Friday, September 18, 2009

Natural Gas Boys to Spend Money in Washington D.C.

By DAVE MICHAELS / The Dallas Morning News

WASHINGTON – Natural gas producers are planning a major lobbying effort to shape climate change legislation in the Senate, aiming for incentives to boost the use of their resource in power plants and vehicles.

The aggressive push is meant to make up for the gas lobby's relative absence from climate-change negotiations in the House, where a bill that passed in June reserved most goodies for coal-burning utilities and manufacturers seeking incentives to shield them from the cost of reducing greenhouse gas emissions.

"It's only when legislation is introduced that changes it from a level playing field to an unlevel playing field that we say, 'Wait a minute, you are rewarding those fuels that are less clean than natural gas,' " said Larry Nichols, chief executive of Oklahoma City-based Devon Energy.

For many of the companies, Washington's preference for coal couldn't come at a worse time. After several years of high prices and massive new discoveries such as North Texas' Barnett Shale, the price of gas has fallen to a seven-year low.

A supply glut is partly to blame. So gas kingpins like Dallas' T. Boone Pickens have asked Congress to underwrite new uses for natural gas, including a program to convert trucking fleets from diesel to natural gas.

Other gas producers are also touting the fuel's green credentials, since it emits 50 percent less carbon dioxide than coal. They emphasize that new fields are near East Coast cities – trying to break the view that gas is found only in Texas and Louisiana – and echo Pickens' argument that domestically produced gas could help reduce oil imports.

The gas lobby's new outfit, the America's Natural Gas Alliance, plans an $80 million campaign to tout its aims with ads in national and regional publications. The group is united in opposition to new oil and gas taxes proposed by the Obama administration, as well as a House bill that would federally regulate hydraulic fracturing – the water-and-chemical-infused drilling method used to produce most gas in the U.S.

They're also winning some allies in the environmental lobby. The Sierra Club, for instance, agrees that natural gas could be a bridge fuel as power plants reduce their use of coal. On Thursday, Sierra Club executive director Carl Pope lobbied Capitol Hill along with Aubrey McClendon, chairman and chief executive of Chesapeake Energy, one of the biggest players in the Barnett Shale.

"Basically, the House promised coal that it will get a shot at the future by investing heavily" in clean coal, said Dave Hamilton, director of global warming and energy programs for the Sierra Club. "The problem is by not inserting incentives for fuel switching, they are just passing on what are millions and millions of tons of quick carbon dioxide reductions."

The gas lobby wants senators to create a "bridge fuel credit," which would reward utilities that switch from coal to natural gas.

Fuel switching raises concerns in Texas, where gas price volatility has wreaked havoc with consumers' electric bills. The gas producers say today's huge reserves mean that gas won't be in short supply anytime soon, so prices are likely to stay between $5 and $8 per thousand cubic feet.

"Abundance is what will ensure price stability," said David Trice, chairman of Newfield Exploration Co., a Houston-based independent oil and gas producer.

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