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McDonald Denies Rumor NGSA is Being Disbanded

McDonald Denies Rumor NGSA is Being Disbanded

The role the Natural Gas Supply Association "provides is unique, and our members haven't given us any indication that they are anything but pleased," said Rebecca McDonald, this year's chair of the organization and the future senior vice president of global gas marketing for BP-Amoco. McDonald was questioned by NGI about persistent rumors that NGSA, which originally was created to promote the decontrol of natural gas, would be disbanded and its functions rolled into the American Petroleum Institute. McDonald said the two organizations address very different issues, with API focusing on upstream oil and gas and NGSA involved mainly in downstream activities. "NGSA has done a good job with a difficult task."

Nick Bush, NGSA's president, also denied the rumors, saying that just as the industry has been restructuring and cutting back NGSA has been doing some belt tightening. Bush said they would be hiring a new public relations representative soon. Charlotte LeGates, NGSA's spokeswoman, left the organization two weeks ago. Meanwhile NGSA was very much in evidence at the NARUC meeting, providing speakers for a number of panels and sponsoring a large reception.

NGSA Cautions on Pipeline Market Power

Advising that pipeline monopoly power has increased with the consolidation which has been going on over the last several years, Rebecca McDonald, an executive with Amoco and chairman this year of the Natural Gas Supply Assoc., warned against a reduction in regulatory oversight.

"The market power of interstate pipelines has grown significantly in recent years," McDonald told attendees at the DOE-NARUC Natural Gas Conference earlier this week. There are 14 interstate pipeline companies today where there were 30 not long ago. Defending against comparisons with consolidation on the producer side, McDonald, who will be senior vice president of global gas marketing for BP-Amoco, pointed out the top five producers represent just 19% of production while the top five pipeline companies control 55%. The 14 largest producers have just 32% of U.S. natural gas production while the 14 largest pipeline companies carry 83% of gas volumes.

A decrease in regulation could lead to an increase in transmission rates with disastrous effects on the producing community, McDonald said. An adequate return is what spurs producers to spend the E&ampP dollars necessary to maintain and improve production levels for the prospective 30 Tcf market ahead. And producers, some of the biggest pipeline customers, will not get those returns if higher transmission rates cut into their netbacks. McDonald urged regulatory officials to turn a deaf ear to pipeline pleas to free up their market by allowing them to negotiate contractual terms and conditions..

McDonald said pipelines have argued they no longer have market power because there now are multiple owners of capacity and the pipeline network in the U.S. has increased from 8,000 to 285,000 miles. But even with multiple owners, capacity is not always available in peak periods, she advised. And the 8,000 miles of pipe was adequate for the then 2 Tcf market, while the 285,000 miles of pipeline has stretched to connect new markets and reservoirs for a 20 Tcf market. "Those lines were never constructed with competition in mind," McDonald, who came up through the ranks with Panhandle Eastern Pipe Line, and Tenngasco, said.

Ellen Beswick

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