Chemical, energy firms caution US Congress on natgas

21 October 2009 21:00  [Source: ICIS news]

WASHINGTON (ICIS news)--A new bipartisan group in Congress on Wednesday called for wider US use of natural gas, but energy producers and chemical sector leaders warned against legislative mandates for broader gas use while production is constrained.

As many as 45 members of Congress convened the first meeting on Wednesday of their Natural Gas Caucus with the expressed goal of developing policy to “increase and expand the many uses of environmentally-friendly natural gas”.

A congressional caucus is simply a group of like-minded members who seek to advance a particular issue or legislation. A caucus can include members of the House and Senate.

Representatives Tim Murphy (Republican-Pennsylvania) and Dan Boren (Democrat-Oklahoma) began forming the Natural Gas Caucus earlier this month with 40 members, including 22 Republicans and 18 Democrats. The caucus has since grown to 45 members, sources said.

Murphy said the group will educate other members of Congress and the public in an effort to broaden use of natgas. 

“We can use natural gas to heat our homes, fuel our cars and light out offices,” Murphy said. “And the possibilities of natural gas continue to grow,” he added, noting that gas has long been used in chemicals production, other manufacturing and transportation.

Boren noted that “recent studies have shown that natural gas is also an abundant domestic fuel that will help us reduce our dependence on foreign energy supplies”.  He was referring to new developments in shale gas resources that have greatly expanded US gas reserves.

However, Cal Dooley, president of the American Chemistry Council (ACC), cautioned the new caucus against taking action to broaden gas use and demand without also taking steps to allow expanded domestic exploration and production.

“We urge Congress to balance calls to legislate greater natural gas demand with steps that will create a long-term, sustainable, affordable, adequate and accessible supply of natural gas,” Dooley said in a letter to Murphy and Boren.

He noted that climate change legislation pending in Congress could greatly increase US demand for and consumption of natural gas by forcing electric utilities to abandon carbon-intensive coal in favour of cleaner-burning natural gas. He urged the caucus to address supply issues as well as expanded use and demand.

The US petrochemicals sector and downstream chemical manufacturers are heavily dependent on natural gas as a feedstock and energy fuel.

Bruce Vincent, chairman of the Independent Petroleum Association of America (IPAA), told the caucus that congressional action and policies being pursued by the Obama administration could greatly inhibit production of domestic gas resources.

Vincent’s association, which represents some 6,000 independent drillers that account for 90% of US oil and gas well development, argued that revenue policies being pursued by the White House would eliminate energy industry tax credits and deductions that have been in place since 1913.

“The overall consequences of these proposals on independents include a reduction in new drilling by 25% to 40% and the loss of 20% of domestic oil production and 12% of American natural gas production,” he said.

Vincent also cited efforts by some in Congress to pass legislation to limit the use of hydraulic fracturing, which is essential to development of major shale gas reserves.

“We confront an aggressive and well-orchestrated effort to mischaracterise and demonise hydraulic fracturing technology,” Vincent said, which could thwart development of shale gas.

To discuss issues facing the chemical industry go to ICIS connectPaul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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