Customers looking for services tailored to their specific needsare driving pipelines to seek lighter-handed regulation includingthe ability to negotiate and deliver those services on the spot-without lengthy FERC proceedings, according to Interstate NaturalGas Assoc. (INGAA) chairman John Riordan.
Only by gaining the flexibility and the ability to take risk andgain rewards like normal businesses, can pipelines expand todeliver to the 30 Tcf market that has been predicted by 2005.Riordan, who also is vice chairman of KN Energy, said the INGAAFoundation has initiated a study on the steps industry must take toget to that 30 Tcf market.
INGAA hopes to work through the Natural Gas Council with theother gas industry organizations, including the American GasAssoc., the Independent Petroleum Assoc. , the Natural Gas SupplyAssoc. and the American Petroleum Institute, to make it happen.
The KN executive took a swipe at producers and municipals whohave opposed the proposal submitted by the American Gas Assoc.(AGA), with INGAA’s backing calling for negotiated terms andconditions of service. “They call themselves customers, but manyhold little or no capacity on interstate pipelines or are notparticipating in state unbundling….Maintaining the status quo maybe good for some producers, but it’s not the way we’re going to getto the 30 Tcf market. Producers call themselves customers, but theultimate consumer is the customer.” Riordan said the pipelinesneeded market incentives and the ability to make a higher rate ofreturn if they are to provide the needed capacity.
He acknowledged there had been a breakdown in communications,saying “we want to find a way to work with producers….we can’tcontinue do things the way we used to.” Both pipelines andproducers have reduced costs because of the competitive market,Riordan said. “The more you deregulate, the more costs will godown. We want to convince producers to trust the market.” Riordanacknowledged that increasing the pipelines’ ability to negotiatethe types of new services customers want would tend to reducestranded capacity costs.
On other issues Riordan also commented that he expected theproducer organization API to have a much bigger role as theindustry goes forward.
And he said a survey of pipelines has shown they have ongoingplans and already have completed a significant amount of theremedial work necessary to deal with the year 2000 problem incomputers. And “transaction systems have built in back-ups whichused to run without all this electronic stuff. We can still do thatif we have to….but we don’t expect problems.”
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