Funding for gas industry research and development (R&D) is roughly half of what it was in 2003 and is focused on "near-term developments" rather than "longer-term industry goals," such as those pursued by the electric power and water industries, according to a study released by the American Gas Foundation (AGF).

The report, "Research and Development in Natural Gas Transmission and Distribution," was co-sponsored by the INGAA Foundation Inc. and shows that R&D funding for the transmission and distribution (T&D) sectors has declined by about $25 million and is roughly half of what it was in 2003, the AGF said Friday. Since then two significant industry programs have ceased: a cross-industry R&D program managed by the Gas Research Institute and funded through a surcharge approved by the Federal Energy Regulatory Commission; and a program funded by the Department of Energy's National Energy Technology Lab that was focused on pipeline reliability.

"A troubling outcome of the recent funding cuts is the virtual elimination of long-term basic research," said AGF Chairman Robert W. Best, who also is CEO of Dallas-based Atmos Energy Corp.

The study examines how research funding aligns with current industry objectives, compares it to similar industries and reviews R&D structures and strategies. While R&D spending in U.S. industry at large has been increasing, spending in the energy industry, which includes gas T&D, has been declining since the 1990s, the study found. This is due primarily to a decrease in federal funding and discontinuation of an R&D surcharge approved by FERC.

"Today, gas distribution R&D programs are conducted in a more decentralized environment that creates a greater demand for the industry to coordinate R&D activities, and it creates a greater need for communications," said AGF Executive Director Gary Gardner. "Since the industry continues to face such challenges as aging infrastructure, growing demand and the constant need to maintain a high level of reliability and safety, a closer look may need to be taken to make sure this downward trend in R&D investment does not point to future problems in bringing products and services to market that address the challenges and satisfy customer expectations."

For a summary and full text of the study report, visit the AGF website, www.gasfoundation.org.

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