The role the Natural Gas Supply Association “provides is unique,and our members haven’t given us any indication that they areanything but pleased,” said Rebecca McDonald, this year’s chair ofthe organization and the future senior vice president of global gasmarketing for BP-Amoco. McDonald was questioned by NGI aboutpersistent rumors that NGSA, which originally was created topromote the decontrol of natural gas, would be disbanded and itsfunctions rolled into the American Petroleum Institute. McDonaldsaid the two organizations address very different issues, with APIfocusing on upstream oil and gas and NGSA involved mainly indownstream activities. “NGSA has done a good job with a difficulttask.”

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

NGSA Cautions on Pipeline Market Power

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

“The market power of interstate pipelines has grownsignificantly in recent years,” McDonald told attendees at theDOE-NARUC Natural Gas Conference earlier this week. There are 14interstate pipeline companies today where there were 30 not longago. Defending against comparisons with consolidation on theproducer side, McDonald, who will be senior vice president ofglobal gas marketing for BP-Amoco, pointed out the top fiveproducers represent just 19% of production while the top fivepipeline companies control 55%. The 14 largest producers have just32% of U.S. natural gas production while the 14 largest pipelinecompanies carry 83% of gas volumes.

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

McDonald said pipelines have argued they no longer have marketpower because there now are multiple owners of capacity and thepipeline network in the U.S. has increased from 8,000 to 285,000miles. But even with multiple owners, capacity is not alwaysavailable in peak periods, she advised. And the 8,000 miles of pipewas adequate for the then 2 Tcf market, while the 285,000 miles ofpipeline has stretched to connect new markets and reservoirs for a20 Tcf market. “Those lines were never constructed with competitionin mind,” McDonald, who came up through the ranks with PanhandleEastern Pipe Line, and Tenngasco, said.

Ellen Beswick

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