Natural Gas (5-26-06)
Cleaner than other fossil fuels and abundant in the United States,
natural gas has gained an increasing foothold across the nation. It
powers over 60 million American homes and 90 percent of new power
plants. In all, natural gas accounts for nearly a quarter of energy
consumption in the US. The federal government has tracked the status
of natural gas as it has gained popularity and has periodically requested
reports on the subject. In 1992 it solicited the first update from
the National Petroleum Council (NPC),
entitled "Potential of Natural Gas in the United States."
Since that time NPC has issued two more reports, one in 1999 ("Meeting
the Challenges of the Nation's Growing Natural Gas Demand"),
and, most recently, in 2003 ("Balancing Natural Gas Policy--Fueling
the Demands of a Growing Economy"). Secretary of Energy Spencer
Abraham requested the latter in light of homeland security, price
volatility, fuel avaibility and other concerns.
On May 18th, the House rejected an attempt to allow more offshore
natural gas drilling through an amendment to the 2007 Interior, Environment,
and Related Agencies Appropriations Act (H.R. 5386). Florida and California
representatives cited a threat to tourism when opposing the measure,
saying that wells could be placed within three miles of the coast.
"It's a grievous assault on Florida and other [coastal] states,"
said Representative Adam Putnam (R-FL). This argument overshadowed
the call for more energy supplies to reduce high energy prices. Putnam
sponsored an amendment (H.AMDT.856) on the House floor to reinstate
the ban, which passed 217-203. (5-26-06)
The House Appropriations Committee voted on May 10, 2006 to remove
a long-standing ban on offshore natural gas drilling. The committee
voted 37-24 to include the amendment, which was introduced by Representative
John Peterson (R-PA), in the 2007 Interior, Environment, and Related
Agencies Appropriations Act. Originally enacted in 1982, the ban on
coastal drilling covers the east and west coasts of the U.S. as well
as the eastern part of the Gulf of Mexico. It has been renewed by
Congress every year during the appropriations process.
Peterson's amendment would lift restrictions on offshore natural
gas drilling but maintain limitations on offshore oil drilling. The
language in the legislation is similar to language Peterson introduced
last year to a bill in the House Resources Committee. That bill was
approved by the committee, but the offshore drilling provisions were
removed in a 157-262 vote when the bill came before the full House.
The amendment will likely face a tough battle on the House floor
this year as well. Critics from both parties, particularly those in
coastal states, have voiced strong opposition. According to E&E
Daily, Representatives Jim Davis (D-FL) and Mark Foley (R-FL) plan
to introduce a new amendment sometime next week that will renew the
ban. Representative Lois Capps (D-CA) called the amendment "failed
Republican energy policy that won't solve our nation's energy needs
and has repeatedly and resoundingly been rejected by the House and
the American public" (E&E) and said she too would be fighting
to reinstate the ban. (5/11/06)
Federal Energy Regulatory Commission (FERC) Chairman
Pat Wood announced February 16, 2005 at a conference in Houston that
eight new Liquefied Natural Gas (LNG) terminals could be built by
2010 to help meet the country's needs. The amount of authority that
should be granted to FERC over the siting of new LNG terminals is
a central debate in national energy policy legislation.
For more information, see the Energy
Information Administration report on LNG, including tables of
planned expansions and proposed terminal sites in the lower 48 states.
The California Energy
Commission also offers a good overview. A map of US terminals
is available by clicking here.
Even though the highly contested Energy Bill failed to pass in the
Senate, the natural gas industry still made significant gains in the
second session of the 108th congress. The authorizing language for
the Alaska natural gas pipeline was attached to the FY05 Military
Construction Appropriations bill, which was passed just prior to Congress'
adjournment for the election on October 11th, 2004. According to Environment
and Energy Daily, the language includes "a ban on a northern
route for the line that would bypass Alaska markets, provisions that
allow Alaska to control in-state use of the gas to promote its use
for heating or enhancement of a gas industry in Alaska, and a streamlined
permitting and expedited court review process to speed construction
and limit judicial or regulatory delays...The bill also includes $20
million for a worker job training program in Alaska, including $3
million for construction of a Fairbanks training facility." This
language, which effectively provides all the necessary prerequisites
for the $20 billion project to get underway. The FERC will hold an
"open season" in early 2005 for companies wishing to bid
on pipeline capacity. The stage is set for another battle in 2005
over the proposed drilling in the Arctic National Wildlife Refuge
on Alaska's North Slope. With President Bush's reelection and a larger
Republican majority in the House and Senate, Democrats may have a
difficult time blocking ANWR development in the 109th congress.
High gas prices and market volitility prompted
two hearings on capitol hill in October of 2004. The Senate Competition,
Foreign Commerce, and Infrastructure Subcommittee held a hearing on
the domestic supply and cost of natural gas followed by a Senate Joint
Economic Committee hearing on the long-run economics of natural gas.
Since 2000, American companies have increasingly turned to natural
gas to satisfy their energy needs, thereby moving the nation from
a natural gas surplus to a deficit. Because of this, the prices of
propane, natural gas, and heating oil gone up 22%, 15.3%, and 28.4%
The House Subcommittee on Energy Policy, Natural Resources, and Regulatory
Affairs met June 23rd to discuss the federal and state roles in siting
liquefied natural gas (LNG) terminals at both onshore and deepwater
ports. Chairman Doug Ose (CA) stressed the importance of LNG, explaining
that increasing energy demands require the U.S. to import more LNG
and consequently build more ports with the ability to accept these
imports. The responsibility of licensing and securing these ports,
however, has not been clear and the Committee called for federal standards
that would specifically outline the LNG terminal permitting and siting
process. As decided by the Maritime Transportation Security Act of
2002, the Federal Energy Regulatory Commission (FERC) has jurisdiction
over the siting and construction of onshore terminals while the Department
of Transportation (DOT), including the Coast Guard, is in charge of
offshore terminal licensing and security.
Currently, five new terminals have been approved by federal regulators,
but all with different criteria, raising questions of how secure they
are from terrorist attacks and what danger they pose to nearby residents.
Eight deepwater port applications are currently being processed, but
none are in operation anywhere in the world, making deepwater ports
Sources: CQ Today, Environment & Energy Daily, Greenwire,
hearing testimony, The Kansas City Star, The Los Angeles Times, The
National Petroleum Council website, The New York Times, Thomas website,
and The Washington Post.
Contributed by: David Millar, 2004 AGI/AAPG Semester Intern; Jenny
Fisher, 2006 AGI/AAPG Spring Intern and Timothy Donahue AGI/AIPG Summer
Background Information taken from the AGI's
Natural Gas Policy site and AGI's
Energy Hearing Website for the 108th Congress.
Please send any comments or requests for information to AGI Government Affairs Program.
Last updated on May 26, 2006.