The upcoming winter has special significance. It arrives at a time when a confluence of factors are present that will go a long way toward determining the future success of gas as a significant force in our country's energy mix.
The most important of these are the final steps being taken to implement the operational and transactional framework that has evolved under Order 436 and that was recently given its latest push by Order 636. Other factors include the final decontrol of all wellhead prices, scheduled for January 1,1993, under the Wellhead Decontrol Act of 1989, and the burgeoning efforts by producers and others to demonstrate the solid attributes of natural gas, which in many quarters have earned it the justifiable sobriquet of "fuel of the future.'' We also come into the upcoming season on the heels of a long-term, relatively stable, low (some would say depressed) price environment.
Major Issues Are Supply and Price
How likely is it that conditions this winter could submarine the progress producers have made in recent years? In our view, not likely, even if we experience a winter colder than those of recent times.
Supply Assurance: Improved Since 1989
With respect to supply reliability, some observations are in order. First, when we talk of supply reliability we are not just talking about production capability or wellhead deliverability as we did in the 1970s. To the customer, supply reliability today means not only the ability of the producer to produce but also the ability of the transmission and distribution systems to deliver the commodity where and when he or she needs it. Thus, supply-reliability issues, for which producers were the whipping boy in the 1970s, are now everybody's business, particularly with unbundled pipeline services, the proliferation of shorter-term sales transactions, and the imminent demise under Order 636 of the pipeline's city-gate service obligation.
Also, everyone, but most particularly those government officials with the power to affect change in the gas industry, must accept the fact that no human endeavor, be it supplying gas or brushing one's teeth, can ever be made William T. Benham is vice president for regulatory affairs ofAmoco Production Company in Chicago. He is responsible forregulatory and leghlativepolicy development at both the federal and state levels.