After President Signs Energy Bill, Real Work for Industry Begins, Execs Say

The industry's political work is not over with the completion of the energy bill, Questar Chairman Keith Rattie and American Gas Association (AGA) President David Parker told a gathering in Denver this week at the Colorado Oil and Gas Association's annual meeting.

"Our work is just starting. If Bush signs that legislation next Monday, we can't afford to take the rest of the month off," Parker said. "We've got to be right in there at [the Interior Department]." While the top level at Interior is dedicated to increasing land access for drilling, "they need help at lower levels, and they need help with the politicians, and they need help getting the money to implement the laws that they want to put in place."

Also next on the list is reform of the National Environmental Policy Act (NEPA). The energy bill "ducked NEPA reform," Rattie said. "The NEPA process is in desperate need of a little adult supervision. It is the biggest impediment to the development of our natural resources." This is an issue that is expected to be taken up by the Congress soon.

Parker said AGA is working closely with House Resources Committee Chairman Richard Pombo (R-CA), particularly on NEPA "to make sure the regulations that are written are something we can live with because we will have to live with them for the next 20 years."

"We need to get things done while Bush is still in office" and while Republicans are leading the Congress, Parker said. "The environmentalists have been beaten in Washington DC and have gone out to the states." The Republicans should retain the Senate in the 2006 elections, he predicted, but in 2008 they may be less successful. That year there will be 21 Republicans up for reelection and only 12 Democrats.

Parker said utilities are becoming very active in the drive to remove restrictions to drilling. He suggested producers should meet with some of the media in states like Florida that use energy but don't produce any, "and talk about some of the challenges that you have." It also would be useful for utilities to visit producers to see the problems they face.

Rattie praised the AGA for its political work to remove obstacles to production. "Dave Parker and his team at the AGA have been the most effective voice on the Hill over the last couple of years in arguing for improved access because they speak for the 69 million homes and businesses that depend on natural gas."

The Questar executive advised producers to also "watch out for climate change legislation," which could take the form of an attempt to regulate carbon dioxide emissions. Some are calling the effort "Kyoto light. The issue is not going to go away and will likely get renewed attention in the near future." Rattie suggested the global warming issue has as much to do with politics as with science.

"The consensus for global warming doesn't exist," Rattie said. The Union of Concerned Scientists which issued the report warning of global warming was a group initially formed to promote nuclear energy and only four of them had expertise in climatology, Rattie claimed. "This isn't the first time we've had alternating periods of warming and cooling over the last thousand years. And there are a host of possible causes [for global warming], including variation of radiation from the sun, a variation in earth's orbit and changes in cloud cover."

It's time to separate reality from myth. "Americans are confused; they can't reconcile modern society's need for increasing amounts of energy with environmental ideals," Rattie said. The reality is there is no near-term alternative to oil and natural gas. "The world runs on oil and gas and will for decades to come."

Despite 30 years of subsidies, wind and solar provide only 1% of this country's primary energy needs, he pointed out. There are physical limitations to wind power and fuel cells still are too expensive to be massively installed.

As for hydrogen, the only way it can be economically produced is by cracking natural gas or coal, "which brings you right back to dependency on fossil fuels," Rattie said. The only alternative, electrolysis, "is hugely expensive and requires cheap, abundant electricity. When it comes to electricity, cheap and abundant is an oxymoron."

Also there is a problem with distribution. Because of the very small molecules, hydrogen bleeds when transmitted under pressure through existing pipelines. Even if science solves these problems, it may not be very popular with the driving public, he said. "The energy density of hydrogen is only one-fourteenth that of gasoline and one-fourth the density of natural gas. A tank of hydrogen won't take you very far."

Copyright 2005 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

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