It's up to the US Federal Energy Regulatory Commission to decide, possibly this year, if industry should keep paying a government-mandated surcharge to fund natural gas research and development at the Gas Technology Institute.
Under a 1998 agreement, the industry surcharge is supposed to end this year, but GTI recently asked FERC to extend the required fee another 5 years. The American Gas Association and the US Department of Transportation support GTI's proposal to extend funding. Major and independent producers, as well as industrial gas consumers, oppose it.
AGA, DOT
DOT told FERC that GTI's $48 million proposal would help industry meet a congressionally mandated pipeline research plan.
"The funds that GTI seeks could constitute a significant source of funds for the private sector match needed for the DOT's 5 year plan," DOT said. "The pipeline infrastructure is aging, while at the same time R&D funding from the pipeline industry to develop technologies to assure its integrity is decreasing."
"In this environment, collaboration among stakeholders in the conduct of research and development to benefit pipeline safety and integrity is essential to maintain the aging supply infrastructure and to maximize the effectiveness of R&D investments," DOT said.
AGA said continued funding for some type of collaborative research benefits the entire industry, from wellhead to burner tip. In the association's opinion, GRI's proposal fills an "urgent" need for industry and consumers in the short and medium term. But that doesn't mean AGA wants or expects the government surcharge to last forever.
If funding is approved, stakeholders "will undoubtedly continue to explore other avenues that might be implemented in the longer term to complement the GTI proposal, which will still yield a much lower level of funding than the previous GRI programs provided," AGA told FERC. AGA also said the cost to consumers, estimated at 67¢/year/household, is minimal.
Producer opposition
"Natural gas producers recognize the need for [R&D], but IPAA believes it can be accomplished through alternatives other than GTI," said Independent Petroleum Association of America Vice-Chairman Mike Linn. "Natural gas producers and major natural gas consumers agree—GTI is not needed and has become a drain on the natural gas segment's resources at a critical time. IPAA is unconvinced that GTI's focus is appropriate. Its past efforts have not directed appropriate attention to natural gas exploration and production issues despite the consequences to the natural gas market that supply insufficiency can cause," he said. The producer and consumer groups disagreed with DOT and AGA's assertion that GTI offers a unique gas R&D role. They said that voluntary and private funding, as well as federal appropriations, are already playing a worthwhile role and in fact could be expanded without having to rely on GTI. It's unclear if Congress would be amenable to filling the funding gap. A spending bill earmarks $42 million for gas research in fiscal year 2005 under the US Department of Energy's fossil fuel office. That amount is $1 million less than FY 2004 spending levels but $16 million more than the White House wanted to see.