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Panel: Natural Gas a 'Robust' Bridge to Renewables

Despite the incoming administration's focus on renewable energy, traditional fuels -- especially natural gas -- remain key to America's energy future, according to a trio of industry experts speaking last Wednesday at the United States Energy Association's (USEA) Annual State of the Energy Industry conference in Washington, DC.

"We see ourselves as in a partnership with the renewable industry," said Natural Gas Supply Association CEO R. Skip Horvath. At some point renewables may take the lion's share of the market, but natural gas will be the bridge to that future and will provide a stable backup for renewables in the future, he said. For now, the natural gas industry is making the best of a very bad economic situation.

"At a time when the entire economy -- almost every other sector -- shrank, we added jobs," Horvath said. "We were adding jobs in October, November and December...It's a pretty amazing story. And this was as the price of gas was on the decline, so it is still obviously a robust industry."

"Natural gas really has been a major American energy success story for the past several years," said Natural Gas Association of America President Donald Santa. "You think about the growth in domestic production that we have seen and the ability to sustain that growth, you think about the fact that gas is portable, you think about the fact that it is clean relative to other fossil fuels and can make a major contribution to the transition that our energy economy is going to be undergoing...but the capital markets drying up is affecting the industry."

Gas and oil currently account for approximately 63% of the nation's energy supply and, even with the projected expansions of other fuels' pieces of the pie, that number is likely to drop only to 59% by 2030, according to American Petroleum Institute CEO Jack Gerard.

"It's still significant, and that's because as long as you have 250 million vehicles out there that run on oil or in some cases gas, you're going to need more oil going forward," Gerard said.

Earlier this month ExxonMobil CEO Rex W. Tillerson said any attempt by the incoming Obama administration and/or the Democratic Congress to reinstate the moratorium on oil and gas drilling in the Outer Continental Shelf (OCS) would be "crazy...[and] devastating to U.S. long-range energy security" (see NGI, Jan. 12). On Tuesday ConocoPhillips CEO James Mulva said reinstating the moratorium would be "a mistake of historic proportions" (see related story). Gerard was of like mind, saying lifting the moratorium was only "a good first step."

"Much has to be done beyond that to be able to actually start developing domestic resources...there's much that needs to be done to be able to deliver that. And make no mistake about it, the American public has said that they want it. Clearly the polls have defined that. So, going forward, we hope that the [Obama] administration will focus on developing these resources," Gerard said.

Lawmakers let the nearly three-decades-old congressional moratorium on drilling expire last year as part of a stopgap measure to fund the federal government through this March (see NGI, Oct. 6, 2008). Earlier in the year, President Bush issued an executive order shelving the parallel presidential ban on drilling in federal offshore areas (see NGI, July 21, 2008). The two actions lifted all restrictions on drilling in the OCS; the Minerals Management Service responded Friday with a draft five-year leasing plan (see related story).

"The eastern Gulf of Mexico is still under moratorium until 2022," Gerard said. "That needs to be revisited."

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