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INGAA Warns Of the Costs of Not Using Gas

INGAA Warns Of the Costs of Not Using Gas

The current framework of regulation and legislation may be inadequate to ensure there is 30 Tcf of gas demand in 2010 and that could have dire environmental and economic consequences, the INGAA Foundation said last week in releasing a new report titled Implications of Reduced Gas Use on Emissions from Power Generation.

Although it's costing generators quite a lot these days to burn natural gas, INGAA said not using gas could mean the loss of about $1.2 billion a year to pay for additional emissions controls on coal-fired plants. Furthermore, reliance on coal plants would pump much more carbon dioxide into the atmosphere.

"We believe in this industry that it is very important to arrive at this 30 Tcf level because there are negative consequences for not being able to do that," said Cuba Wadlington, CEO of Williams Gas Pipeline and chairman of the Board Task Force on Environment for INGAA. "If we are not able to reach a 30 Tcf level and say are only able to reach something in the neighborhood of 26 Tcf, then we are looking at something like approximately $1.2 billion in additional annual costs as a result. I think more importantly we are looking at missing the opportunity to make swift improvement in the environment."

Wadlington said the study projects lower demand for gas only to make a point. The low demand projection has nothing to do with the possibility that low gas supply has driven up gas prices to a level that makes gas less economic than other fuels for new generation. The projection that gas demand for power generation may be lower is based on the fact that INGAA believes the regulatory and legislative incentives currently are inadequate for gas demand to reach 30 Tcf in 2010.

"We are going to have to have significant help and changes in our regulatory environment to be able to streamline our ability to build projects," said Wadlington. "And we're going to have to have flexibility in our regulatory environment relative to our ability to price services on a flexible basis so we can meet the needs of these power generation customers," he said. "At least 90% of all new power generation is going to be gas fired."

The INGAA Foundation report, which was prepared by Energy and Environmental Analysis Inc., is a follow-up on a January 1999 INGAA report that outlined the storage and infrastructure requirements to reach the U.S. Energy Information Administration's projections on demand growth.

The initial report projected that 6.5 Tcf of new gas demand would come from electric power generation. The new report says that failure to reach the projected level would increase emissions of mercury and uncapped NOx emissions by 10%, and CO2 emissions by 4% because coal fired generation likely would be the replacement. The report costs $100 and can be ordered by calling (202) 216-5943.

Rocco Canonica

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