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Congress Gets High Marks on Gas Infrastructure Issues in 2005, But Fails on Supply

When the natural gas industry looks back at 2005, it will see that Congress made significant headway on pipeline, storage and liquefied natural gas (LNG) infrastructure issues, but little, if any, progress in the area of expanding gas supply, industry officials say.

"It was the best year we ever had. Everything we wanted out of the Energy Policy Act we got," said Martin Edwards, vice president of legislative affairs for the Interstate Natural Gas Association of America (INGAA), which represents interstate gas pipelines.

Most favorable to pipes and other gas infrastructure were the provisions in the omnibus energy bill, which was enacted into law in August, that designated the Federal Energy Regulatory Commission as the lead agency for reviewing projects under the National Environmental Policy Act; gave FERC the authority to set deadlines for all agencies involved in the permitting of a project; required the FERC record to be used in all subsequent appeals and reviews; and expedited the federal appeals process for reviews of agency decisions, Edwards said.

These provisions, all of which are aimed at expediting approval of gas projects, "are the best of any in terms of their comprehensive [nature]," he told NGI last week.

But the story on the gas supply front was decidedly less favorable in 2005, Edwards said. Congress was "Lucy pulling away the football at the last minute" when it came to expanding access to the federal Outer Continental Shelf (OCS) and opening the Arctic National Wildlife Refuge (ANWR) to oil and gas drilling, he noted.

Many energy executives agree, saying that the energy bill was a "good first step," but sorely lacking in supply initiatives.

Edwards said he expects the battle over drilling in the OCS and ANWR "will continue next year." He noted that "a lot remains to be done" to increase domestic gas supply. Sen. Pete Domenici (R-NM), chairman of the Senate Energy and Natural Resources Committee, has said that both OCS and ANWR will be priority issues in 2006.

The latest defeat on ANWR occurred last Wednesday, when Senate Democrats blocked a spending bill, which would have authorized arctic drilling, from coming to the floor for an up-or-down vote (see related story). The setback was particularly stinging, given that 2005 was considered the best chance that Congress has had in years to pass legislation permitting drilling on the coastal plain of Alaska's ANWR.

In the wake of Hurricanes Katrina and Rita this summer, which shut in significant amounts of oil and gas production in the Gulf of Mexico, it appeared that Congress might finally vote to allow drilling in protected OCS waters. Rep. Richard Pombo (R-CA), chairman of the House Resources Committee, worked throughout the fall months to obtain agreement on expanded OCS drilling, only to have it and ANWR development stripped from the House deficit-reduction bill due to opposition from moderate Republicans (see NGI, Nov. 14).

The failure of Congress to take action to expand OCS activity before adjourning for the year is "irresponsible," said Paul N. Cicio, president of the Industrial Energy Consumers of America, last Thursday. "There is no shortage of natural gas in this country...There is a shortage of federal action to remove areas currently under federal moratoria or withdrawal. Most of these moratoria were established about 30 years ago in a time of abundant natural gas supply. That is no longer the case."

The industrial group called on the Bush administration to eliminate the backlog of drilling permits in the Rocky Mountain region and to act quickly to make the area known as Lease 181 in the eastern Gulf of Mexico available for production. President Bush has the authority to unilaterally open up portions of the gas-rich Lease 181. Domenici and other members of Congress have urged Bush to take this step, but he has hasn't heeded their calls (see NGI, Oct. 10).

In addition, "We need a stand-alone natural gas bill that provides all members of Congress the opportunity to vote for increased domestic production," Cicio said.

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