Natural Gas Seeps Into Spotlight

Industry experts say the fuel is abundant, cheaper than oil, and carries environmental benefits. ENERGY

NATURAL gas, the Cinderella fuel, could be the darling of America's energy planners in the coming decade. Federal officials estimate that the use of natural gas will climb by 25 percent or more during the 1990s. It will replace gasoline and diesel fuel in thousands of cars and trucks, supplant heating oil in many homes, and fire clean-burning turbines to generate electricity.

Most of the gas will come from wells in the United States, rather than imports. Natural gas reserves, while not limitless, are called ``abundant'' by officials in both the United States Department of Energy and the American Gas Association (AGA).

Despite natural gas's many advantages, Americans use 14 percent less today than in 1972, the peak year. Yet gas is a domestic fuel which offers both cost and environmental benefits over imported oil.

A study by the Democratic Policy Committee (DPC) notes: ``When natural gas burns completely, carbon dioxide and water are the only major by-products. Gas combustion is almost entirely free of the harmful gases produced when other fossil fuels are burned [carbon monoxide, sulfur oxides, and nitrogen oxides].''

Replacing oil with gas should help control the so-called greenhouse effect, or global warming. The DPC says that carbon emissions from gas are 44 percent less than oil, 75 percent less than coal.

Gas is also cheap - by today's standards.

An official at the American Gas Association notes that prices on the spot market (the cheapest currently available) were recently $1.10 to $1.40 for a thousand cubic feet of natural gas. That is equal to $6.27 to $7.98 for the equivalent energy in a barrel of crude oil. In contrast, crude prices recently have hovered around $19 a barrel.

Nearly half the energy consumed in US homes comes from gas. Yet the fuel got a bad name during the 1970s.

In the winter of 1976-77, gas supplies ran short in some states. Schools, businesses, and factories were closed to save fuel. Several states imposed moratoriums on new residential and commercial uses of natural gas. There were concerns that domestic wells were running out.

Indeed, proven reserves of gas have fallen from 292 trillion cubic feet in 1967 to just 167 trillion cubic feet in 1989.

But gas industry sources blamed government for the earlier shortfalls as well as the falling reserves, an assessment with which Energy Department officials now agree.

Even during the 1976-77 crisis, gas supplies were abundant in the unregulated state markets, but chronically short in the federally-controlled interstate market. Producers were unwilling to sell gas to interstate customers at what they judged were unfair rates.

The final remnants of federal control on wellhead prices will expire on Jan. 1, 1993. An Energy Department official, who asked not to be identified by name, says the next big step is clearing away the 50-year-old ``regulatory morass'' which has resulted in monopoly distribution systems and monopoly pipelines.

Ways must also be found to boost pipeline capacity to bring more gas, for example, into the Mid-Atlantic and New England states where gas can replace both oil and electricity.

The most striking change for many Americans may come in the transportation sector with the increased use of natural gas vehicles, or NGVs.

Already, 300,000 NGVs are operating in Italy, 200,000 in the Soviet Union, and 110,000 in New Zealand. The US has 30,000, Canada has 20,000, and Argentina 15,000.

The gas association says several countries are prepared to sharply increase the number of NGVs, including the USSR, which is adding 300,000; Argentina, which will put another 135,000 on the road; and Indonesia, 100,000. Thailand (50,000) and Pakistan (21,000) are also moving toward NGV transportation.

In the US, environmental concerns rather than fuel shortages could produce a surge of popularity for natural gas as a motor-vehicle fuel.

The 1990 Clean Air Act requires that owners of fleets of vehicles start using clean-fuel cars and trucks in the 22 smoggiest cities before the year 2000.

The choice by the fleet owners won't necessarily be natural gas. They could opt for ethanol from corn, methanol, electricity, or even an improved gasoline. But already 30,000 vehicles fueled with compressed natural gas are operating in California, Texas, and other states. Natural gas is powering trucks, vans, cars, and ``a lot of school buses,'' an AGA official says.

In addition to environmental benefits, gas has security advantages for the US.

By speeding up the construction of pipelines and establishing regulatory reforms, federal officials hope that gas will replace 300,000 to 400,000 barrels of imported oil per day after 1995, according to the National Energy Strategy released last month by President Bush.

A study by the AGA estimates that, within 10 years, gas could displace 1.7 million barrels of oil per day, or about one-fourth of current imports of petroleum.

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