After nearly 27 years of operation, the Gas Research Institute (GRI) filed its last annual budget request with FERC last week and will be formally phased out over the next few years. For its last year of funding through pipeline surcharges, GRI is requesting a research, development and demonstration (RD&D) program budget for 2004 of $60 million. In addition to the FERC portion of the budget, GRI anticipates receiving about $6.3 million in co-funding from industry and government sources in 2004.

The RD&D organization, which led the development of as many as 153 new technologies across a broad spectrum of industry operations, began its phase-out transition period seven years ago. In 1998, the gas industry, GRI and FERC completed a settlement agreement with interstate pipeline companies, which had been concerned that the GRI surcharges the pipelines were responsible for collecting from customers through transportation rates were making their services less competitive.

In April 2000, GRI merged with the Institute of Gas Technology (IGT) to create a new organization, the Gas Technology Institute (GTI), with a more market oriented approach to R&D. Both GRI and IGT continue to exist as separate and distinct corporate entities within the overall GTI organization.

In parallel with GRI programing, IGT earned about $36 million in client revenue in 2002, about $40 million in 2003 and is targeted to earn $45-50 million in 2004, said spokesman Joe Hilyard. GRI also received about $21 million in government co-funding this year. “That will drop, we think, to only about $6-7 million for 2004,” Hilyard said.

“The industry is going to need to decide how much continuing research they want to have done and who they want to do it. We think the industry understands the value of R&D.

“We also think the GRI programs delivered tremendous value,” said Hilyard. “We showed a benefit-cost ratio of about eight to one. The value of technology will continue to be there. We’ll just have to operate in a new way.

“Going forward, GTI will continue to be ready to serve the R&D needs of the industry and we’re always discussing funding mechanisms,” he said. “There are mechanisms they can use with state public utility commissions, for example. The funding level going forward for the first few years, in 2005 and 2006, will be lower than it has been in previous years, but our target is to get the GTI program up into the range of $60-70 million by 2005 or 2006.”

Hilyard said in the future the organization, which is based outside Chicago, will be more client-focused and probably more focused on technology development rather than research. “I think that if there is a bit of a cloud over the future we would say that we’re concerned that there may be less support for longer term research, more ‘D’ and less ‘R.’ We’ll be looking more at solutions that can be applied quickly — a year or a year and a half timeframe.”

He said the organization’s traditional strength has been in R&D on the materials used in delivery systems, but there are diverse interests regarding R&D today. “We’ve seen some increased interest in the application of biological sciences to solutions to problems of site clean up, corrosion, control, etc.”

In the meantime, GRI’s 2004 budget application proposes that all funds be used to support its core program, which is composed of six projects that are designed to be widely beneficial to gas users and to the entire gas industry. Each of the six projects meets one of the six core program strategic objectives defined in a 1998 settlement agreement approved by the FERC.

The program is designed to help to facilitate a logical, orderly and consumer-beneficial closeout of core program RD&D funding by Dec. 31, 2004, and a final true-up and accounting by July 31, 2005.

©Copyright 2003 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.