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AGA Plans 'Aggressive Campaign' to Pressure Congress on OCS Access Issue

A major natural gas utility group last Tuesday said it plans to launch an "aggressive lobbying campaign" this year to win congressional support for stand-alone natural gas legislation aimed at expanding access to domestic supplies.

The bill envisioned by the American Gas Association (AGA) would allow for increased gas production in the federal Outer Continental Shelf (OCS), particularly the eastern Gulf of Mexico, which is projected to hold upwards of 20 Tcf of gas, said AGA President David Parker during the 2nd annual "State of the Energy Industry" conference sponsored by United States Energy Association (USEA) in Washington, DC.

The warm weather so far this winter "[has] reduced the sense of urgency among elected officials about the seriousness of America's need for a sensible and fully comprehensive policy going forward [that would provide] more access to more supplies," he noted.

"The cold is still coming" this winter, and will bring with it political pressure, said Skip Horvath, president of the Natural Gas Supply Association (NGSA), which represents major producers.

"This pressure will come back on soon. I think we [can] get some good response to this pressure -- that we'll have Congress do some good things for access," he noted. At the same time, Horvath said the NGSA and other gas trade groups should try their best to ward off the "bad things," such as market interference by lawmakers.

In addition, "we say it's high time to get that construction" of a long-line gas pipeline from Alaska to the Lower 48 states underway, the AGA's Parker said. It's estimated that Alaska has more than 250 Tcf of gas reserves, enough to supply the U.S. for a decade or more, he noted. He acknowledged, however, that an Alaska gas pipeline is at least a decade away from operation.

As a "mid-term solution, we're encouraging more siting of LNG [liquefied natural gas] facilities," Parker said. AGA anticipates that imports of LNG will grow from 4 Bcf/d to 20 Bcf/d by 2020, at which time it will account for 18% of domestic gas supply.

As a demand-side measure, Parker said the AGA supports fuel diversity for electric generation. Current demand growth in electric generation -- much of which is fueled by natural gas -- "has significantly contributed to the upward pressure on natural gas prices," he noted.

"We believe natural gas is best used directly in the home or business, while other fuels -- like clean coal, coal gasification, nuclear and renewables -- should play more of a larger role in generating future electricity load," he said.

Donald Santa, president of the Interstate Natural Gas Association of America (INGAA), said his group advocates greater gas supply access as well. The U.S. "quite frankly willingly has chosen to address this problem with one hand tied behind its back. We need to unleash that other hand so we can get access to those gas resources that fuel our economy and bring down those consumer bills."

Santa, a former FERC commissioner, also echoed AGA's support for supply diversity, both within North America and globally. In addition, he said that INGAA "will continue to beat the drum" in 2006 about the need for pipeline shippers to enter into multi-year contracts to support infrastructure projects.

As for INGAA's legislative agenda this year, Santa said it will focus on the reauthorization of the Pipeline Safety Act. The Transportation Department's Office of Pipeline Safety, which oversees the safety of gas pipes, "has performed well and enjoys good credibility with Congress and other overseers," so INGAA anticipates that reauthorization of the pipeline safety law will be "speedy and non-controversial" this year, he told the USEA conference.

In addition to pipeline safety, "we're also going to be very supportive of anything that goes towards increasing access to gas supply and getting that diversity of gas supply that we need," Santa said.

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