Officials: Western states key to gas dilemma

Bob Anez

Monday, Sept. 15, 2003 | 9:13 a.m.

BIG SKY, Mont. -- The demand for natural gas continues to outstrip supply and western states, from Montana to New Mexico, are prime sources for filling that gap, a pair of Bush administration officials said Sunday.

But they also told the annual meeting of the Western Governors' Association that environmental and technological barriers limit the ability to tap such domestic supplies and keep pace with the nation's growing appetite for natural gas as a clean-burning fuel.

A balance has to be struck between the environment and energy needs, said Rebecca Watson, assistant secretary for land and minerals management in the U.S. Department of the Interior. "There is no silver bullet when it comes to energy."

Robert Card, undersecretary for the Department of Energy, said the natural gas industry appears to have an adequate supply of gas in storage so long as the nation has another relatively mild winter.

But the industry's own attitude tells volumes about the thin margin, he said.

"The industry is calling for conservation and fuel switching," Card said. "You know when the industry is calling for that, you have a serious problem."

The administration considers the West at "center stage" in the drive to reduce the country's dependence on foreign energy supplies, Watson told the governors. The abundance of gas, coal and wind make it a logical place to look, she said.

"The western states are critical," Watson said. "The West will continue to be the focus of energy supply and demand."

The demand for natural gas -- both as a heating source and a fuel for electricity generation -- is expected to balloon by 50 percent over the next 20 years from its current level of about 11 trillion cubic feet annually, Watson said. But, at the current rate of production, supply would increase just 14 percent in that time, she added.

So the search is on for more gas.

Domestic options such as drilling deep off the continental shelf raises technological problems and tapping Alaska's healthy supply of gas requires a multibillion-dollar pipeline, Watson said. Drilling in other areas, such as the Rocky Mountain Front in Montana, are so contentious as to be impractical, she added.

That predicament has prompted a growing interest in pulling gas from coal-bed methane wells, an inexpensive process where permitting is easier, and in buying gas overseas, such as Russia, Iran and Saudi Arabia, she said.

In the short term, America needs to rely on conservation while seeking alternatives to natural gas, Card said.

Over the next decade and a half, the nation must develop gas reserves in Alaska, amid the Rocky Mountains and offshore, he said.

The problem isn't a shortage of the fuel in the ground, but rather getting to it, he explained. "No one needs to worry about whether there will be gas; there's gobs of gas."

On a related issue, the western governors asked Congress to take final action on a bill allowing the region to adopt mandatory electricity reliability standards to ensure that the West is not hit with the kind of sweeping blackout that struck several eastern states last month.

Under the existing system, utilities are subject to only voluntary standards.

The governors' action came after hearing a report from an industry group called the Western Utility Coordinating Council on the potential for a power outage in the West.

"Absolutely it can happen in the West," said Dennis Eyre, chief executive officer for the organization.

It happened in 1996 as a result of a combination of problems similar to the causes of the blackout that affected about 50 million residents from New York to Michigan in August, he recalled.

Protective devices failed, operators failed to recognize the impending disaster and they did not react quickly enough to prevent it, Eyre said. The proposed federal law would force electric companies to adhere to operating standards and guarantee that key employees neither make decisions before understanding the problem nor fail to act at all, he said.