Author Archives: Chris Hogan

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 112^th 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.”

On Wednesday, January, 12, at the National Press Club here in Washington, D.C., the United States Energy Association hosted it’s 7th annual “State of the Energy Industry” forum.

This landmark event brought together leaders from the top oil, gas, electricity, renewables and nuclear associations.  Discussions focused on the future of energy and the roles of conventional fossil fuels, nuclear power and, increasingly, renewable sources of energy.

Dave Parker, president and CEO of the American Gas Association, was part of a panel focused on natural gas, oil and nuclear.  He discussed a range of issues affecting the natural gas distribution system and and noted that safety is the entire industry’s number-one focus.

Parker highlighted the increasingly important role of shale gas in domestic supply.  As demand for natural gas increases, distribution companies will be playing a larger role in the transportation of natural gas.  Parker also touched on the often neglected fact that natural gas is the primary backup fuel for many renewable fuels sources like wind power.

Keynote speaker Tom Kuhn, president of the Edison Electric Institute (EEI), talked about how business efficiencies need to be part of the equation when looking at the future of a cleaner and more efficient energy system.  He noted that renewables will be a key part of the utility industry moving forward.

Innovations in efficiency, another key topic throughout the day, also play an emerging role in utilities.  Kuhn pointed out that 90 percent of EEI members in 43 states are active in smart grid development and technology.

President and CEO of the Electric Power Research Institute, Michael Howard, stated that innovation continues and is moving the energy industry forward.  He said that a major challenge is to provide reliable, affordable and sustainable electricity. Navigating competing constraints like electric vehicles, demand response and efficiency, renewable energy, energy storage, controls and cyber security is also a key issue.

Howard noted that other larger challenges facing the future of energy supply and demand include the search for near-zero emissions, integration of renewables, evolution of the “smarter” grid and innovations to the energy distribution system. These increased opportunities to use power more efficiently will affect everything from data centers to residential appliances.

American Petroleum Institute president and CEO, Jack Gerard, spoke about the importance of domestic oil and natural gas production. Access and business certainty were his key themes.

Donald Santa, president of the Interstate Natural Gas Association of America, pointed out that natural gas has moved beyond the “bridge fuel” moniker.  He stated that natural gas, as President Obama recently pointed out, is an issue on which American can come together and through which we can move toward a smart energy future.

The heads of the nuclear and solar associations also highlighted the importance of a diverse and multifaceted energy mix. Both groups indicated that they foresee a growing demand for their energy sources as both technology and consumer familiarity increase.

As Dave Parker said during the discussion, “we need all these energy sources as we move toward the future.”