A group of 30 Senate Democrats fired off a letter to DOE Secretary Spencer Abraham this week commending his recent plan to call an emergency meeting of the National Petroleum Council (NPC) to address the nation’s apparent natural gas supply problem (see Daily GPI, May 19). However, the Senators said high gas prices require immediate action, possibly in the form of conservation efforts, so that consumers aren’t hammered next winter.

“We are writing to express our concern about continued high natural gas prices, the impact on industries that rely on natural gas for manufacturing, and the possibility of severe price spikes recurring later this year,” the senators said in their letter on Tuesday. “In your recent address to the National Petroleum Council, you correctly pointed out that the amount of natural gas in storage is unusually low and that injection rates must increase dramatically in order to fill storage to levels sufficient to meet anticipated demand this year. With natural gas prices twice as high as they were last year and the increased demand for electricity expected this summer, market fundamentals are not encouraging for robust storage refill rates.”

The senators expressed confidence in the ability of the NPC to tackle the difficult issues facing the gas industry. However, they said a quicker solution is needed. “Increased natural gas supplies are needed of course, and in fact, drilling is up 30% this year. But significant new gas supplies are not likely to come on line in the near term.

“Energy efficiency and conservation, as well as fuel switching, are more likely to make a difference in natural gas markets this summer and next winter,” the senators told Abraham. They noted the successful efforts of California to reduce electricity consumption in 2001 after blackouts and soaring power prices signaled a crisis. “Efficiency and conservation were the fastest and least costly solutions available” to California.

“We urge you to cast a wider net for recommendations on natural gas including meeting with governors, state and federal regulators, industrial and commercial gas consumers, electric utilities and independent generators, and experts in efficiency and conservation.”

The NPC, a 175-member oil and natural gas advisory committee to the DOE secretary, currently is nearing completion on a natural gas study, which is scheduled for release by the fourth quarter. Abraham said the study addresses resources for capital investment, the role of technology, access to the nation’s resource base, new sources of supply from Alaska and Canada, liquefied natural gas imports and the long-term potential of unconventional resources such as methane gas hydrates.

However, Abraham already has warned that “we cannot wait until the late fall to take action on the more immediate problems we face.” He said the special June meeting of the NPC would be structured to “gather information, discuss problems and solutions, and identify those actions” to take immediately to ease short-term gas supply constraints. Ideas and suggestions that emerge from the meeting could be implemented during the critical summer period, he said. Other initiatives would be implemented once the new study is released.

In its last report on natural gas in 1999, the NPC concluded that gas demand had the potential to increase to 29 Tcf per year in 2010 and could increase beyond 31 Tcf in 2015. The council also concluded that the existing gas resource base could support the increases in future demand and that adequate gas supply could be produced.

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