A statement of natural gas policy delivered by Energy Secretary James R. Schlesinger Tuesday saying the United States should favor production of domestic gas including high-cost Alaskan gas over imports from Canada and Mexico, has drawn sharp criticism from the Senate.
Sen. Edward M. Kennedy (E-Mass.), in a statement released yesterday, said Schlesinger's "is a policy for protecting domestic gas from competition" and is geared "to clear out the gas glut, which embarrasses domestic producers."
Schlesinger, in remarks delivered in New York to a group of securities analysts, indicated that the Energy Department considers a major natural gas deal proposed by Mexico to be unacceptable, both because the price is too high and because it would undercut domestic production.
Kennedy, in his statement, said "Unless we encourage long-term gas supplies from Mexico, Mexico will never maximize oil production."
Sen. Lloyd Bentsen (D-Tex.) also sent a letter to Schlesinger yesterday saying, "Little more than a year ago, you canceled an agreement for the purchase of Mexican natural gas on the grounds that it was too expensive; today you appear to be arguing that because it is too cheap, it will suppress the development of domestic gas supplies."
During the debate over the administration's energy plan last year Bentsen was identified with oil producer interests, while Kennedy opposed efforts to decontrol new natural gas prices and the administration-backed natural gas compromise.
Schlesinger's speech, the administration's first comprehensive statement of natural gas policy since the energy bill's passage, said the United States should rely on domestic gas as much as possible to reduce dependence on oil imports, particularly since there is currently a surplus of natural gas.
"Use of this excess deliverability will permit us to reduce import requirements by some 400,000 to 500,000 barrels of oil a day," the secretary said. He also said that "it is essential to avoid chronic surpluses [of gas] having a dampening effect on incentives."
Schlesinger also appealed to the investment community to support the proposed $12 billion gas pipeline that would carry gas from Alaska's North Slope across Canada to the lower 48 states. "I want to urge all of you to remain sympathetic on this critical issue," Schlesinger said.
Schlesinger also said that the Energy Act, which includes complex natural gas pricing provisions, should allow the market to absorb the "gas bubble," as the gas surplus has been called.
The secretary's remarks were warmly received in industry circles, "Overall we're pleased that the secretary is emphasizing gas and the contribution it can make, and [is] urging people to burn more of it," said George H. Lawrence, president of the American Gas Association.
Northwest Alaskan Pipeline Co., the major backer of the Alaska gas line, also reacted favorably to Schlesinger's speech. "We are pleased because he places a high priority on getting Alaskan gas to the market," said Darrell MacKay, Northwest's vice president.