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Barriers Constraining Energy Co.'s in U.S.

Barriers Constraining Energy Co.'s in U.S.

Energy companies are constrained in various ways on every level --- exploration and development, generation and transmission, refineries and pipelines --- and these barriers all point to the need for the United States to shape an effective national energy policy, said several speakers at the recent annual conference of the International Society of Energy Advocates.

Meeting in Oklahoma City, many of the panelists focused on Oklahoma's oil and gas industry, including expanding transmission capacity, tax incentives for energy production and issues facing small producers in the state.

While focusing on Oklahoma's concerns, speakers also zeroed in on the lack of state or national energy policies, citing how the physical constraints within exploration and production, lack of pipelines, too few refineries and a need to expand electricity generation and transmission were hurting the nation's economy, spelling signs of even more problems in the future.

Denise Bode, vice chair of the Oklahoma Corporation Commission, told participants that the infrastructure in the United States is "shot," adding that the country has to turn its attention to an effective policy now. "We can no longer bide our time," she said.

Robert L. Parker, chairman of Tulsa-based Parker Drilling Co., said the biggest problem facing the country was its inability to meet the growing demand for generation while misrepresenting renewable energy "as a solution." And now, he said, the energy industry's credibility is an issue because it is becoming more difficult to deliver adequate gas supplies.

"We told them we had lots of gas," but he said that the country doesn't and because of production constraints, some power companies are announcing plans to build coal-fired generation plants to make up for a lack in natural gas supplies.

Mark Monroe, president of Louis Dreyfus Natural Gas Co., said that "only an energy crisis" would result in a significant U.S. energy policy. Even though he didn't think a policy was a near-term possibility, he called on Congress to enact a plan that would prioritize energy supplies and provide more land for exploration. He also said it was time for a natural gas pipeline from Alaska to the Lower 48 to become a reality, and said Congress needed to remove drilling restrictions and provide tax incentives to encourage producers.

Two major issues face small producers in Oklahoma, according to Liz Fajen, executive director of the Marginal Well Commission in the state. Tax relief is the top issue, she said, but they also face the problem of dealing with the spread of land development in areas that were once the sole domain of producers. She said that the encroachment issue is escalating as people move out of the cities, and in some cases, operators have been blocked from well locations.

Oklahoma's future generation also may be a problem, according to Ted Banasiewicz, executive vice president of Smith Cogeneration in Oklahoma. He said that the state has to improve its transmission capacity, and urged the state's Legislature to enact laws to encourage investment in electricity transmission.

"Under current conditions, there is very little motivation for utilities that own the transmission systems to invest in upgrades," Banasiewicz said. And without the transmission, independent power producers will not be able to service customers. "If you can't get your product to the consumer, no perfect legislation is going to help."

Carolyn Davis, Houston

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