A stand-alone, comprehensive natural gas bill offered in the Senate Wednesday that potentially could give producers greater access to offshore areas is of “historic significance,” said an official with a major industrial consumer group.

The measure, “The Natural Gas Price Reduction Act of 2005,” is the “first legislation in decades that seeks to address the politically complex issue of increasing access to offshore natural gas,” said Paul N. Cicio, executive director of the Industrial Energy Consumers of America (IECA), in a letter to Sen. Lamar Alexander (R-TN), one of the bill’s sponsors. “Your bill is of historic significance.”

The cost of the natural gas crisis to consumers “is nearing $200 billion and immediate action is needed to provide solutions and remove barriers that will increase the affordability and reliability of energy and especially natural gas,” he wrote. “Your legislation is an excellent start and we are very grateful for your commitment to this area.”

He noted that gas prices are 344% of 1998 levels and the highest in the world, and that U.S. production declined by 4.9% and Canadian imports fell by 19% from 2001 to 2004 levels. “The gravity of the challenge means we must use every supply and every demand side policy option that is cost effective and environmentally possible,” Cicio said.

The bill seeks to control gas prices by giving coastal states the opportunity to opt out of the federal moratorium on offshore oil and gas leasing. It also could potentially free up the gas-rich Lease 181 in the eastern Gulf of Mexico for leasing. Moreover, the measure addresses the need for more liquefied natural gas (LNG) by giving the Federal Energy Regulatory Commission “exclusive” authority over the siting of LNG terminals, and requires the Commission to act on applications for LNG and pipeline projects within one year.

Significantly, the bill also would allow a natural gas storage facility to use market-based rates even if FERC determines that the facility may have the ability to exercise market power. It also authorizes regulations to provide Congress with an update on the Alaska natural gas pipeline every six months, and it would provide $50 million per year from 2006 to 2009 for research into gas methane hydrates.

The measure proposes a number of provisions aimed at reducing natural gas demand for residential, commercial and power generation customers. For example, it authorizes $90 million a year for each of the fiscal years 2007 through 2010 to fund public education programs for consumers to reduce the demand for natural gas, oil and electricity.

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