The American Gas Association joined a growing chorus of trade groups warning US consumers they could see higher natural gas prices in the next decade unless policymakers boost access to energy-rich resources.
"A mismatch between growing demand for natural gas and supplies of it will inevitably result in higher prices for natural gas consumers during the next 10-15 years unless public policies and personal attitudes change about bringing fresh supplies of natural gas to market," AGA said.
A new AGA report says North America holds abundant supplies of natural gas but emphasizes that the industry will have difficulty meeting increasing consumer demand unless policies that restrict exploration and production efforts are updated to reflect current technology and unless additional gas supplies come from Alaska and overseas.
"Americans want a stable, reliable source of environmentally friendly energy that is produced in North America. They find it in natural gas. But given the long lead time associated with producing and transporting natural gas, critical decisions must be made now," said AGA Pres. and CEO David N. Parker.
A call for leadership
The AGA report stressed that federal and state officials must take the lead in overcoming the pervasive "not in my backyard" attitude toward energy infrastructure development.
AGA's call to action came only a few weeks after Congress left town last month without passing sweeping energy legislation.
Under consideration were proposals designed to encourage domestic oil and gas production, including expanded tax incentives and royalty reforms. One item that was under serious negotiation was a Senate plan to encourage construction of an Alaskan gas pipeline to the Lower 48.
House legislation, meanwhile, included a controversial plan that would have allowed the secretary of the Interior to consider leasing a small portion of the Arctic National Wildlife Refuge.
At the same time, however, both the House and Senate last session restricted drilling in the federal offshore while Congress was in the midst of its annual approval of the federal budget.
The new Congress, now completely under Republican control, started work this month. Republican leaders have said that some industry issues such as ANWR leasing may resurface early on, possibly as part of the budget process. Other concerns, such as updating clean air laws, may prove more challenging to retool, given Senate parliamentary rules that in effect demand a supermajority of 60 votes for most nonbudget matters. Republicans will control the Senate by a narrow margin of 2 seats.
Parker said that a host of laws and regulations encourage homes, businesses, industries, and electric-power generation plants to use more natural gas because it is the cleanest fossil fuel. Yet outdated concerns regarding the environmental impact of finding and producing natural gas make it increasingly difficult for companies to meet growing consumer demand, the report found.
"Continued migration of natural gas production in the US has occurred in the deepwater Gulf of Mexico, South Texas, North Texas, Louisiana, and the Rocky Mountain basins and is vital," AGA said. However, areas that are currently off-limits to gas production must also begin to come into play if we are to satisfy growing demand. Similarly, growth in Canadian production is likely in Canada's offshore and coalbed natural gas resources."
In addition, nontraditional supply sources such as Alaska gas and liquefied natural gas will likely account for a significantly larger share of the supply mix, the report found. Alaska's total natural gas resource base might hold 250 tcf of natural gas—enough to support current US natural gas needs by itself for more than a decade, the report said. Yet it may take 8-10 years to site, permit, and construct a pipeline to transport natural gas from Alaska to the Lower 48, the report said.
Since short-term solutions are limited, natural gas customers should be aware that weather and economic forces will continue to make natural gas prices fluctuate during the next few years because the supply-demand balance is so tight, Parker said.
Recommendations
AGA recommended that current restrictions on access to new sources of supply be reevaluated. The association said that, thanks to technological improvements, natural gas exploration and production is more environmentally sensitive.
The group, which represents most of the nation's gas utilities, also said renewable forms of energy should play a greater role in meeting US energy needs, "but government officials and customers must realize that all forms of energy have some environmental impact."
US officials also should work closely with Canadian and Mexican officials to address the challenges of supplying North America with competitively priced natural gas in an environmentally sound manner, AGA said.