While reliability and price continue to be driving factors, environmental concerns are moving into equal footing in the gas buying process, according to a panel of industry veterans at GasMart 2010 in Chicago on Tuesday. The five panelists addressed different aspects of “Integrating Green Goals into Gas Procurement Basics.”
While Bill Bathe, CEO at U.S. Energy Services, moderated, panelists looked at the roles of green gas, sustainability, gas-fired generation and storage. They embraced the idea that market signals and government policy moves will make environmental considerations a necessity in buying strategies and processes in the future.
In response to a question, Andrew Hess, gas supply director at Integrys Energy Services, said unequivocally that environmental considerations were getting equal consideration with price/reliability concerns in his gas buying strategies.
“The environmental benefits definitely are not secondary to price/reliability concerns,” Hess said. “I think every customer has to make their own decision about how much weight they give to environmental considerations, but a lot of customers today would say it is just the right thing to do. We offer a green-based product to small commercial and residential customers.”
But are green gas products such as biogas viable without subsidies? “I think the answer is yes,” Hess said. “In many areas you are dealing with dairies or landfills where the operators have to get rid of a waste and that is the best way to do it [capturing the otherwise escaping methane].”
Kevin Petak, a vice president with the consulting firm ICF International, concentrated on the expected growth in the use of gas for power generation, particularly in combination with the growth of more intermittent renewable energy sources, such as wind and solar, for electricity production (see related story). However, in response to a question about ICF’s projections for natural gas as a transportation fuel, Petak was more circumspect and less bullish.
Noting that gas will have a growing role in fleet vehicles, Petak said ICF assumes gas will continue to penetrate that market with a 100 to 200 Bcf annual growth potential. “For gas to make a big penetration, it would have to get into long-haul trucking and passenger vehicles, and that is a more difficult nut to crack, requiring a lot more fueling stations and a big infrastructure. It is very unclear how well natural gas can penetrate the larger transportation market.”
In the larger scheme of greening gas buying, Robert McKinstry, a partner with Ballard Spahr LLP, said many corporations today are adopting sustainability and climate change programs. “They are anticipating regulation in this area because it is coming whether you want it or not. Shareholders are demanding it and the Securities and Exchange Commission is requiring shareholder disclosures in this area. It is particularly important if you are operating in a multinational framework.
“Climate change regulation is not only inevitable, it is already here,” McKinstry said. Companies that are identifying a greenhouse gas (GHG) emissions reduction program can use the process to identify ways to reduce their energy use and to take advantage of tax credits and reductions, so there are bottom line benefits to the green emphasis, he said.
McKinstry said he thinks what happened to companies with hazardous waste regulations in the early 1980s will take place with GHG reduction efforts. The initial dread at the “added cost” of the regulation will give way to the realization that there will be some very real bottom line economic benefits to compliance. “GHG emissions regulation is inevitable,” he said, noting the court determination that the federal Environmental Protection Agency could regulate GHG emissions sealed the deal.
In short, McKinstry said climate change regulations are presenting a real opportunity for companies to “do well [financially] by doing good.”
Petak in his descriptions of gas growth in the power sector, and gas storage projections by Berne Mosley, a deputy director for energy projects at the Federal Energy Regulatory Commission (see related story), underscored the fact that there is a green link to the growing gas demand they predict will expand in the decade ahead.
Mosley said he has been talking about gas storage partnering with various market dynamics in the industry for the past 10 years, including its role with liquefied natural gas, market volatility, producer needs and now shale gas. “Now I am here talking about how storage can be integrated into green fuels.” His thesis is that storage is merely a tool used to respond to market dynamics, and environmental concerns are clearly a current dynamic driving parts of the gas market.
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