Energy chiefs say US is too dependent on natgas

06 November 2007 19:35  [Source: ICIS news]

WASHINGTON (ICIS news)--Top US energy regulators warned on Tuesday that the country will be excessively dependent on natural gas for ten years and longer for power generation, resulting in continuing high prices and volatility amid uncertain supply.

 

Joseph Kelliher, chairman of the Federal Energy Regulatory Commission (FERC), told a special natural gas conference that “we are going to have to rely unduly on natural gas over the next ten years or so” and that growing US dependence on imported liquefied natural gas (LNG) will leave the country vulnerable to global supply constraints.

 

Natural gas supply and pricing issues are crucial to US chemical manufacturers who rely on gas as both a feedstock and energy source.

 

Leading a commission meeting called specifically to examine challenges facing US natural gas producers and their customers, Kelliher said that pending climate change legislation in the US Congress will play a role in increasing US reliance on gas as a cleaner-burning fuel for electric power generation.

 

In addition, he said North American gas production is insufficient to meet the continent’s growing gas demand and as a consequence US imports of LNG have become the fastest-growing sector of the country’s gas supply profile.

 

“Although we are relying increasingly on LNG, we are not predestined to win all the LNG supply we may need,” Kelliher said. 

 

“The question is one of North American competition with Europe and Asia for global LNG supplies,” he said, adding that US natural gas supplies “are very important to the prosperity of our country”.

 

The commission heard testimony from Kevin Petak, head of gas market modelling at consulting firm ICF International, that the US natural gas market will see relatively high prices and volatility “continuing well into the future”.

 

Petak said that climate control carbon policy that may emerge from the US Congress - or even uncertainty over a possible carbon constraint mandate - “is the wild card in our natural gas outlook”.

 

“In all cases of carbon restrictions that we have projected, natural gas use increases dramatically,” Petak said, saying that gas is likely to serve as the “bridge fuel” through 2025 when more US nuclear power and clean coal power generation will perhaps ease the demand pressure on natural gas.

 

FERC commissioner Philip Moeller said that increasing US reliance on natural gas means that “it is going to be a pretty long bridge”.

 

In anticipation of federally mandated carbon restraints, Moeller noted that US electric utilities are cancelling earlier plans to build coal-fuelled power stations in favour of more gas-powered generation.

 

“Natural gas is the only new capacity option” for utilities, Moeller said.

 

The commission said it will look at what options it may have for facilitating the US gas market.

By: Joe Kamalick
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