High natural gas prices have forced a number of sugar beet plant closures and may force the shut down of the entire sugar beet industry in Wyoming despite the abnormally low gas prices there relative to the rest of the country, according to testimony for a hearing on gas supply last week in front of the House Subcommittee on Energy and Mineral Resources.

“Wyoming is the second highest ranking state in natural gas production. It is ironic and alarming that industries within the state of Wyoming are at risk of closing due to high natural gas prices,” said Calvin Jones, CEO of Wyoming Sugar Co. LLC. “Perhaps even more ironic, natural gas producers in Wyoming currently receive the lowest price for their commodity as compared to any other natural gas producing region in North America.”

The sugar beet industry is part of the $21.1 billion “sweetener industry” that also includes sugar cane and corn. The combination of a decline in sugar prices and higher cost of production mainly because of high natural gas prices are directly responsible for a number of domestic plant closures.

Sugar beet growers use gas to power water irrigation pumps to irrigate their crops. Sugar beet processing factories also use natural gas. A total of 19 sugar beet factories have shut down in the United States since 1996, Jones said.

“Recently, the Nymex prices for natural gas have risen dramatically. In contrast, sugar prices have been plummeting. Because of these opposing price trends, one can see the squeeze sugar companies are facing!” Jones said.

He said Wyoming sugar beet producers will see their cost of gas increase nearly 2.5 times in 2003 compared to last year. “Wyoming Sugar Co., having been a part of the state’s economy for 97 years, is at risk of closing as a result of high natural gas prices,” he said. “Unlike natural gas utilities that purchase and supply natural gas to residential and commercial customers, the beet industry cannot simply vote to immediately ‘pass through’ its higher cost of gas to its customers.

“As the Federal Reserve chairman, Alan Greenspan, stated on Tuesday June 10, 2003, high natural gas prices could weaken some key American industries’ ability to compete. I am here today to inform you from grass roots America that this is in fact happening.”

Jones said his company won’t survive long with these high gas prices. But Wyoming producers also are struggling to increase supply to lower prices. The time it takes for the Bureau of Land Management to issue permits to drill wells in Wyoming has increased three fold in the past year, according to Jones. “I am told that in one particular Wyoming BLM office, what in the past took 45 days for federal land permitting, is now taking approximately 175 days.

“If this process were streamlined, more natural gas production, or at least the potential for more production, might be available.” Jones also recommended that the federal government consider methods to encourage an increase in marginal well productivity.

“We can manage with the noncontrollable factors such as the drought and weather related issues,” he said. “The controllable items are the ones we all have to address to continue our way into the future. As I have explained today, one of these items is the burner tip cost of natural gas at our processing facilities.”

©Copyright 2003 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.