Gas industry faces many challenges, trade group leaders say

The US natural gas industry will have to be careful that the fuel’s bright future doesn’t blind producers, pipelines, and utilities to potential problems, three association executives cautioned Mar. 23 at an American Gas Association luncheon.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Mar. 24 -- The US natural gas industry will have to be careful that the fuel’s bright future doesn’t blind producers, pipelines, and utilities to potential problems, three association executives cautioned Mar. 23 at an American Gas Association luncheon.

US shale gas discoveries, which look sustainable for a generation, make it easy to become complacent, warned Natural Gas Supply Association Pres. R. Skip Horvath. “The impression is that gas has won. But our industry still faces challenges,” he said during AGA’s monthly Natural Gas Roundtable luncheon.

Criticism of hydraulic fracturing could lead to needlessly strict regulations, Horvath said. Industrial customers also aren’t fully confident that supplies will be reliable and reasonably priced, and perceived competition with other fossil fuels and emerging renewable and alternative sources lets policymakers delay action, he said.

AGA Pres. David N. Parker said, “Obviously, price volatility is still a major concern. It’s an issue we’ve discussed for years.” Parker added that AGA plans to participate in an upcoming year-long investigation of the situation.

Parker observed that not enough policymakers recognize that improved efficiency led by consumers means the amount of gas used to heat more than 60 million homes today is the same as the amount used to heat 38 million homes decades ago.

‘Silent success’
Industry members must tell other success stories more aggressively, added Bill Cooper, president of the Center for LNG. “LNG is a silent success story as we see more cargoes arrive in this country,” he said. “We’re well oversupplied at the moment and probably into the future. LNG is well-suited to supplement domestic supplies for some time to come.”

Horvath said industry should expect more questions about fracing despite its impressive 60-year record. He noted that producers of “Gasland,” which received the special jury prize for a documentary at the 2010 Sundance Film Festival, hope to have their movie in wide release in a few more weeks after showings at several festivals. “It’s well done. It holds people’s attention. And it could block our industry,” he warned.

Horvath said he’s concerned when large industrial customers question gas’s reliability when US storage and pipeline capacity has grown so dramatically in the last 3 years. Electric power generation may be the biggest growth area, but the gas industry still must be ready to answer customers’ doubts about its storage and transmission, he said.

Parker said, “This is not an industry that speaks with one voice.” That led to gas not being included when US Reps. Henry A. Waxman (D-Calif.) and Edward J. Markey (D-Mass.) developed carbon cap-and-trade legislation early in 2009, he said. After NGSA’s Horvath interjected that AGA was the exception “and has been there from the beginning,” AGA’s president said the gas industry is much better represented as US Sens. John F. Kerry (D-Mass.), Joseph I. Lieberman (I-Conn.), and Lindsay O. Graham (R-SC) work on their energy and climate proposal.

Parker said America’s Natural Gas Alliance, the American Clean Skies Foundation, and similar groups’ efforts mean “natural gas is no longer invisible in Washington, DC. It’s not just a bridge to the future now. It’s a superhighway.”

Contact Nick Snow at nicks@pennwell.com.

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