INGAA Pushes Flexibility To Serve the Market
Customers looking for services tailored to their specific needs
are driving pipelines to seek lighter-handed regulation including
the ability to negotiate and deliver those services on the spot
-without lengthy FERC proceedings, according to Interstate Natural
Gas Assoc. (INGAA) chairman John Riordan.
Only by gaining the flexibility and the ability to take risk and
gain rewards like normal businesses can pipelines expand to deliver
to the 30 Tcf market that has been predicted by the year 2005.
Riordan, who also is vice chairman of KN Energy, said the INGAA
Foundation has initiated a study on the steps industry must take to
get to that 30 Tcf market.
INGAA hopes to work through the Natural Gas Council with the
other gas industry organizations, including the American Gas
Assoc., the Independent Petroleum Assoc. , the Natural Gas Supply
Assoc. and the American Petroleum Institute, to make it happen.
The KN executive took a swipe at producers and municipals who
have opposed the proposal submitted by the American Gas Assoc.
(AGA), with INGAA's backing calling for negotiated terms and
conditions of service. "They call themselves customers, but many
hold little or no capacity on interstate pipelines or are not
participating in state unbundling....Maintaining the status quo may
be good for some producers, but it's not the way we're going to get
to the 30 Tcf market. Producers call themselves customers, but the
ultimate consumer is the customer." Riordan said the pipelines
needed market incentives and the ability to make a higher rate of
return if they are to provide the needed capacity.
He acknowledged there had been a breakdown in communications,
saying "we want to find a way to work with producers....we can't
continue do things the way we used to." Both pipelines and
producers have reduced costs because of the competitive market,
Riordan said. "The more you deregulate, the more costs will go
down. We want to convince producers to trust the market." Riordan
acknowledged that increasing the pipelines' ability to negotiate
the types of new services customers want would tend to reduce
stranded capacity costs.
On other issues Riordan also commented that he expected the
producer organization API to have a much bigger role as the
industry goes forward.
And he said a survey of pipelines has shown they have ongoing
plans and already have completed a significant amount of the
remedial work necessary to deal with the year 2000 problem in
computers. And "transaction systems have built-in back-ups which
used to run without all this electronic stuff. We can still do that
if we have to....but we don't expect problems." INGAA is
cooperating with the Natural Gas Council in conducting a survey of
the year 2000 problem in the entire gas industry.
Discussing the potential market, Riordan pointed out that the
increase by 2005 would be 36%, but divided into annual increments
it would only be between 3% and 4% a year. Most of the new load
will come from electric generation put in place by a variety of
sponsors. The market impact of global warming is not included in
these numbers because it is not clear when Congress will act.
He mentioned a phased 200 to 600 MW independent power venture,
which includes Peoples Energy, be put in place over one of People's
storage fields. KN also is looking at a joint venture in the
Chicago area for a 600 MW plant. Riordan expects to see more new
generating plants being located over gas storage fields or market
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