CHALLENGES
Capacity, Constraints, and Impacting Factors The natural gas supply chain into South Dakota can be divided into three main components:
Source
Transmission
Distribution
Source Natural gas is almost entirely sourced from underground reserves that exist outside of South Dakota, making the State dependent on outside resources for natural gas. Most of the gas that flows into South Dakota comes from the northern United States and southern Canada. Other minor natural gas sources are renewable natural gas (RNG) from landfills and livestock waste. In 2021, South Dakota consumed 0.3% of the natural gas supply in the United States according to State Energy Profile Data. Due to this and other factors, the reserve basins, which are the ultimate source of natural gas, are not currently a limiting factor in supply to the State. Transmission The supply chain transmission component takes natural gas from source locations and brings it into the State. Because there is nearly zero natural gas production is South Dakota, the State relies on private companies to bring natural gas into the State via transmission pipelines. Distribution partners then provide a network to take the natural gas from the large interstate transmission pipelines to the end users. Ultimately, supply to the distribution partners is contingent on the upstream capacity available from transmission suppliers. Distribution South Dakota pipelines are considered to be fully subscribed. This means that all firm capacity has been sold. Upgrades are needed to increase firm capacity in the system. Due to the nature of the interstate transmission pipelines, increasing firm capacity can vary greatly in complexity. In some situations, it may be necessary to upgrade the system outside of South Dakota to increase capacity within the State. The transmission and distribution systems have some variable capacity available, but delivery of variable capacity is not guaranteed, making it less attractive to prospective customers, especially industry and manufacturing.
Did You Know? Natural gas supply is categorized as either firm or variable capacity. Firm Capacity Firm capacity is peak usage of the system. This is typically based on the coldest days in winter since the largest fluctuations in capacity are a result of heating demands. Firm capacity is designed to always be available. Variable Capacity Since the system may only supply at its peak capacity for a few days each year, there is often excess available capacity. This excess capacity is variable because it changes and is not guaranteed at any time.
Infrastructure First Project
Natural Gas | 53
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