Arkansas natural gas industry execs to talk shop in Fort Smith

More than 220 officials with Arkansas’ natural gas industry will hit Fort Smith on Sunday (Sept. 27) to discuss the proposed federal cap and trade legislation, state energy efficiency programs and the future of an industry beset with low commodity prices.

The 2009 Arkansas Gas Association convention is set for Sept. 27-29 at the Fort Smith Convention Center and will include an anticipated speech by Colette Honorable, a commissioner with the Arkansas Public Service Commission, on “Hot Topics in Energy – 2009.”

Keith Cragg, the 2009 convention chairman and an employee of CenterPoint Energy, said the speeches by Honorable and Joe Peters, an energy-industry consultant with Black & Veatch, will be well attended. Peters’ speech — topic title is “Carbon Footprint — will focus on how state and federal energy efficiency programs might change the rules for natural gas utilities.

“We are very heavily swayed toward the energy efficiency program this year,” Cragg explained, adding that details of new state and federal program proposals remain somewhat elusive. “We’re not all clear on what those are, and I expect that Mr. Peters might lay that out for us.”

Cragg stressed that the AGA supports energy efficiency programs if they are “truly energy efficient for the customer.”

Likely to be the point of many formal and informal gas convention conversations is The American Clean Energy and Security Act of 2009, commonly referred to the cap and trade bill. It was approved by the U.S House of Representatives on June 26 with a 219-212 vote. U.S. Rep. Vic Snyder, D-Little Rock, was the only member of Arkansas’ delegation in the House to vote for the bill. It is now on the Senate calendar.

Among its numerous provisions, the proposed bill establishes a national energy production standard requiring 20% of retail electric sales to come from combined renewable energy and energy efficiency by 2020. The bill also establishes greenhouse cap and trade provisions that cover 85% of the overall economy, including electricity producers, oil refineries, natural gas suppliers, and energy-intensive industries like iron, steel, cement and paper manufacturers, according to the filing by Entergy Arkansas. (Link here for a recent story on the issue.)

Mike Callan, president of Fort Smith-based Arkansas Oklahoma Gas Corp., hopes the convention will give regulators a chance to address “competing interests” between natural gas utilities and their customers. Callan said existing regulations encouraging utilities to sell as much gas as possible don’t mesh well with new proposals that seek energy conservation.

“I am interested in seeing how we, as an industry and the government regulators overcome this conflict,” Callan said in a note to The City Wire. “Other states have done it and I’m confident we can too, but it is going to require everyone on both sides of the issue to think and act differently in the future.”

Conservation of natural gas has not been a big problem in recent years. The latest report from the American Gas Association reported Sept. 15 that the national underground storage of natural gas was 3,392 billion cubic feet, up 17% over the five-year average. Also, the natural gas exploration and production sector faces some of the lowest prices in many years. Although the low prices are good for customers, the $2.83 MMbtu rate is well below the $9-$11 prices seen within the past 18 months — and well below the price many producers need to keep drilling.

Cragg said industry officials also will talk more about how to incorporate best practices to respond to ice storms. The December 2008 ice storm that slammed northern Arkansas found some weaknesses in response plans, Cragg noted.

The biggest controversy, however, is not likely to center on the possible comprehensive trillion-dollar overhaul of the U.S. energy policy. Cragg admitted that not all competitors in the association’s Bar-B-Q Cook Off use natural gas cookers.

“Some of those guys are pretty hard core, you know. They are the guys who soak their wood chips before they get going,” Cragg said with a laugh.