Budget cutbacks and consolidation of the natural gas industryhave prompted the Gas Research Institute (GRI) and the Institute ofGas Technology (IGT) to consider the possibility of merging the twoR&D 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 the year 2000, gas industry funding for GRI”flattens out at about $70 million a year through 2004,” at whichtime it will stop completely, he said. GRI currently has an annualbudget of about $130 million, while IGT’s budget is in the range of$30-$40 million. GRI has depended on its gas industry members formuch of its funding over the years, but only a “small portion” ofIGT’s comes from its LDC members. The bulk comes from R&Dcontracts.

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

“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.”

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