Long-awaited Natural-Gas report holds no surprises.

WASHINGTON. DC -- Conservation, demand flexibility, supply diversity, and infrastructure reliability were key policy recommendations of the National Petroleum Council's (NPC) 2003 Natural Gas Study, released September 25 amidst a flurry of statements from natural-gas interests. The study contains few surprises, but a new emphasis on renewables and conservation is notable in this and other recent studies.

Energy Secretary Spencer Abraham asked the council in March 2002 to advise him on what industry and the government could do to guarantee "adequate and reliable supplies" of natural gas into the 21st century. The NPC is a federal advisory committee to the Secretary of Energy.

Traditional North American producing areas will provide about 75% of long-term U.S. natural gas needs, the NPC concluded in its report, "Balancing Natural Gas Policy--Fueling the Demands of a Growing Economy." To temper anticipated higher prices and price volatility for natural gas, NPC calls for increased energy efficiency, greater flexibility in industrial and residential fuel choices, immediate development of new sources of supply, and enhanced infrastructure investment.

NPC's solution is what the organization calls a "balanced portfolio" that includes increased energy efficiency and conservation; alternate energy sources for industrial consumers and power generators, including renewables; gas resources from previously inaccessible areas of the United States: liquefied natural gas (LNG) imports; and gas from the Arctic. New, large-scale resources such as LNG and Arctic gas are available and could meet 20-25% of demand, but are higher cost, have longer lead times. and face major harriers to development.

Get Used To It

The report doesn't expect that natural gas price fluctuations will disappear any time soon and warns that natural gas users should get used to it. "Volatility is a fundamental aspect of a free market, reflecting the variable nature of demand and supply; physical and risk management tools allow many market participants to moderate the effects of volatility," the NPC says.

The organization came up with an extensive list of recommendations, such as increasing supply diversity and increasing dual-fuel capability of industrial and power generation plants. It also promoted increased permitting procedures for LNG terminals, development of lower-48 gas resources, and development of an Alaska gas pipeline.