Gas industry, Senate Republicans express energy bill concerns

The American Petroleum Institute, Independent Petroleum Association of America, and seven other trade associations representing natural gas producers, pipelines, and consumers jointly expressed strong concern Oct. 19 about US House energy legislation that they believe would reduce instead of increase domestic gas supplies.

Oct 19th, 2007

Nick Snow
Washington Editor

WASHINGTON, DC, Oct. 19 -- The American Petroleum Institute, Independent Petroleum Association of America, and seven other trade associations representing natural gas producers, pipelines, and consumers jointly expressed strong concern Oct. 19 about US House energy legislation that they believe would reduce instead of increase domestic gas supplies.

In a letter to House Speaker Nancy Pelosi (D-Calif.) and US Senate Majority Leader Harry M. Reid (D-Nev.), the organizations said that HR 3221 "professes to focus on energy independence, yet if enacted would adversely affect natural gas production and infrastructure development, thereby making the supply of this important energy resource even less secure"

The Natural Gas Supply Association, Interstate Natural Gas Association of America, National Ocean Industries Association, American Exploration and Production Council, Industrial Energy Consumers of America, Process Gas Consumers Group, and US Oil and Gas Association also signed the letter.

It came as the ranking minority members of three Senate committees urged Reid and Minority Leader Mitch McConnell (R-Ken.) to convene a formal House-Senate conference to reconcile differences between HR 6, which the Senate passed June 21, and HR 3221, which the House approved Aug. 4 (OGJ Aug. 20, 2007, p. 84).

Bypassing conference
"Last Wednesday, Speaker Pelosi announced her intention to bypass the appointment of a conference committee to reconcile the differences between these two bills," said Pete V. Domenici (R-NM) of the Energy and Natural Resources Committee, James M. Inhofe (R-Okla.) of the Environment and Public Works Committee, and Ted Stevens (R-Alas.) of the Science and Transportation Committee.

"We regret the speaker's decision to do this and we are deeply concerned about the integrity of long-standing procedures in the Congress if the speaker's decision is allowed to stand," they added in a letter to the Senate's leaders.

A House source told OGJ that Pelosi on Oct. 11 instructed House committee chairmen who have jurisdiction in energy matters to initiate less formal talks with their Senate counterparts after becoming frustrated with what House Democrats considered delays by Senate Republicans in convening a conference.

Pelosi said in an Oct. 12 press conference that the bill, HR 6, which the Senate passed, dealt only with "repealing subsidies to 'Big Oil' and creating a renewable energy fund" and that HR 3221 includes provisions to increase energy security and reverse global warming. "There is nothing I would like better than to have a conference, to have a full and open discussion of the issues that are in the House and Senate bills and come to resolution in a bipartisan, bicameral way," she maintained.

She also said she hoped the resulting bill would be legislation that President George W. Bush could sign. Alan B. Hubbard, assistant to the president for economic policy and director of the National Economic Council, told her in an Oct. 15 letter that Bush would veto any energy bill that reduced instead of increased domestic production, raised taxes or used the tax code to single out specific industries, or imposed price controls.

That led Rep. Edward J. Markey (D-Mass.), who chairs the House Select Committee on Energy Independence and Global Warming, to observe on Oct. 16: "The Bush administration just doesn't get it. Ever since the Cheney energy plan set America on a foolish course to try to drill our way to energy independence, we have been learning the hard way that no matter much money you heap on the oil industry, and no matter how much the oil cartel drives up prices, and no matter how many new oil wells get drilled, we are no closer to energy independence than when this administration took over."

"Most immediate, reliable"
In their letter to Pelosi and Reid, the nine trade associations called natural gas "the most immediate, most reliable option available to reduce power plant emissions as we await the development and deployment of other clean energy technologies." The 2005 Energy Policy Act contains several provisions to encourage production in frontier areas, including ultradeep water, ultradeep gas, and offshore Alaska, which HR 3221 seeks to repeal, they said.

They listed 20 provisions of Title VII and three provisions of Title XIII that they said would adversely affect domestic gas development. The provisions concern taxes, deepwater royalty relief and price thresholds, water management, federal audits, drilling permit application processing, and other issues.

"We are puzzled that so far this Congress has focused so little on natural gas," the letter said. "Despite the numerous hearings on climate change and on energy policy this year, not a single natural gas industry witness has been invited to testify at a hearing, House or Senate, on future natural gas demand and supply dynamics in a carbon-constrained environment. Given that natural gas accounts for 25% of US energy consumption, this is a stunning oversight."

Specifically, it said, Congress has not examined the impact of increased ethanol production on gas demand. "Even more significantly, recent modeling of the McCain-Lieberman climate change legislation, S 280, sponsored by the Natural Gas Council, suggests that a 20% increase in natural gas demand by 2030 is quite possible given the need to meet the emissions reduction targets that would be mandated by that legislation," it continued.

The letter urged the House and Senate "to consider carefully how these and other policies will affect natural gas demand so that the nation can develop adequate supplies and infrastructure now and thus avoid future adverse consequences."

Contact Nick Snow at nsnow@cox.net.

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