US gas groups urge supply, deliverability focus

US natural gas producers and pipeline owners told a congressional committee Wednesday changes are needed if the industry is to meet expected increases in demand. They testified at a House Subcommittee on Energy and Air Quality hearing on the role of natural gas in the nation's energy policy.


By the OGJ Online Staff


HOUSTON, Feb. 28
�US natural gas producers and pipeline owners told a congressional committee Wednesday changes are needed if the industry is to meet expected increases in demand.

They testified at a House Subcommittee on Energy and Air Quality hearing on the role of natural gas in the nation's energy policy.

Roberta A. Luxbacher, ExxonMobil Gas Marketing Co.'s vice-president Americas, testified as chairwoman of the Natural Gas Supply Association.

She said, "Our country's energy needs cannot be met by the producers' actions alone. As we look at developing a national energy policy, there are three areas of importance to the NGSA producers."

She noted that a year ago the National Petroleum Council estimated recoverable gas resources in the Lower 48 states at more than 1,400 tcf, or more than 60 years of supply at the current rate of domestic consumption.

Luxbacher said if they are to deliver that gas, producers need access to drill on public lands, a balanced regulatory framework, and policies that encourage development of a diverse portfolio of energy supplies.

She said, "An estimated 40% of undiscovered natural gas is located on land owned by federal and state governments. Worst of all, restrictions are increasing. The previous administration's executive order to remove 60 million acres from potential development without any consideration given to possible future energy supplies is a flaw in the rulemaking process.

"Exploration to expand supplies in currently available areas requires enormous investments with highly uncertain outcomes. At a minimum, market-based incentives for deepwater production and technology development should be considered as a part of national energy policy."

Luxbacher said Alaskan gas could play a significant role in meeting demand.

"However, Alaska presents huge technical, and economic challenges. We need the support of the federal government, states, Canada, local communities, and a host of other parties all working in concert to achieve success."

Cuba Wadlington, president and CEO of Williams Gas Pipeline, testified for the Interstate Natural Gas Association of America.

He said pipelines are trying to operate safety and reliably. "But we face a number of challenges. We need to continue to develop our pipeline and storage infrastructure. To do this we need to have availability of capital, continued flexibility to meet the challenges of a changing market, and mitigation of impediments to pipeline construction."

The problem is simple, he said. "The current natural gas pipeline infrastructure will not support a 30 tcf market. There simply is not enough capacity." The industry expects to invest $2.5 billion/year through 2010 to meet the growing demand for gas.

He said INGAA supports expedited approval of a natural gas pipeline linking the North Slope of Alaska to markets in the Lower 48 states.

It wants the Federal Energy Regulatory Commission and the Council on Environmental Quality to form an interagency task force to develop a policy to expedite the environmental review and permitting of interstate gas pipelines, and a study by FERC of the impediments that delay the review, certification, and construction of interstate gas pipeline projects.

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