With jobs in mind, energy belt talks up natural gas. If only there weren't a glut on the market
Austin, Texas — Last year Oklahoma Gov. Henry Bellmon had his car converted to use liquefied natural gas. It was a largely symbolic gesture, since the average consumer cannot pull into the local gas station and ``fill 'er up'' with natural gas. But it indicates the potential of natural gas production for states such as Oklahoma, Texas, and Louisiana, where gas has long taken a back seat to crude oil.
Despite a major loss in energy market share over the past 15 years, natural gas holds greater economic promise for energy states than its vaunted relative, petroleum, experts say.
``Much of Oklahoma's potential for petroleum liquid is history,'' notes Jock A. Campbell, senior petroleum geologist with the Oklahoma Geological Survey.
``Nothing would more immediately affect jobs in Texas than gaining back the natural gas market,'' adds John Sharp, a member of the Texas Railroad Commission, which regulates the state's oil and gas industry.
With domestic crude-oil production falling and petroleum imports boosting the United States trade deficit, natural gas experts say development of huge domestic natural gas reserves can help ease the nation's energy dependence. At the same time, they say, increased use of natural gas would do the environment a favor, since it is one of the cleanest forms of energy available.
Democratic presidential candidate Michael Dukakis has drawn renewed attention to natural gas. He proposes a stronger energy belt-frost belt connection through natural gas delivery as a way to boost the lagging economies of energy-producing states while providing the Northeast with energy it needs.
``You've got it, we want it,'' the Massachusetts governor has often stated on campaign swings through gas-producing regions.
The energy states do indeed have it. A study released by Energy Secretary John Herrington last week shows that the contiguous states hold more than 60 years' supply at current consumption - more than a third of it in Texas. The study says natural gas could cut crude-oil imports by 1 million barrels a day.
Another study from Southern Methodist University projects recovery by 1992 of as many as a third of the 300,000 jobs Texas has lost this decade - and growth in state and local revenues by more than $900 million - if natural gas prices rise to reflect increases in other fuel oils.
That is a very big ``if,'' however, given the current ``bubble,'' or oversupply, of natural gas that has resulted in part from lost demand. Since 1973, the percentage of US energy consumption filled by natural gas has fallen from just over 30 percent to 23 percent.
No one expects that recapturing lost markets will be easy. Following predictions of natural gas shortages in the mid-'70s, large utility users diversified to include other energy sources, and conservation measures reduced demand. Also, many large industrial users, such as the steel industry, have shrunk over the past decade and are unlikely to return to old levels of use.
``Market share is not an easy thing to gain back,'' says Tom Haywood, executive director of the North Texas Oil & Gas Association. ``A new coal-fired plant has a 20-year lifetime, so during the life of the plant you can't get that market back.''
Some energy experts are concerned that, with imports covering about 40 percent of domestic energy consumption, the mere existence of domestic natural gas supplies will not be enough impetus to produce gas. This could leave the country open to another energy shortage in the event foreign sources are cut off.
Last year the 1978 Fuel Use Act was repealed. The act required utilities to diversify their energy-generating fuels to reduce dependence on natural gas. Natural gas promoters are hoping the repeal will help stimulate a return to their product.
``This is a window of opportunity to regain the market share,'' says oil and gas regulator Sharp, in California this week to drum up interest in gas. Mr. Sharp, who has become one of Mr. Dukakis's energy advisers, is arranging a conference this fall for gas producers and Northeast utilities and consumers.
Also actively seeking new markets for natural gas is Texas Land Commissioner Garry Mauro, who has worked to forge a coalition between natural gas interests and environmentalists. Mr. Mauro is also working with metropolitan transit authorities and other public agencies owning fleets of vehicles to encourage conversion to natural gas.
Vehicles running on natural gas produce negligible amounts pollutants resulting from conventional gasoline engines.
``We can do some things for the environment that we've been trying to do for a long time,'' says Joe Tucker, marketing coordinator for the Oklahoma Natural Gas Company. He estimates as many as 40,000 vehicles in the US run on compressed natural gas. Conversion of a gasoline vehicle costs about $2,500, but the price of the fuel is about 36 cents a gallon, for roughly equivalent mileage.