WATCHING WASHINGTON GOING AFTER GAS MARKETS

with Patrick Crow Martin Allday, Federal Energy Regulatory Commission chairman, says U.S. gas producers should stop fighting Canadian gas imports and fight directly for a share of the U.S. northeast market. Allday last week said FERC "soon" will decide on the Iroquois pipeline project's application to lay a 358 mile line from the Canadian border through New York and Connecticut to Long Island.

June 11, 1990

3 min read

Martin Allday, Federal Energy Regulatory Commission chairman, says U.S. gas producers should stop fighting Canadian gas imports and fight directly for a share of the U.S. northeast market.

Allday last week said FERC "soon" will decide on the Iroquois pipeline project's application to lay a 358 mile line from the Canadian border through New York and Connecticut to Long Island.

The agency recently approved a final environmental impact statement for the project. The next step will be a decision on the route. Iroquois wants approval this month so it can begin buying right-of-way in July.

OPPOSITION BY INDEPENDENTS

Small U.S. producers, particularly the Independent Petroleum Association of America, remain doggedly opposed to the Iroquois project. They persuaded oil state senators to hold an energy committee hearing on the issue last month (OGJ, May 21, p. 29), but the committee does not plan to interfere.

Independents say they want the chance to compete equally in U.S. markets with Canadian gas, but regulatory rate structures give the Canadians an advantage. They say it should be cheaper to move Gulf of Mexico gas 1,400 miles to New York than Alberta gas 2,300 miles to New York.

They want FERC to conduct a hearing on the need for the gas and its price. Project sponsors say such a delay would throw the project off its timetable, cause contracts to expire, and possibly kill it.

FERC has responded that Iroquois' rates aren't an issue before it, and the pipeline is being considered under an expedited process specifically intended to avoid hearings.

Allday told a Texas Independent Producers and Royalty Owners Association meeting in San Antonio that efforts to block pipeline projects importing Canadian gas are misguided. He did not mention Iroquois by name.

For one thing, he noted, "The Free Trade Agreement between the U.S. and Canada works both ways."

He said the pending and approved pipeline projects proposed to serve the large northeastern market would draw 56% of their gas from U.S. fields and 44% from Canadian.

Allday observed FERC can only consider pipeline applications brought before it. It cannot instigate them.

He said during the decade FERC has been grappling with the issue of new gas service to the Northeast, "Do you know what I find to be very interesting? At no time in this 10 year history has there been any proposal to the commission for a major south-to-north U.S. gas transportation system.

"Rate design and Canada are not preventing domestic producers from competing. Lack of adequate transportation capacity is.

"Rather than worry about getting a fair shake at FERC-which you can count on-why don't you work at making sure we have ways to get U.S. energy to our market?"

SEEK CUSTOMERS

Allday told Tipro today's open access market requires producers to do more than just discover gas. "Now in order to compete, actively seeking customers for gas is important.

"No one believes more than I do that U.S. producers must play an important role in providing our energy supplies. But as an unknown author wrote, there are too many people praying for mountains of difficulty to be removed, when what they really need is the courage to climb them."