Officials warn of carbon controls’ impact on gas

Gas Daily Feb 20, 2008

 

With carbon control legislation likely emerging soon from Congress, producers and utility officials expressed concern Monday over the potential effects on natural gas supply and, ultimately, prices.

“Carbon regulation is likely to place upward pressure on natural gas demand and consequently on prices, and the industry and regulators will be left to explain this to consumers,” said Jenny Fordham, director of energy markets and government affairs for the Natural Gas Supply Association.  

Fordham was among several industry spokesmen participating in a National Association of Regulatory Utility Commissioners panel on gas supply issues. She noted that natural gas has the lowest carbon emissions of any fossil fuel, has become the energy source of choice for new electricity production and serves as a preferred backup for renewable sources of energy, such as wind power and solar generation facilities.

All of this, however, puts more demand on the gas industry to produce more of the fuel at a time when access to new supplies on federal lands is constrained, she said. Fordham encouraged the state public service commissioners to help educate federal officials and consumers about the potential impacts of climate change legislation on gas markets.

“We need to work together to help ensure that carbon regulation policy includes access to new sources of natural gas,” she said. “Current federal restrictions apply to more than 250 Tcf of potential natural gas resources. LNG imports and unconventional sources will not be enough to make up for the increases in natural gas demand that are likely in a carbon-constrained economy.”

“We are not running out of domestic natural gas,” noted Alan Allred, president and CEO of Questar Gas. “Any form of carbon regulation, whether it’s a direct tax or indirect tax or cap-and-trade, will favor the substitution of natural gas for high-carbon fuels.”

More gas will be needed as a result, and gas supplies can be increased without affecting the environment, he maintained. But doing so will require greater levels.