Large producers, both majors and independents, “have confidence that natural gas price indices are fundamentally sound,” the Natural Gas Supply Association said in a letter to FERC Chairman Pat Wood last Tuesday, refuting comments to the contrary by Apache Corp. in a Washington Post article published March 1.

“The article gave the impression that Apache represents the voice of large natural gas producers. This could not be further from the truth. The views of Apache Corporation are not shared by the Natural Gas Supply Association (NGSA).

“Contrary to the statement made by Apache Corporation, more of NGSA’s members now report their natural gas transactions to the index developers than ever before,” the letter signed by NGSA Chairman William Transier said. Those reporting are “a majority of NGSA members.”

Producers’ confidence in the indices “is based on the fact that the many buyers and sellers provide a check-and-balance on each other, and that FERC as well as the CFTC are monitoring natural gas prices continuously.

“That price reporting has gone up in recent months is evidenced by the increasing liquidity at market hubs. After admission last fall of misreporting by several companies in other sectors of the energy industry, some of NGSA’s members took a break from reporting to assess their own internal procedures. This break resulted in a temporary decrease in data provided to index developers. Now, more and more companies are reporting and we expect this trend to continue,” NGSA told the Federal Energy Regulatory Commission chairman.

The producers group noted that it has joined in recent “laudable and ongoing efforts” to “improve further” the process of reporting natural gas prices. And “although we share the objective of Apache Corporation to increase the accuracy of price indices, we strongly disagree with their approach to call on the federal government to lead that effort. That job is best done by the industry, with FERC and other regulatory bodies scrutinizing the results and challenging the industry to restore credibility to the natural gas market.

“An industry-led, market-based solution is the best hope to ensure the integrity of natural gas price indices. With continued monitoring by FERC, we believe we can restore the confidence in the natural gas industry that has so clearly been lost.”

For nearly a year Apache has been leading a very vocal “Coalition for Energy Market Integrity and Transparency,” which includes members of the American Public Gas Association and which has mounted an inflammatory campaign calling for the federal government either to compile and publish gas and power prices itself or strictly regulate those who do. The group has been intensively lobbying Congress, the federal agencies, consumer groups and the general press.

The Washington Post article had included a quote from Apache Chairman Raymond Plank saying the “market continues to be very subject to the potential of further manipulation,” and saying “some of the largest producers” are not submitting data.

As a long-time publisher of natural gas price indices, NGI also has supported groups seeking to improve price reporting and processing, and has strongly urged broad participation in the surveys to create the large volume of price quotes that best serves in creating an accurate index.

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