Customers looking for services tailored to their specific needsare driving pipelines to seek lighter-handed regulation, includingthe ability to negotiate and deliver those services on thespot-without lengthy FERC proceedings,according to InterstateNatural Gas Assoc. (INGAA) chairman John Riordan.

Only by gaining the flexibility and the ability to take risk andgain rewards like normal businesses, can pipelines expand todeliver to the 30 Tcf market that has been predicted by the year2005. Riordan, who also is vice chairman of KN Energy, said theINGAA Foundation has initiated a study on the steps industry musttake to get to that 30 Tcf market.

INGAA hopes to work through the Natural Gas Council with theother gas industry organizations, including AGA, the IndependentPetroleum Assoc. (IPAA) , the Natural Gas Supply Assoc. (NGSA) andthe American Petroleum Institute (API), to make it happen, Riordansaid.

Briefing the press Thursday on INGAA initiatives, He took aswipe at producers and municipals who have opposed the proposalsubmitted by the American Gas Assoc. (AGA), with INGAA’s backingcalling for negotiated terms and conditions of service. “They callthemselves customers, but many hold little or no capacity oninterstate pipelines or are not participating in stateunbundling….Maintaining the status quo may be good for someproducers, but it’s not the way we’re going to get to the 30 Tcfmarket. Producers call themselves customers, but the ultimateconsumer is the customer.”

He acknowledged there had been a breakdown in communications andsaid he expected API to have a much bigger role as the industrygoes forward. Riordan’s very pointed support for API lent fuel torumors circulating around Washington that the oil producersorganization which originally spun off NGSA as the natural gaslobbying arm, is attempting to reclaim that function.

Discussing the potential market, Riordan pointed out that theincrease by 2005 would be 36%, but divided into annual incrementsit would only be between 3% and 4% a year. Most of the new loadwill come from electric generation with “all different types ofpeople getting into the generation business.” He mentioned a newpower facility with phased capacity of 200 to 600 MW beingsponsored in part by People’s Energy which is locating it over oneof their storage fields in the Chicago area. His own company, KNEnergy “is looking at a joint venture in Chicago area for a 600 MWplant. Riordan said he sees new generating plants being locatedmore and more over gas storage fields or at market hubs.

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