The current framework of regulation and legislation may beinadequate to ensure there is 30 Tcf of gas demand in 2010 and thatcould have dire environmental and economic consequences, the INGAAFoundation said last week in releasing a new report titledImplications of Reduced Gas Use on Emissions from Power Generation.

Although it’s costing generators quite a lot these days to burnnatural gas, INGAA said not using gas could mean the loss of about$1.2 billion a year to pay for additional emissions controls oncoal-fired plants. Furthermore, reliance on coal plants would pumpmuch more carbon dioxide into the atmosphere.

“We believe in this industry that it is very important to arriveat this 30 Tcf level because there are negative consequences fornot being able to do that,” said Cuba Wadlington, CEO of WilliamsGas Pipeline and chairman of the Board Task Force on Environmentfor INGAA. “If we are not able to reach a 30 Tcf level and say areonly able to reach something in the neighborhood of 26 Tcf, then weare looking at something like approximately $1.2 billion inadditional annual costs as a result. I think more importantly weare looking at missing the opportunity to make swift improvement inthe environment.”

Wadlington said the study projects lower demand for gas only tomake a point. The low demand projection has nothing to do with thepossibility that low gas supply has driven up gas prices to a levelthat makes gas less economic than other fuels for new generation.The projection that gas demand for power generation may be lower isbased on the fact that INGAA believes the regulatory andlegislative incentives currently are inadequate for gas demand toreach 30 Tcf in 2010.

“We are going to have to have significant help and changes inour regulatory environment to be able to streamline our ability tobuild projects,” said Wadlington. “And we’re going to have to haveflexibility in our regulatory environment relative to our abilityto price services on a flexible basis so we can meet the needs ofthese power generation customers,” he said. “At least 90% of allnew power generation is going to be gas fired.”

The INGAA Foundation report, which was prepared by Energy andEnvironmental Analysis Inc., is a follow-up on a January 1999 INGAAreport that outlined the storage and infrastructure requirements toreach the U.S. Energy Information Administration’s projections ondemand growth.

The initial report projected that 6.5 Tcf of new gas demandwould come from electric power generation. The new report says thatfailure to reach the projected level would increase emissions ofmercury and uncapped NOx emissions by 10%, and CO2 emissions by 4%because coal fired generation likely would be the replacement. Thereport costs $100 and can be ordered by calling (202) 216-5943.

Rocco Canonica

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