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INGAA Says House Bill Could Thwart Foreign Gas Trade, Investment in U.S.

A major natural gas pipeline group last Wednesday expressed concern that pending House legislation could restrict the free flow of gas between the U.S. and its "traditional trading partners," as well as block capital investment in U.S. pipeline and liquefied natural gas (LNG) infrastructure by allies, such as Canada, Mexico, Great Britain and France.

The North American Free Trade Agreement removed trade barriers between the U.S. and Canada, but the House bill (HR 4881) "would take U.S. trade and investment policy in another direction...by placing strict limits and/or controls on the foreign ownership of 'national defense critical infrastructure,'" wrote Donald F. Santa, president of the Interstate Natural Gas Association of America (INGAA), in a letter to House Speaker Dennis Hastert (R-IL).

"While that term is somewhat vaguely defined in the legislation, nothing would preclude the secretary of Defense from interpreting it to [include] both natural gas pipelines and liquefied natural gas (LNG) import terminals," he said. Moreover, "the restrictions and controls proposed by HR 4881 would appear to apply equally to investment by any foreign nation or its citizens. Investment from Canada, Great Britain or France seemingly would be treated the same as would investment from Iran or North Korea."

Such a "blanket policy" would limit gas trade and investment by the United States traditional trading partners, and the "net result would only harm our national economy in the long run," Santa said.

"The United States does not have the luxury of discouraging investment in natural gas supply and infrastructure," he told Hastert. While the U.S. currently produces about 84% of the gas that is consumed domestically, another 14% of the natural gas consumed in the U.S. is imported by pipeline from Canada and the remainder is imported via LNG tankers from countries such as Trinidad, Santa said. "The United States and Canada enjoy an integrated market that benefits both nations... The United States also attracts capital from countries such as Canada and France that is invested in domestic natural gas infrastructure projects."

Santa also noted that HR 4881 could discourage construction of a natural gas pipeline from Alaska's North Slope to the Lower 48 states. "More than half the mileage of such a pipeline would be located in Canada, and it is reasonable to assume that Canadian companies would expect to have an opportunity to participate on equal terms in the ownership of that project. There is considerable doubt that HR 4881 would permit such a multinational ownership arrangement."

INGAA "strongly supports increased infrastructure security" in the U.S., but it believes that a better alternative -- if Congress decides to legislate in this area -- would be to improve the review process at the Committee on Foreign Investment in the United States to "differentiate between investment from U.S. allies and traditional trading partners, and those investments from countries that present real security threats," Santa said.

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