The Department of Energy is nearing completion of its long-awaited National Energy Strategy (NES), billed as a blueprint for future energy policies.
As a part of its data gathering process, DOE conducted a hearing last week in Washington on how current energy policies affect production. It plans other hearings soon on how tax policies and scientific developments affect energy.
Energy Sec. James Watkins said DOE wants to determine where reforms and improvements in regulatory policies, or new approaches, or deregulation would help energy production.
He got plenty of advice.
WHAT INDUSTRY WANTS
John P. DesBarres, president of Santa Fe Pacific Pipelines Inc., testified for the Association of Oil Pipelines. His primary message was that the administration should press for congressional passage of long-stalled oil pipeline decontrol legislation.
Nicholas Bush, president of the Natural Gas Supply Association, said the benefits of a regulatory environment that encourages gas industry competition was demonstrated to the nation last month.
"In December," he said, "the nation experienced record cold weather, and while there were significant operational difficulties throughout the industry, the system worked-and worked well.
"An important reason that natural gas was able to flow from one region to another on short notice was the existence of several new pipeline interconnects that have been built to take advantage of the Federal Energy Regulatory Commission's open access policies."
He urged FERC to expedite the certification of new pipelines, reform rate design, and change some rules to reflect natural gas decontrol legislation passed last year.
Paul Hilliard, chairman o t e Independent Petroleum Association of America, said gas producers face two major problems: wellhead prices that are too low to generate enough exploration to replace production and regulatory uncertainty that makes it impossible to project even near term profits.
He recommended that FERC approve a gas inventory charge that will make it easier for pipelines to sign long term contracts with producers.
And he said FERC must avoid precipitous regulatory changes, pointing out that every major natural gas initiative undertaken by FERC since the end of 1985 has been either successfully challenged in court or is under vigorous attack.
Kenneth Lay, chairman and CEO of Enron Corp., agreed. He said despite FERC's efforts to inject competition into the gas pipeline industry during the past 6 years there remains enormous uncertainty as to exactly what the rules for the future will be. "Of the five or so key orders attempting to achieve a more competitive natural gas pipeline industry, only one is a final, nonappealable order," he said.
NEW PRIORITIES
Although DOE won't release its interim NES study until Apr. 1, DOE's fiscal 1991 budget, to be released next week, will have new priorities due to its NES process.
DOE will not only bring its planning, programs, and budget into line with the NES findings and recommendations, it will begin a continuing effort to review that policy "so we don't allow ourselves to bank up other barriers" to production, Watkins said.
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