Conserving natural gas is urged

WASHINGTON — Greater energy efficiency and conservation are vital to keeping natural gas prices lower and less volatile as North American production of this critical fuel levels off, according to a report by a committee of oil and gas executives that advises the Energy Department.

The National Petroleum Council's report, scheduled to be released today by Energy Secretary Spencer Abraham, also prods the Bush administration to relax onshore and offshore drilling restrictions, and to encourage natural gas imports because "production from traditional U.S. and Canadian basins has plateaued."

A draft of the council's 89-page executive summary was obtained by The Associated Press.

The report comes at a time when the nation's supply of natural gas is tight and the government is bracing consumers to expect higher home heating costs this winter. Many of the issues raised in the report are being debated by Congress as it attempts to pass broad energy legislation.

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. While a similar study was prepared in 1999, Abraham said substantial changes had occurred in natural gas markets since then and further analysis was needed.

The issue gained added attention last spring when natural gas in storage dropped to its lowest level since the government began keeping records in 1976 and Federal Reserve Chairman Alan Greenspan warned that prolonged high prices would damage the U.S. economy, particularly the manufacturing sector.

More than 60 million Americans heat their homes with natural gas, up from about 48 million in 1987, and 90 percent of all new power plants use this fuel, which has been embraced because it burns cleaner than coal and can be found domestically in large quantities.

The consumption trend is problematic, though, because production from North American natural gas fields is declining at a rate of more than 25 percent, requiring that many more wells to be drilled every year just to keep supplies steady.

"There has been a fundamental shift in the natural gas supply-demand balance that has resulted in higher prices and volatility in recent years," the report says. "This situation is expected to continue, but can be moderated." -->

Among the council's hodgepodge of recommendations, government-backed conservation measures are stressed.