North America’s apparent dwindling natural gas reserves pose a long-term challenge, but continued price volatility, contractual uncertainty and growing political pressure for regulators to “do something” also have to be addressed to restore confidence in the marketplace, an industry panel concluded Thursday.

R. Skip Horvath, president of the Natural Gas Supply Association (NGSA), presided over a panel of energy experts Thursday at GasWeek in Houston. Although he believes that many of the Enron-era problems are nearly past, the many issues remaining will test the resolve of the industry.

“Clearly, if we continue on our present path of stimulating demand while restricting natural gas supply, customers will continue to see higher heating bills, while the economy also suffers from increasing fuel costs,” Horvath said. However, he noted that “over the long-term…we will also need to have a more consistent approach by policymakers at all levels: local, state and regional, as well as in the federal government.”

Jay Lukens, CEO of Lukens Energy Group Inc., said, “in my opinion, we are where the oil industry was in the late ’60s and early ’70s. There were mature reservoirs in North America…declining production and growing demand.

“To meet the requirements of the market required adding imports outside of North America, and today there is a trend toward globalization of natural gas,” Lukens said. He noted the growing interest in liquefied natural gas imports and the move by many U.S. producers to expand their operations overseas. Lukens also warned that industry needed to address how contracts would work in the future.

“We have one foot on the beach and one foot on the boat,” Lukens said. “Who’s going to commit long-term?” As domestic supply is filled by more LNG imports, someone will need to take the risks. “The merchants could do this, but many are no longer in the business. Then you have the financial conditions of the pipelines [including] Williams and El Paso, which both have junk credit. Where’s the money going to come from?”

Andrea Wolfman, a former regulator at the Federal Energy Regulatory Commission and now an attorney with Thelen Reid & Priest LLP, said there continues to be a “crisis of confidence” in the system, exacerbated by the gas price survey data scandal that touched many of the marketers and producers.

One way to resolve the crisis, she noted, would be for FERC to step in to govern the system. But Wolfman questioned whether that would be wise. “Post Enron,” she wondered whether “policing will restore confidence or paralyze it with fear. These are issues we have to explore.”

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