In keeping with the consolidation of the natural gas industry,the boards of directors of GRI (formerly Gas Research Institute)and the Institute of Gas Technology (IGT), the leading energyresearch organizations, said yesterday they have approved inprinciple a combination of the two organizations. The boards areexpected to meet again next Monday to give their final stamp ofapproval to the deal.

The “primary driver” behind the proposed merger, which has beenin the discussion phase since last fall, has been to eliminateoverlapping dues for GRI and IGT members, as well as “to bring thesynergies of the two groups together,” said GRI spokesman JoeHilyard.

A name for the combined organization hasn’t been selected yet,he noted. The new research group probably will have a much widerfocus than just gas research and development (R&D), he said.Its 550 members will hail from the gas, oil, electric industries,as well as from other fields.

IGT’s portion of the annual budget of the combined group couldnot be learned. In fiscal year 2000, however, GRI will collect $98million via the FERC-approved pipeline surcharge and $53.7 millionin voluntary funding from the gas industry and federal government,Hilyard said. All of GRI’s funding through the mandatory surchargewill cease in 2004.

Both GRI and IGT will be headquartered in the Chicago suburb ofDes Plaines, IL, where the offices of IGT currently are located.

John F. Riordan, who previously was president and CEO of MidConCorp. and Natural Gas Pipeline Company of America, will become CEOof the combined research organization. He also was executive vicepresident and director of Occidental Petroleum Corp., and vicechairman of KN Energy Inc.

His objective is to build a “highly customer-directedorganization providing innovation and business solutions for theenergy industry,” Riordan said. “I am confident that a combinedcompany can meet that challenge, as demonstrated by growingrevenues and important new initiatives at both GRI and IGT.”

FERC Chairman James Hoecker gave his blessing to the proposedmerger, saying it will help to provide for a “smooth” transitionfrom ratepayer-supported to voluntary industry funding of naturalgas research. “That’s why the merger of GRI and IGT is such goodnews. Formed into a single organization, they will be more able tosustain this critical R&D effort.”

The new research organization will continue to be a non-profitbusiness with membership comprised of all the existing members ofthe two groups. A new board, representing all of the segments ofthe gas industry (producers, pipes, LDCs, integrated companies,municipals, gas consumers and public interest segments), isexpected to be named soon.

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