No Silver Bullet for Solving Gas Supply/Demand Problem
While energy efficiency and renewables, liquefied natural gas (LNG) and the eventual construction of the Alaska pipeline can all play a role in helping to tackle the current gas supply/demand quandary facing the U.S., there is no single silver bullet available that can dramatically lower natural gas prices from their high levels today, a broad cross-section of energy and environmental officials agreed at a conference on Tuesday.
"There is no single solution here," said Larry Downes, chairman of New Jersey Resources, at a Washington, DC, conference, "Natural Gas: Balancing Supply, Demand and the Environment," sponsored by the American Gas Foundation (AGF).
"I wish..that there was one single thing that we could do to take care of this entire situation, but that is not reality," Downes said. "Today, what we are focusing on is a number of strategies that are out there, but I don't think we can lose sight of the fact that the energy pie is going to continue to grow."
Addressing the various strategies for tackling gas-related issues discussed at the conference, Downes said, "We need all of those, given the projections of growth that we see." Downes has "never seen this as an either-or. That we have to choose one path over the other."
Downes said that "when you are in a regulated business, you are successful, quite honestly, by finding the middle ground and I think that's what we need to do here because there is merit to all of the perspectives that we are hearing here this morning."
Other conference participants, meanwhile, said that LNG imports, in and of themselves, won't be enough to solve the current gas supply-demand equation. The yet-to-be-built Alaska pipeline will also play a central role.
David Biegler, chairman of AGF, told the conference that LNG "is an important supplement" in North American gas supplies, "but it is not a complete solution to the issue. In the longer term, gas from Alaska is an important supplement also and needs to make a substantial contribution to the U.S. supply portfolio."
Bruce Henning, a director at Energy and Environmental Analysis Inc. (EEA), also stressed the need for both LNG and Alaskan gas. "It's not an 'or' issue as it's been stated in some of the policy debates." EEA concludes that LNG imports and Alaska gas will provide about 30% of the U.S. and Canada's gas supply by 2025.
Henning also said that "in the shorter term, energy efficiency improvements, and in the longer term, renewables, can wind up making modest changes in the demand for natural gas and that can have significant benefits in terms of price reductions and consumer cost saving."
The EEA official said that overall the natural gas supply/demand balance will remain tight. So-called "new frontier" gas supplies will be necessary. On this topic, an EEA handout distributed at the conference projects that new frontier supplies will account for 44% and 53% of total U.S. and Canada gas supply in 2015 and 2025, respectively, versus only 20% today.
A portfolio of both frontier gas supply development and energy efficiency/renewable deployment offers the most effective relief from high gas prices, Henning said.
Meanwhile, Alan Nogee of the Union of Concerned Scientists outlined a set of reasons for why conference participants should support energy efficiency and renewable energy as being "very high priorities for balancing natural gas supply and demand -- particularly in the short term, but in the long term as well."
Among other things, Nogee noted that energy efficiency and renewable energy "can be ramped up very quickly to produce very significant gas savings and gas price reduction -- as high as 20% gas price reductions in a fairly short period of time."
Panelists were asked at a later point whether they believe there are any "must haves" in currently pending comprehensive energy legislation to help get natural gas prices under control. The U.S. House of Representatives has already passed its version of a broad energy bill, while the Senate Energy and Natural Resources Committee continues work on Senate energy legislation.
Peter Molinaro, vice president for federal and state government affairs at Dow Chemical Co., said that if the House energy bill "were to become law, I don't think it would do much to solve" the problems the panelists discussed at the forum.
"The good news is I think the Senate energy committee...is trying to take a stab at really doing something about this problem," Molinaro said. "We see the markup that's occurring right now as the first serious attempt to do something to address the natural gas crisis."
Jeanne Connelly, senior vice president for government affairs at Calpine Corp., noted that "we live in a political world and every good idea has an opponent out there somewhere. So, all the ideas for increasing supply...there's someone out there that's going to oppose that." She said that "in a political process, what happens with legislation is you make a little bit of progress and so I think the bill will touch on all of these areas and maybe just make a little bit of progress."
Connelly believes that what's going to drive change is market forces. "Seven dollar gas does drive change," the Calpine official said.
Meanwhile, both Molinaro and Nogee expressed a belief that there are enough votes in the U.S. Senate right now to approve a national renewable portfolio standard (RPS). An RPS was not part of the House-passed energy legislation.
Tuesday's forum will culminate in a set of recommendations "and possible next step initiatives that can help us achieve efficient and environmentally responsible energy production and usage," Biegler said. "We will be capturing the discussion and recommendations from today's forum and we'll issue a white paper for distribution to key public policy decision-makers."
(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.