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GRI, IGT to Merge into One Research Group

GRI, IGT to Merge into One Research Group

In keeping with the consolidation of the natural gas industry, the boards of directors of GRI (formerly Gas Research Institute) and the Institute of Gas Technology (IGT), the leading energy research organizations, last week announced they approved in principle a combination of the two organizations. The boards are expected to meet again today (April 24) to give their final stamp of approval to the deal.

The "primary driver" behind the proposed merger, which has been in the discussion phase since last fall, has been to eliminate overlapping dues for GRI and IGT members, as well as "to bring the synergies of the two groups together," said GRI spokesman Joseph Hilyard.

A name for the combined organization hadn't been selected as of last week, he noted. The new research group probably will have a much wider focus than just natural gas research and development (R&D). Its 550 members will hail from the gas, oil and electric industries in North America and other foreign countries, as well as from other related fields.

A major difference between the two groups, an IGT official said, is that while GRI contracts out for companies or groups to perform research and experiments, IGT conducts these in house. As a result, their strengths are dissimilar --- IGT's is in "performing excellence" and GRI's is in "management skills and industry network." The combination of these distinguishing features should make for a "powerful new organization geared to meet the needs of a more competitive, deregulated energy industry," the organizations said in a joint press statement.

GRI's contribution to the combined group's annual budget will be about $151.7 million. For fiscal year 2000, it will collect $98 million via the FERC-approved pipeline surcharge and $53.7 million in voluntary funding from the gas industry and federal government, Hilyard said. All of GRI's funding through the mandatory surcharge will cease in 2004. IGT has a $28 million annual budget that's earmarked for energy and environmental research.

The combined GRI-IGT group will be headquartered in the Chicago suburb of Des Plaines, IL, where the offices of IGT currently are located.

John F. Riordan, who previously was president and CEO of MidCon Corp. and Natural Gas Pipeline Company of America, will become CEO of the combined research organization. He also was executive vice president and director of Occidental Petroleum Corp., and vice chairman of KN Energy Inc.

His objective is to build a "highly customer-directed organization providing innovation and business solutions for the energy industry," Riordan said. "I am confident that a combined company can meet that challenge, as demonstrated by growing revenues and important new initiatives at both GRI and IGT."

FERC Chairman James Hoecker gave his blessing to the proposed merger, saying it will help to provide for a "smooth" transition from ratepayer-supported to voluntary funding of natural gas research. "That's why the merger of GRI and IGT is such good news. Formed into a single organization, they will be more able to sustain this critical R&D effort."

The new research organization will continue to be a non-profit business with membership comprised of all the existing members of the two groups. A new board, representing all of the segments of the gas industry (producers, pipes, LDCs, integrated companies, municipals, gas consumers and public interest segments), is expected to be named soon.

Susan Parker

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