In a letter to state legislative leaders last Thursday, Wyoming Gov. Dave Freudenthal urged that the state not get into the natural gas business, although he reiterated his support for the activities of the state pipeline authority. He supports the Wyoming Pipeline Authority’s (WPA) work to deal with the price differential for stranded gas in the state.
Some elected leaders in the state have proposed having the WPA acquire pipelines or purchase capacity on existing pipelines as a way to raise the export price for Wyoming’s abundant gas supplies, prompting Freudenthal to write the legislature’s Joint Minerals, Business and Economic Development Interim Committee.
The governor said he remains “skeptical, both as a philosophical matter and in deference to the state constitution,” about the state getting directly into the interstate natural gas business. “The Wyoming Constitution established clear boundaries between governmental and private sector activities,” he wrote. “The government should not try to compete in the private economy.”
Freudenthal is concerned about what he called a larger issue surrounding the state’s depressed natural gas prices, and that is “assured access to the resource,” rather than state involvement in gas pipelines or the creation of “severance tax credits” for producers.
While continuing to support the WPA role in moving industry decisions along, Freudenthal said he recognizes that “everyone remains frustrated with the pace of the private-sector marketplace.” He said he continues to support “those activities by this office, the legislature and the WPA that facilitate the operation of a free market economy. This includes actions such as encouraging certainty in resource availability, dissemination of market-clearing information and asking producers and commercial consumers to contract for pipeline capacity.”
During the past six years, some 3.5 Bcf/d of gas pipeline capacity has been added in Wyoming, according to WPA calculations, including 1.4 Bcf/d from Rockies Express Pipeline (REX) and subsequent expansions.
“The 3.5 Bcf/d of capacity has been helpful but remains insufficient,” Freudenthal said in his letter, in which he attached WPA information on nine separate pipeline projects that are under discussion for parts of Wyoming. (Of the projects, the earliest one could be commercially operational would be 2010, WPA said.)
Otherwise, Freudenthal raised five questions for legislative leaders:
Freudenthal said he is ready to do almost anything to add more pipeline capacity, but he draws the line at constitutional changes and getting the state in the pipeline business. Those two alternatives could be off the table if the governor has his way.
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