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Lack of Access, Infrastructure Hurts Industry, Says Panel

Lack of Access, Infrastructure Hurts Industry, Says Panel

Without new liquefied natural gas (LNG) facilities and Arctic gas pipelines from Alaska and the Mackenzie Delta, North American gas supply won't grow more than 25 Tcf, and without more access to gas supplies from the Rocky Mountains, there may even be a decline, Don Santa, president of the Interstate Natural Gas Association of America (INGAA), said last week.

Santa, speaking at Platts Natural Gas Outlook 2005 in Houston with other industry professionals, said there is a "sufficient" gas resource base in North America, but lack of access and infrastructure remain problems going forward.

"These resources can be developed and delivered to the North American gas market at prices that will allow the gas market to continue to grow," said Santa. However, the market will stagnate under the current policies, he said, unless new plants and pipelines are built to access supply and deliver frontier gas to market.

"There is no silver bullet," said Santa, referring to LNG, tight gas and Arctic pipelines. "All of the solutions have long lead times." However, he warned that there is a "price to pay" under current government policies and in the face of public opinion "that deny access to resources and hinder construction of infrastructure."

Lee Fuller, vice president of government relations for the Independent Petroleum Association of America (IPAA), echoed Santa's remarks, and said the new Congress has to come up with a strong energy policy that will meet U.S. consumer and industry needs. However, the "producer agenda continues to face risks." Among those risks, Fuller detailed how there is "general" support for increasing gas supplies, but there are questions on how gas will be distributed via pipelines and LNG facilities, and the continued scrutiny of the gas markets.

A "level of uncertainty" has been removed with President Bush's re-election, but Fuller said that the "new Congress poses new challenges...energy is only one issue" on the agenda. Energy could quickly be put aside if there are legislative battles over possible Supreme Court nominations, the budget and tax reform. "It is time to seek new policies," he said, and "more needs to be done," but IPAA does not expect an easy time for producers in the next four years, even with support from the White House and key members of Congress.

James Diener, vice president of consulting firm Pace Global Energy Services, affirmed the panel's remarks. He said there was "tremendous uncertainty going forward for the next five years. Gas supply is limited despite three years of high prices." Even with "significant" unconventional gas from coalbed methane and LNG regasification, there are "real restraints" that have to be addressed.

Land access and environmental issues remain "real hurdles" for U.S. producers, said Diener, and for now, domestic exploration will remain stagnant while "LNG is the primary candidate to push supplies forward."

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