyer for the plant, according to Terry Winter, SDG&E;’s acting division manager of engineering and operations.
SDG&E; could be forced to dismantle the plant if it fails to sell the plant before the end of the year, Winter said.
Finding a buyer for the plant could be difficult, according to utility industry observers, because even though it is fully licensed by state regulators, the facility has so far operated only as a demonstration project.
Additionally, a buyer would have to negotiate a contract to sell electricity to SDG&E; or another utility. SDG&E; has acknowledged that the plant is not cost effective to operate, given today’s relatively low prices for natural gas and fuel oil.
However, SDG&E; or a potential buyer might choose to mothball the plant until some time in the future when “the price of electricity makes it economically viable,” Winter said.
The plant is owned by SDG&E;, the state and the Imperial Irrigation District. A number of other organizations and companies, including Southern California Edison and Pacific Gas & Electric, contributed money for the demonstration project.
SDG&E; has until Sept. 15 to respond to the lawsuit, according to Marcie, after which the judge will made a decision.
