Budget cutbacks and consolidation within the natural gasindustry have prompted the Gas Research Institute (GRI) and theInstitute of Gas Technology (IGT) to consider the possibility ofmerging the two research and development groups.

“I think it…..has to do with the fact that the FERC fundingmechanism [for GRI] is changing and the gas industry is beingrestructured,” said IGT Chairman Warren Mitchell, who is chairmanand president of Southern California Gas. “In a sense that theindustry is becoming more competitive, then I think associationsand industry providers, like IGT and GRI, are under pressure to dothings like this to be more efficient and cost effective.”

By the end of 2000, gas industry funding for GRI “flattens outat about $70 million a year through 2004,” at which time it willstop completely, he said. GRI currently has an annual budget ofabout $130 million, while IGT’s budget is in the range of $30-$40million. GRI has depended on its gas industry members for much ofits funding over the years, but only a “small portion” of IGT’sfunding comes from its LDC members. The majority comes from R&Dcontracts.

The boards of directors of Chicago-based GRI and IGT of DesPlaines, IL, have formed a 10-member joint committee to investigatethe merits of a merger. They also hired Boston Consulting Group toassess the “benefits and barriers” to combining the groups, and tosubmit a study at year’s end.

“I think the two organizations can complement each other becausethere aren’t a lot of overlapping activities, although I thinkthere’s the opportunity to create some efficiencies in terms ofadministration,” Mitchell said. “The primary difference in theorganizations is that GRI is a managing organization for R&Dfunds and a contractor, while IGT is an organization that actuallydoes the research itself.”

Susan Parker

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