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INGAA Pans NGSA in Biting Letter to BP Amoco

INGAA Pans NGSA in Biting Letter to BP Amoco

The head of a major pipeline trade group wrote a biting letter to BP Amoco CEO Sir John Browne that characterized the Natural Gas Supply Association (NGSA) as a dangerous loose cannon whose interests are contrary to the rest of the natural gas industry.

The Interstate Natural Gas Association of America (INGAA) and a variety of groups, including the American Petroleum Institute, are working to "increase deliverability and [the] use of natural gas," but "unfortunately, the same cannot be said of the Natural Gas Supply Association," wrote INGAA President Jerald V. Halvorsen in a March letter in which he said he was seeking "cooperation, not confrontation" between the two associations.

"Given that BP Amoco is one of the largest contributors to NGSA, we are surprised that [the] NGSA has publicly staked out a position that is inimical to the expanded transportation of natural gas," he said.

"Specifically, NGSA repeatedly challenges the filings of natural gas pipelines at our regulatory agency, the Federal Energy Regulatory Commission (FERC), and NGSA publicly attacks the financial returns and efficiency of our members. Without adequate returns on equity, our members cannot compete for needed capital to build the North American pipeline infrastructure that will be needed," he told Browne.

Halvorsen also criticized the NGSA for seeking rehearing of the mega gas rule, Order 637, which was issued in February. "That rule, while not perfect, was approved unanimously by Commissioners of divergent views and reflects a compromise worked out over two years," he said.

"The problems you set forth in your letter are, in some respects, the vestiges of a previous, more confrontational time," responded L. Richard Flury, BP Amoco's chief executive of gas & power. "BP Amoco is dedicated to improving relationships with the pipeline community, while at the same time ensuring the U.S. gas producers' legitimate interests are adequately represented."

As to Order 637, he noted there are "many aspects" of the decision that BP Amoco supports. "Our concerns relate primarily to those areas where we believe pipeline market power can be exploited. We have proposed to FERC prudent regulatory safeguards to address that issue."

Susan Parker

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