Congress Closer To Approving SRF Boost In 2010

By Stephen Barlas, Washington Editor | August 2009 Vol. 64 No. 8

Julie Gentz, spokeswoman for Williams Gas Pipelines, says the company does not disclose emissions for each of its 100 compressor stations. It does disclose aggregate emissions for all Williams’ facilities, midstream and pipelines.

Richard Wheatley, spokesman for El Paso, says his company does have compressor stations with emissions over 25,000 metric tons. “We are affected and are continuing to assess proposed climate legislation and potential impacts on individual facilities and El Paso businesses and operations,” he adds.

What is not clear is the impact on gas producers. ConocoPhillips released a statement saying, “We recognize that the complex bill has both positive and negative implications for the U.S. natural gas industry.” Asked to delineate those implications, Charlie Rowton, a spokesman for ConocoPhillips, says he is not prepared to discuss them. “As everybody has pointed out, it is a lengthy bill and there are lots of complex issues entwined. Natural gas is a fuel that ought to have an important role, and we want to make sure it doesn’t get penalized vis-a-vis other energy sources.”

Paul Wilkinson, vice president, policy analysis, the American Gas Association, says natural gas demand will spike as a result of the legislation. That is because natural gas, as an input fuel, emits less carbon when burned than coal or petroleum. He points out that when sectors such as the electric utilities and big industrials start looking to replace coal so as to comply with industry carbon caps, natural gas will be the likely alternative, especially in the early years of a program, between 2012, when emission reductions must begin, and 2020. That is because utilities cannot turn to “carbon capture technologies” because they don’t yet exist. There won’t be additional nuclear plants coming on line for years. Availability of solar and wind power is growing very slowly. That leaves natural gas.

The natural gas distribution industry itself will come under pressure, too, by having to ensure that by 2016 its residential, commercial and small industrial customers have brought their total carbon equivalent emissions under about 9 percent (this number is a moving target) of total U.S. carbon emissions. That total is expected to be somewhere around 5.5 billion tons. In the rubric of the climate change debate, that would mean the natural gas utilities would get an allowance in 2016 of something around 500 million tons (9 percent of 5.5 billion). If their customers emitted more than 500 million tons, the utilities would have to go out on the open market and purchase additional allowances.