Natgas a vital bridge for energy needs: gas group

Typography
NEW YORK (Reuters) - Natural gas remains the United States' only viable fuel source to help bridge a 15-year gap for the nation to transition from dirty fossil fuels to cleaner alternatives, an industry trade group said. According to American Gas Association chairman David McClanahan, natural gas, with its "small carbon footprint" will be the key fuel until new nuclear power, renewables and liquefied natural gas can also meet America's growing energy needs.

NEW YORK (Reuters) - Natural gas remains the United States' only viable fuel source to help bridge a 15-year gap for the nation to transition from dirty fossil fuels to cleaner alternatives, an industry trade group said.

According to American Gas Association chairman David McClanahan, natural gas, with its "small carbon footprint" will be the key fuel until new nuclear power, renewables and liquefied natural gas can also meet America's growing energy needs.

"We need a bridge until clean coal and nuclear are available, which could be a 10 to 15 year period. Natural gas is ready to play a key role to the challenges that our nation faces not only in 2008 but in 2028," McClanahan said speaking to the New York Society of Security Analysts in New York on Thursday.

McClanahan said new nuclear plants would have no effect on supply until the end of the next decade or later, as the industry faces growing opposition from environmentalists and lengthy construction times.

!ADVERTISEMENT!

In addition, he said with wind and solar energy not always available at times of peak demand, there are limits to how much renewables can add to the solution.

LNG will play a factor, McClanahan said, but stiff competition from other parts of the world, particularly Asia, will likely keep costs relatively high.

The AGA is focused on getting their message out that natural gas is abundant and less expensive and can help offset climate concerns, one of the biggest challenges facing the energy industry.

"We are in the midst of a seismic shift in the way carbon issues are dealt with in this country. It's a complicated issue and the solutions are elusive, but we can't wait for the perfect solution to present itself," he added.

But in order to meet those needs, McClanahan said offshore areas must be opened up for drilling as soon as possible and not after a supply crunch starts to affect prices.

"Supply is the number one issue. There are domestic places that are not being drilled offshore. Section 181 (in the Gulf of Mexico) was opened last year, but there are expectations that there is a lot of gas on the East Coast and West Coast," he said.

McClanahan said there are fears about not having those supplies until a "crisis" resulting in a big spike starts to hit consumers, some of whom are already showing signs of an economic pinch.

THE MODERATING FACTOR

McClanahan, also the president and chief executive officer of Houston-based CenterPoint Energy, said the company was starting to see some early indications of an economic slowdown in some of its Midwest market areas.

CenterPoint serves gas and power customers in Minnesota, Mississippi, Oklahoma, Arkansas, Louisiana and Texas.

"People have to have energy to heat or cool their homes, but we are seeing signs that people are starting to feel the pinch of a housing slowdown."

McClanahan said his company came out of last winter with its highest amount of delinquent accounts.

"We saw people having to make decisions about what bills to pay. It seems like they were putting aside their energy bill on the 'I'll pay it next month' pile," McClanahan said.

"We worked with those customers, but we were kind of shocked coming out of last winter. It's an indication that high energy prices and high prices at the pump are affecting people's bottom lines," he added.

McClanahan said high volatility and high prices remain big concerns for the gas industry, but the moderating factor is more supply. "Our message is we've got plenty of gas. We've just got to go and get it," McClanahan said.

(Reporting by Eileen Moustakis and Michael Erman; Editing by Marguerita Choy)