WHEN it comes to energy legislation crawling through Congress,
the natural gas industry is in a tantalizing position. The industry
hopes the legislation will get moving again in time to be passed
this year, but slow enough that some objectionable provisions can
Last week the Senate's version failed to come to a vote because
President Bush and senators from Western states objected to a tax
on all coal to pay for the health benefits of 84,000 retired union
coal miners in Eastern states.
"Completely stalled" is how Denise Bode, president of the
Independent Petroleum Association of America, assessed the Senate
"It's kind of scary," adds Urban O'Brien, who deals with
government issues for Apache Corporation, a Houston-based company
that is the nation's fourth-largest independent oil and gas
Mr. O'Brien and Ms. Bode note that once the coal-tax issue is
resolved, the bill still must be reconciled with the House version
in a conference committee. The impasse in the Senate leaves little
time, in view of other Senate business, an August recess, and
elections in the fall.
However, Michael Baly III, president of the American Gas
Association, remains confident that Congress will pass an energy
bill. "Too much hard work has gone into this," he says.
The bill would likely contain a number of provisions the gas
Most important is partial relief from the alternative minimum
tax, which discourages drilling.
This year the number of drilling rigs at work in the US hit 596,
the lowest weekly average in 52 years. As a result, the nation will
probably replace only 60 percent of the natural gas it consumes,
says George Mitchell, chairman of Mitchell Energy and Development
Corporation, a large independent gas producer in The Woodlands,
Texas. "That's going to be very serious," he warns.
The energy bill is also expected to make it easier for natural
gas transmission companies to build pipelines to serve new markets.
Federal, state, and private vehicle fleets would be required to
convert to alternative fuels, including natural gas. Individuals
would be given a tax incentive to convert their vehicles to
And the electric-power generation market would be opened wider
to independent power producers, which are expected to favor natural
gas as fuel. Electrical generation is the gas market with the
largest potential for growth. …