This week, John Somerhalder, chairman of the American Gas Association (AGA) and chairman, president and CEO of AGL Resources, met with the New York Society of Security Analysts (NYSSA) to discuss the outlook for natural gas demand and supply. He also addressed some key issues regarding investment in the natural gas utility sector.
Dave Parker, who is retiring as president and CEO of AGA, also provided a political update, highlighting both the opportunities and challenges of the 112th Congress.
Somerhalder’s speech to the NYSSA officially kicks off his year as AGA chairman and gave the many analysts who cover the utility and natural gas space an opportunity to learn more about the state of the industry and his priorities for 2011.
Noting that the natural gas supply picture has never been brighter, he stated that, “currently, we have about 100 years of natural gas supply.” Somerhalder also said that this bright picture is reflected in the stable affordable prices that natural gas customers currently are enjoying.
Somerhalder told an audience of more than 100 analysts and industry executives that natural gas utilities continue to be a solid investment opportunity.
“Natural gas utilities have a consistent long-term track record of creating shareholder value,” he said. “They focus on fundamentals; they have healthy balance sheets and positive earnings trends. And thanks to the abundant supply of natural gas, utilities are now focusing on growing demand.”
Somerhalder added that the recent two-year extension of the 15-percent dividend tax rates will make dividend-paying companies such as natural utilities an even more attractive investment.
“We are especially pleased with this victory, which AGA worked very hard to achieve,” he told the audience.
Somerhalder also focused on demand growth by pointing out that at a time when America’s domestic supply of natural gas is at an all time high, it is critical for our industry to explore new market opportunities based on the clear price and environmental and energy efficiency advantages of the direct use of natural gas.
Leading AGA’s legislative and regulatory priorities for 2011 is pipeline safety,AGA is working with the U.S. Department of Transportation (DOT) on reauthorization of an effective, flexible and cost-effective Pipeline Safety Act. AGA is also working with DOT and state regulators on implementing a sound Distribution Integrity Management Program.
Touching on the transportation market, an especially attractive demand growth opportunity, he said that displacing oil with domestically abundant natural gas by expanding our use of natural gas vehicles can save money, reduce green house gas emissions and decrease our dependence on foreign oil.
“The bottom line is that America needs clean and abundant energy and natural gas utilities can meet that need. With all that natural gas has to offer, this is an exciting time for the industry and I am thrilled to capitalize on the many opportunities we have before us to provide safe, reliable and clean energy solutions to our customers.”