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Energy Secretary Nominee, Gas Association Leaders See Energy Bill as a Top Priority

Energy Secretary Nominee, Gas Association Leaders See Energy Bill as a Top Priority

A comprehensive energy bill will be "among the most important matters to come before this Congress" in the upcoming months, Energy Secretary nominee Sam Bodman said during his Senate confirmation hearing last Wednesday. Business leaders and representatives of leading natural gas associations echoed that sentiment at a "State of the Energy Industry" roundtable last week.

"I will look forward to working with this committee...to pass this legislation," he told the Senate Energy and Natural Resources Committee, which has jurisdiction over his nomination.

"This country has been for too many years without a sound, balanced energy policy," said Sen. Lisa Murkowski (R-AK), while questioning Bodman about U.S. energy policy. So many people subscribe to the "immaculate conception" notion of energy, she noted. "It just happens." She urged Bodman to educate the public about energy issues.

Although he has little energy background, Bodman, who has held senior positions in both the departments of Treasury and Commerce, is expected to be easily confirmed by the Senate. "I expect you to be confirmed with a large majority," said Sen. Jeff Bingaman of New Mexico, the ranking Democrat on the Senate panel. A number of other committee members echoed that sentiment. He was nominated by President Bush in December (see Daily GPI, Dec. 13, 2004).

The Senate energy panel is expected to vote out Bodman's nomination to the full Senate at a Jan. 26 business meeting.

Bodman, 66, said he also intended to be an "energetic advocate" for opening the coastal plain of the Arctic National Wildlife Refuge (ANWR) to oil and natural gas drilling. He noted that ANWR is at the center of the Bush administration's energy policy.

ANWR "will come up one way or another" this year, but it won't be in an energy bill, noted Senate Energy Committee Chairman Pete Domenici (R-NM). As for the chances for passage of an energy bill, Domenici said he was hopeful that the level of cooperation that lawmakers exhibited on other issues in the past "will apply to the energy bill this year."

Bodman also indicated that he supports domestic oil and gas drilling. "I would rather see it go on in this country" as opposed to overseas, given the superior level of regulation of the industry in the United States, he said.

He admitted that he has much to learn about energy. "I haven't even yet visited the [Department of Energy] building."

In a related development, business leaders and representatives of natural gas associations stepped up to the plate last week to once again call on Congress to pass a comprehensive energy bill.

While the United States has failed to develop a comprehensive energy strategy in recent years, the world is passing it by with growing energy demand from such fast-developing nations as China putting a premium on supplies and threatening America's economic and national security, R. Bruce Josten, Executive Vice President of the U.S. Chamber of Commerce told a "State of the Energy Industry 2005" roundtable in Washington last Tuesday.

Josten, who also is spokesperson for the Alliance for Energy and Economic Growth (AEEG), strongly renewed the call for Congress to enact omnibus energy legislation, noting it has failed in its last three attempts. He cited common-sense business imperatives for energy legislation.

"Every business knows it can't operate without adequate and affordable energy," he said. "Since a national energy bill was first introduced in 2001, we've seen energy shortages in California and blackouts in the Midwest and New York City, oil has reached $55 per barrel and the price of natural gas has doubled."

In 2001, "we discussed how, without adequate energy supplies and a modern and reliable energy infrastructure, that we will not have economic or national security," said Josten. "Still, nearly four years later -- and after several attempts -- Congress has failed to pass a comprehensive energy bill."

As for natural gas, it's not that the U.S. is running out of gas, "we're running out of the ability to access that natural gas and therein, probably, is the most critical problem that we have when we start dealing with comprehensive energy legislation." said David Parker, CEO of the American Gas Association (AGA).

"We've got to fully recognize and maybe review some of the drilling moratorias that exist in the Gulf of Mexico, particularly in the eastern Gulf, certainly on the Atlantic shoreline." Parker also called for expediting the siting of liquefied natural gas facilities (LNG).

Energy "is the lifeblood of our economy and if we don't cooperatively work together to advance that, and if we can't get that message clear to this Congress to advance that, then we're failing in our jobs. So I would [ask]...virtually all of you in this room to make your voices heard on Capitol Hill of the need for a comprehensive energy policy...you need to be involved in this process."

Meanwhile, Skip Horvath, president of the Natural Gas Supply Association (NGSA), said Congress doesn't need to get involved in controlling market operations. He praised the market for allocating resources, warning against government attempts to stifle volatility. There is ongoing evidence that the U.S. gas marketplace is continuing to adjust to its persistent supply challenges by efficiently allocating available resources, Horvath said.

"Customers are choosing their fuels based on their best options as they see them. Sometimes that's natural gas, but lately we've also seen greater interest in coal gasification technology in response to the price of natural gas. We're fine with that because that's a market decision.

"In the meantime, these customers are redoubling their efforts to become more energy efficient and they are succeeding. Again, even though that means we sell less gas than otherwise, we support these market-driven conservation efforts," Horvath said. "In the meantime, the industry is doing its part by keeping its rig count and well completion numbers high, while also investing in an expansion of LNG, storage and pipeline infrastructure."

"All of these are the most appropriate and most efficient responses to our tight balance between supply and demand," he said.

Horvath said policymakers should resist any temptation to address recent market volatility by intervening artificially. That, he said, would be like trying to cure only the symptom rather than the underlying disease. "Price volatility is a natural phenomenon of commodity markets, and is itself a form of price signal to the marketplace that encourages investment," he said. "Any government attempts to dampen price volatility artificially will only distort the market and prolong the constraints."

Apart from normal market activity, Horvath expressed the association's support for the vigorous enforcement efforts and investigations being conducted by the Federal Energy Regulatory Commission and other federal agencies. "These efforts are good for the industry and need to continue. Time and time again, they have resulted in a clean bill of health for the industry from a competent and credible source."

The NGSA official also said that the gas industry doesn't need "government restrictions on who can use what fuel...the market will decide that. People will decide that for themselves." And he pointed to one area where the Congress has acted to promote energy independence, the passage last year of Alaskan natural gas pipeline legislation. "We don't expect or need anything else from the U.S. Congress with respect to the Alaskan gas pipeline. They've done their job, now it's our turn to do ours."

Horvath also gave high marks to the various segments of the natural gas industry for consistently demonstrating a greater collaborative spirit and approach to the needs of the marketplace. He said it has been much more effective than the split agendas that hampered industry progress in prior years. "Our challenges are just beginning, and I suggest that we consider expanding our collaboration on broader energy themes, as well, and including even more of our customer base in that collaboration."

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