Energy Secretary Donald P. Hodel told the Senate yesterday that decontrolling "old gas" would give producers an "incentive" to discover 15 percent more reserves of this low-cost natural gas than they acknowledge.
Hodel, in urging the Senate Energy Committee to pass the Reagan administration's bill to decontrol all natural gas by Jan. 1, 1986, said lifting controls on gas from wells drilled before 1977 would reverse this past winter's trend, which saw surprisingly little "old gas" brought to market.
Under existing price regulations, the major oil companies, which control more than 70 percent of all old gas, could sell it this past winter to the large interstate pipelines for an average of only $1.38 per thousand cubic feet. New gas, in contrast, was sold at an average of $3.30.
Hodel said yesterday that while the Energy Department had anticipated a 15 percent decline in old gas production this past winter simply because the supply is diminishing steadily the decline was actually 24 percent.
C.M. Butler, chairman of the Federal Energy Regulatory Commission, said he saw no evidence that producers were "withholding" old gas from the market, but conceded that the producers currently do not "have much of an incentive . . . to get that low-cost gas to the market. It's a very low price."
But Hodel said natural gas industry representatives told administration officials recently that 2.5 trillion to 11 trillion cubic feet of "additional old gas would come into existence--or be available for the market--as a result of" removal of price controls.
The nation's old gas reserves currently are estimated at about 60 trillion cubic feet, Hodel said.
But Edwin Rothschild of the Citizen/Labor Energy Coalition, one of several groups contending that decontrolling old gas merely would give a $40 billion to $70 billion windfall to the major oil companies, termed it "fantasy to think the magic of decontrol will create more old gas."
"So the producers are now discovering new 'old gas,' " said Ann Lower of the Consumer Federation of America. "Well, that's the power of the industry. They can just sit on it. And that's all the more reason to keep controls on."