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CRISIS BOOSTS NATURAL GAS INDUSTRY

CRISIS BOOSTS NATURAL GAS INDUSTRY

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As America feels increasing pangs from the latest oil crisis, the natural gas industry sees an opportunity to grow.

Increased use of natural gas ``will keep us from sending the money over to Saddam Hussein and other Arabs,' contended Robert A. Hefner III, a leading gas explorer from Oklahoma City.Supporters say natural gas is cheaper and cleaner, with a plentiful supply in North America that's free of supply disruptions caused by Mideast political strife. More than 90 percent of the gas used in this country is produced domestically, with most of the rest from Canada.

While oil prices have shot up in chaotic trading since Iraq invaded Kuwait, pushing up the cost of gasoline and home heating oil, natural gas has moved up only in a predictable response to the coming cold season.

With oil trading above $30 per barrel, the cost of an equivalent amount of natural gas, 6,000 cubic feet, is about $9.

Natural gas now has about 24 percent of the energy market, and the American Gas Association has its sights set on a 28 percent market share by the year 2010.

Uncertainty from the Iraqi invasion has prompted gas producers to push themselves even harder lately through advertising and lobbying.

The AGA says some 20 new pipeline projects that now await regulatory approval could quickly cut the need for foreign oil by bringing more gas into three regions: the Northeast, Florida and California. The industry says demand for gas in those areas is greater than the current infrastructure can support.

``We could replace roughly 160,000 barrels a day within 60 days,' said Michael German, senior vice president with AGA. ``We could displace 480,000 barrels a day within a year. We could displace 1.3 million barrels a day within five years.'

Energy Secretary James Watkins told the Senate Energy Committee on Thursday that the government would seek faster ways to cut through the red tape.

Watkins, however, offered more modest figures for the amount of oil that could be replaced. He put the figure at 55,000 barrels per day by 1991, 300,000 barrels by 1992 and 600,000 barrels by 1994.

There is also strong opposition to some proposed pipelines by local groups, who say construction of the underground lines would damage the environment. Some are also afraid of leaks and accidents, although the industry claims transporting natural gas is safer than moving other kinds of fuel.

Automobiles present another frontier for natural gas. It can power cars more cleanly and at about 70 cents per gallon, the industry says, compared to prices of more than $1.25 lately for a gallon of gasoline.

But its limited use keeps startup costs high. At present, natural gas is being tried mostly by motor fleets in the United States, although some people envision the day when consumers will drive natural gas cars that are filled up overnight by machines set up in the garage.

Hefner views natural gas as the logical successor to oil, the same way oil replaced coal as the fuel driving the nation this century. He would like to speed things along by imposing a $1 per gallon tax on gasoline to force consumers to pay the entire cost of their fuel.

As he sees it, the government is propping up a dying oil industry though such multibillion-dollar acts as the deployment of troops to the Persian Gulf and the storage of crude in the U.S. Strategic Petroleum Reserve.

``If the oil companies or the producers had to pay the bill to ensure the free flow of oil, they couldn't pay the bill,' Hefner said.

The AGA, however, is not ready to endorse a gasoline tax, although its members would benefit.

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