A coalition of eight oil and natural gas associations has urged FERC not to move forward with a notice of inquiry (NOI) requiring industry members to report individual transactional data including prices.

“The trade associations are concerned that given the Commission’s limited jurisdiction over wholesale sales of natural gas, the proposal set forth in the notice will not improve and may actually harm market transparency, and will place an inconsistent and unfair burden on natural gas market participants. Accordingly, the trade associations urge the Commission to reconsider the approach and not move forward with the proposal in the notice,” the group of producers, pipelines, industrial gas consumers and local distribution companies (LDC) said.

The coalition is responding to the Federal Energy Regulatory Commission’s (FERC) November NOI that proposes for the first time to require that buyers and sellers report, on a quarterly basis, the prices of individual transactions (see NGI, Nov. 19, 2012). Currently, FERC argues that much of the market information available to the Commission is in aggregate form and therefore does not provide full market visibility.

The Commission is considering whether quarterly reporting of every jurisdictional natural gas transaction that entails physical delivery for next day (next-day gas) or the next month (next-month gas) would provide useful information for improving natural gas market transparency. The agency also is weighing whether these reporting requirements should be in addition to, or in lieu of, the existing Form No. 552 reporting requirements.

“The NOI raises difficult issues regarding FERC’s limited statutory authority to collect natural gas sales data in a robust natural gas commodity market in which most transactions are outside of FERC’s regulatory control. [It] also raises practical issues regarding the difficulty and (perhaps impossibility) of determining which natural gas transactions are FERC-jurisdictional and which ones are not,” said Ballard Spahr attorneys Dena E. Wiggins and Jack N. Semrani, who represent the American Forest & Paper Association and the Process Gas Consumers Group.

The NOI states that the Wellhead Decontrol Act of 1989 and the Natural Gas Policy Act of 1978 removed from the Commission’s jurisdiction “first sales,” and that all sales in the chain from the producer to the ultimate consumer are “first sales” until the gas is purchased by an interstate pipeline, an intrastate pipeline or LDC, the coalition said.

The notice further states that sales by an interstate pipeline, instate pipeline, LDC or their affiliates are not “first sales” unless the sale is attributable to volumes produced by the pipeline, LDC or affiliate.

The trade associations have called on the Commission to rethink its approach, and not move forward with the proceeding [RM13-1]. The coalition includes American Forest & Paper Association; American Gas Association; Gas Processors Association, Independent Petroleum Association of America, Interstate Natural Gas Association of America, the Interstate Natural Gas Association of America; the Natural Gas Supply Association (NGSA); Process Gas Consumers Group; and the Texas Pipeline Association..

“The trade associations contend that requiring the natural gas industry to embark on a process to determine compliance with Commission’s proposal in this proceeding is “ill-advised. Resolution of a proper scope of reporting, by itself would be nearly impossible to obtain.”

Earlier last week, the NGSA filed its own opposition to the the contemplated reporting requirement, saying that the natural gas market is already highly transparent. Both the costs and complexity associated with the contemplated reporting requirement would result in an undue burden on natural gas market participants,” the Washington, DC-based producer trade association told the Commission.

“If the FERC determines that it needs additional information for surveillance purposes, natural gas market transaction-level data is available to FERC from the [Atlanta-based] IntercontinentalExchange (ICE). Subject to essential confidentiality and appropriate contractual arrangements, ICE can and has expressed a willingness to provide the Commission with access to natural gas market transaction-level data,” it

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