ENRON CHAIRMAN KEN LAY PROMOTES NATURAL GAS IN TESTIMONY
BEFORE REPUBLICAN PLATFORM COMMITTEE
HOUSTON, April 13 /PRNewswire/ -- A national energy policy should exploit America's strengths to achieve aggressive environmental protection and robust economic growth, according to Kenneth L. Lay, chairman and CEO of Enron Corp. (NYSE: ENE), in testimony today before the Republican Platform Committee in Kansas City. The country's record of productivity, prosperity and global leadership suggest that America has been successful playing to her strengths. The country should continue this success through national policies that promote one of America's greatest strengths--natural gas technology, Lay noted.
"In the interests of environmental stewardship, economic growth and job creation we must commit ourselves, as a matter of national policy, to enhance the natural gas industry's world leadership position," Lay said.
The environmental benefits of natural gas are readily identifiable, Lay said. A new natural gas combined cycle power plant eliminates 58 percent of the C02 emissions produced by a comparably sized coal plant; produces virtually zero S02 emissions; reduces N0x emissions by 80 percent, when compared with a new coal plant which meets U.S. New Source Performance Standards; and produces no solid waste.
According to Lay, environmental protection and economic growth do not have to be mutually exclusive. In fact, natural gas power generation is not only cleaner, it is at least 30 percent less costly, per kilowatt hour, than coal-fired electricity over the life of the plant, using natural gas supplies purchased under long-term contracts. Nuclear power costs about twice as much, per kilowatt hour, as gas fired combined cycle power generation. From an American competitiveness standpoint and a consumer perspective, it is in the public interest to produce electricity as efficiently and cost effectively as possible, Lay noted.
"A 1 cent per kilowatt hour decline in average consumer electricity prices would put an additional $432 dollars per year into the pockets of an American family of four to save, invest or spend in our economy."
Encouraging greater reliance on natural gas in homes, industry and motor vehicles not only improves the environment, it can displace foreign oil, create jobs and reduce America's vulnerability to oil shocks, Lay noted.
A natural gas vehicle emits 80 to 90 percent less reactive hydrocarbons and carbon monoxide (C0), the main contributors to smog, than a gasoline fueled vehicle. Replacing oil with natural gas in stationary applications virtually eliminates S02 and C0 emissions and reduces C02 by 30 percent.
Displacing foreign oil with domestic natural gas also creates American jobs.
"Approximately 16,000 new American jobs would be created and our trade deficit would be reduced by $750 million for every 100,000 barrels per day of foreign oil displaced with domestic natural gas," Lay said. "Displacing 1 million barrels of foreign oil per day would increase domestic gas demand by 2 trillion cubic feet, create 160,000 new jobs, and reduce our trade deficit by $7.5 billion."
The U.S. currently imports approximately 8 million barrels of oil per day, about 47 percent of total U.S. consumption. According to the Department of Commerce, in 1991, the U.S. sent $44 billion overseas to pay for foreign oil, accounting for two-thirds of the nation's total merchandise trade deficit. This amounts to more than our country's total trade deficit with Japan. As the war in the Persian Gulf demonstrated, America is vulnerable to oil shocks, Lay noted.
"We must reduce our reliance on oil and reduce America's vulnerability to unstable energy supplies," he said.
The U.S. has about 2.8 percent of the world's proven oil reserves compared to 65 percent in the Middle East. According to the Department of Energy, the U.S. has approximately 26 billion barrels of proved oil reserves and 35 billion barrels equivalent of natural gas and natural gas liquids proved reserves. America is believed to have at least 160 billion barrels equivalent of natural gas yet to be discovered and made available for production.
"With such large proved and potential natural gas supplies, it is indefensible that we use almost twice as much oil in our economy as natural gas and that we import from foreign sources almost half of the oil we use," Lay said.
U.S. energy policy planners tend to be pessimistic about near-term and reasonably inexpensive improvements in natural gas technology and optimistic about long-term, very expensive breakthroughs in items such as clean coal and nuclear technology, Lay said. The bias is reflected in the National Energy Strategy even though it includes a large role for gas, he added.
"Natural gas provides about 24 percent of all the primary energy consumed in this country, but only receives 6.5 percent of the U.S. Department of Energy's (DOE) research and development (R&D) budget. Coal provides an equal energy share to the country, but receives 30 percent of DOE's R&D budget -- almost five times that of natural gas. The federal budget for natural gas R&D is significantly underfunded and must be increased," he said.
Lay cited the need for the U.S. to reform natural gas pipeline regulation. Any significant effort by pipelines and their customers to serve expanding markets requires lengthy, costly and painstaking review by federal regulators, he said.
"This process stifles and discourages competitive innovation that would provide better service to customers and encourage economic growth. Regulators can safely grant much greater latitude to pipelines and customers to negotiate their own terms and conditions for service, acting more as a watchdog for abuse than a centralized planning agency for the industry."
The federal government also should encourage states to review and assess cost of service regulatory policies that may discourage electric utilities from choosing the most economic and environmentally sound technology option for electric power generation, Lay said. State regulatory policies may be preventing electricity consumers from reaping the benefits of reliable, lower cost and cleaner electricity, he noted.
"I have proposed that electric utilities and state public utility commissions adopt the "Natural Gas Standard," which simply means no new coal or nuclear power generating stations should be built unless they produce electricity cleaner, cheaper and more reliably than gas combined cycle plants."
According to Lay, natural gas could become the dominant primary energy source in North America by early next century if the correct federal and state policies are implemented.
Enron Corp., America's leading natural gas company with more than $13 billion in revenues and $10 billion in assets, operates the nation's largest natural gas transmission system; markets natural gas, natural gas liquids crude oil and refined products nationally and worldwide; owns 84 percent of Enron Oil & Gas Company, one of the country's largest independent (non-integrated) natural gas exploration and production companies; is one of the largest independent developers and producers of electricity in the United States and the United Kingdom, with extensive experience in combined heat and power installations; and is a leading purchaser and marketer of long-term natural gas supplies. Enron Corp. is traded under the ticker symbol, "ENE."
/CONTACT: Diane Bazelides of Enron, 713-853-6285/
(ENE) CO: Enron Corp. ST: Texas IN: OIL SU: SM -- NY055 -- 7776 04/13/92 12:42 EDT