CEO Alliance Calls for More US Natural Gas Supplies

Assembled at a news conference in Washington on Tuesday, five chief executives of natural gas producers and industrial natural gas consumers called on the Bush Administration and Congress to take immediate action to help increase US natural gas supply.

"There is no shortage of natural gas in this country," said Anadarko CEO Jim Hackett. "In fact, Minerals Management Service studies indicate there are 1,040 trillion cubic feet of gas waiting to be discovered, yet we can't get access to much of this resource because of various government restrictions. It's Economics 101--tight supplies lead to higher prices for everyone."

The CEO alliance cited four main points:

  • Americans are being hurt by high natural gas prices.
  • The US has plentiful natural gas resources.
  • Lack of access and red tape keep resources off-limits to producers.
  • Increasing supplies would reduce and stabilize prices for consumers.

The business leaders outlined actions that the federal government could take to immediately address problems the natural gas industry faces in trying to increase supply. Their specific solutions include:

  • Reduce the permitting backlog and accelerate the processes for applications to work on onshore federal non-park, non-wilderness lands.
  • Open up the remaining Sale 181 areas in the Eastern Gulf of Mexico and push to lift the exploration moratoria on the East Coast, West Coast, and offshore Alaska, while hopefully working with the affected states to provide revenue benefits.

"Our natural gas supply problems are man-made by legislation and red tape," Larry Nichols, CEO of Devon Energy, explained. "We are joining together to call on Congress and the Administration to take immediate action to fix the problem. The solution is in their hands and within their reach."

In addition to calling on the government to support a multi-faceted energy strategy, the coalition called on Congress to appropriate the funds needed to hire additional staff and make other changes to help federal land management agencies approve and accelerate the processing of nearly 5,000 drilling permits that are currently stuck in the system.

"The US postal service has more workers in big cities where there is more mail," Nichols said. "Our land management agencies deserve the same treatment. Imagine if a piece of mail sat for six months before being delivered."

In addition to calling for improvments to the onshore permitting process, the CEOs pointed out that constraints offshore limit the exploration for new sources of energy. Ninety percent of America's Outer Continental Shelf is off-limits to further exploration, stated Anadarko. One specific region that was slated to be offered for lease and then withdrawn from access is the Lease Sale 181 region in the eastern Gulf of Mexico. Ultimately, a small sliver of that area was offered for lease in 2001. Since then, the industry has made 10 discoveries in those waters--all natural gas. When it comes on line, the additional 1 billion cf/d of natural gas from these discoveries will represent an increase of approximately 2 percent of all US supply.

"We applaud Senators Domenici and Bingaman for their efforts to open the remaining parts of Sale 181 and call on Congress to follow their lead," Hackett said. "Without a doubt, opening up 181 offers the best chance for significant new domestic natural gas production in the next five years. This would be a direct, positive action to increase supply and relieve high prices pressuring American consumers." Hackett also cited the need for access to explore off the West Coast, East Coast, the eastern half of the Gulf of Mexico, and the coast of Alaska. "Our industry has proven that development can take place with little or no environmental impact," he said.

Joining Hackett and Nichols in the alliance were CF Industries Holdings CEO Stephen R. Wilson, Nucor president and CEO Daniel DiMicco, and New Jersey Resources chairman and CEO Laurence M. Downes.