INGAA Warns Of the Costs of Not Using Gas
The current framework of regulation and legislation may be
inadequate to ensure there is 30 Tcf of gas demand in 2010 and that
could have dire environmental and economic consequences, the INGAA
Foundation said last week in releasing a new report titled
Implications of Reduced Gas Use on Emissions from Power Generation.
Although it's costing generators quite a lot these days to burn
natural gas, INGAA said not using gas could mean the loss of about
$1.2 billion a year to pay for additional emissions controls on
coal-fired plants. Furthermore, reliance on coal plants would pump
much more carbon dioxide into the atmosphere.
"We believe in this industry that it is very important to arrive
at this 30 Tcf level because there are negative consequences for
not being able to do that," said Cuba Wadlington, CEO of Williams
Gas Pipeline and chairman of the Board Task Force on Environment
for INGAA. "If we are not able to reach a 30 Tcf level and say are
only able to reach something in the neighborhood of 26 Tcf, then we
are looking at something like approximately $1.2 billion in
additional annual costs as a result. I think more importantly we
are looking at missing the opportunity to make swift improvement in
Wadlington said the study projects lower demand for gas only to
make a point. The low demand projection has nothing to do with the
possibility that low gas supply has driven up gas prices to a level
that makes gas less economic than other fuels for new generation.
The projection that gas demand for power generation may be lower is
based on the fact that INGAA believes the regulatory and
legislative incentives currently are inadequate for gas demand to
reach 30 Tcf in 2010.
"We are going to have to have significant help and changes in
our regulatory environment to be able to streamline our ability to
build projects," said Wadlington. "And we're going to have to have
flexibility in our regulatory environment relative to our ability
to price services on a flexible basis so we can meet the needs of
these power generation customers," he said. "At least 90% of all
new power generation is going to be gas fired."
The INGAA Foundation report, which was prepared by Energy and
Environmental Analysis Inc., is a follow-up on a January 1999 INGAA
report that outlined the storage and infrastructure requirements to
reach the U.S. Energy Information Administration's projections on
The initial report projected that 6.5 Tcf of new gas demand
would come from electric power generation. The new report says that
failure to reach the projected level would increase emissions of
mercury and uncapped NOx emissions by 10%, and CO2 emissions by 4%
because coal fired generation likely would be the replacement. The
report costs $100 and can be ordered by calling (202) 216-5943.
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