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 energyresearch organizations, last week announced they approved inprinciple a combination of the two organizations. The boards areexpected to meet again today (April 24) to give their final stampof approval to the deal.

The “primary driver” behind the proposed merger, which has beenin the discussion phase since last fall, has been to eliminateoverlapping dues for GRI and IGT members, as well as “to bring thesynergies of the two groups together,” said GRI spokesman JosephHilyard.

A name for the combined organization hadn’t been selected as oflast week, he noted. The new research group probably will have amuch wider focus than just natural gas research and development(R&D). Its 550 members will hail from the gas, oil and electricindustries in North America and other foreign countries, as well asfrom 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 performresearch and experiments, IGT conducts these in house. As a result,their strengths are dissimilar — IGT’s is in “performingexcellence” and GRI’s is in “management skills and industrynetwork.” The combination of these distinguishing features shouldmake for a “powerful new organization geared to meet the needs of amore competitive, deregulated energy industry,” the organizationssaid in a joint press statement.

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

The combined GRI-IGT group will be headquartered in the Chicagosuburb of Des Plaines, IL, where the offices of IGT currently arelocated.

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

His objective is to build a “highly customer-directedorganization providing innovation and business solutions for theenergy industry,” Riordan said. “I am confident that a combinedcompany can meet that challenge, as demonstrated by growingrevenues and important new initiatives at both GRI and IGT.”

FERC Chairman James Hoecker gave his blessing to the proposedmerger, saying it will help to provide for a “smooth” transitionfrom ratepayer-supported to voluntary funding of natural gasresearch. “That’s why the merger of GRI and IGT is such good news.Formed into a single organization, they will be more able tosustain this critical R&D effort.”

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

Susan Parker

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