Exhibit 3 DOE R&D Program is Out of Balance with Future Energy Needs *1991 GRI Baseline Projection of U.S. Energy Supply & Demand to 2010 Petroleum 41.8% The American Gas Association (A.G.A.) is currently involved in the process of developing a position on S. 341, the National Energy Security Act of 1991. It is unfortunate that our decision making process does not coincide with your March 7 hearing date. The A.G.A. Board of Directors will meet on March 14 and shortly thereafter we will be filing written comments with the committee. We appreciate your recognition of the need to streamline the pipeline construction process. We hope you can appreciate the process we now have underway with our 250 distribution and transmission member companies to provide you and the Committee with our analysis and a meaningful position that addresses the specifics of your legislation in a tangible constructive way. I appreciate the opportunity to bring this matter to your attention. Sincerely, Mike Baby Michael Baly III CC: Members of the Senate Energy & Natural Resources Committee STATEMENT OF THE AMERICAN GAS ASSOCIATION ON TITLE VI OF S. 341 THE NATIONAL ENERGY SECURITY ACT OF 1991 March 7, 1991 Introduction Mr. Chairman and Members of the Committee: The American Gas Association (A.G.A.) is a national trade association comprising some 250 natural gas distribution and transmission companies serving over 174 million natural gas consumers throughout the United States. We appreciate this opportunity to present our views on S. 341 as it relates to natural gas-related research, development and demonstration (RD&D) conducted or sponsored by the Department of Energy (DOE). The American people recognize that greater energy security, improved air quality and energy efficiency are essential to a strong U.S. economy and helping us retain a competitive edge. Enactment of the Clean Air Act Amendments (CAA) and the various national energy strategy (NES) initiatives are a first step in reaching these goals. Sections 6003, 6004 and 6005 of S. 341 should serve as a model for the RD&D programs that will yield the most benefits in the least amount of time. To define these programs further and provide for sufficient funding allocations, the gas industry is proposing a 10 year RD&D program that truly supports the efforts and ideals laid out in the CAA and the NES. To inaugurate this program, the natural gas industry is recommending an authorization and appropriation of $214.9 million for all DOE gas-related RD&D in Fiscal Year (FY) 1992. This total is broken down as follows: $165 million for gas utilization R&D in both DOE'S fossil energy and conservation programs, and $49.9 million for gas supply research in the fossil program. The primary thrust of this major expansion of natural gas related federallyfunded research is to develop the technology that will allow natural gas to make a major contribution to the nation's environmental and energy security needs. Natural gas cannot fulfill its full potential without the proposed RD&D. The Importance of Gas-Related Research As an abundant domestic resource, natural gas can play a significant role in the nation's energy balance and has the potential to make a meaningful contribution in cleaning up the environment. Natural gas is our nation's cleanest burning fossil fuel -- its combustion emits virtually no particulates or sulfur oxides, and it produces far lower emissions of ozone precursors, carbon monoxide, and other pollutants per unit of energy than coal or oil. In addition, A.G.A. and the DOE National Energy Strategy estimate that natural gas could displace up to 1.7 million barrels of imported oil per day within ten years. An A.G.A. analysis is attached. Intensified RD&D programs focused on gas utilization technologies appropriately backed by continuing gas supply RD&D must be undertaken in order to expedite and expand this schedule and derive the accompanying environmental benefits. The gas industry recommends that Congress and DOE undertake a long-term (10year) natural gas RD&D program funded at $2.5 billion to augment the planned industry funding. Programs should include: stationary emissions and efficiency solutions; transportation fuel alternatives and emissions solutions; electrochemical energy conversion; and gas supply enhancement. A comprehensive 10 year program is -3 necessary to provide a level of consistency in research efforts that can support projects through to their completion and commercialization. To initiate these programs we recommend that this Committee authorize $214.9 million in FY 92 for natural gas RD&D. These funds should be allocated as follows: (1) $165 million for natural gas utilization programs to accelerate the availability of new technologies and reap the associated environmental, energy security and conservation benefits; and, (2) $49.9 million to support a continuing natural gas supply RD&D program. This will supplement gas industry, gas equipment manufacturer and producer efforts with estimated funds in the range of $200 million and $215 million in FY 92, for utilization and supply, respectively. This natural gas industry initiative requires funding only for those technologies that are essential and prudent for the orderly development of advanced and new gas utilization and supply methods and processes that will enhance greater energy security, improved air quality and energy efficiency. Recent events in the Middle East underscore the need for better utilization of our nation's indigenous resources. This recommendation for a total amount of $214.9 million is required because of the increasing urgency to promote low pollution end-use technologies and fuel efficiency. This in turn will help meet more ambitious national objectives that will take us into the 21st Century. S.341 We are pleased that Sen. Johnston and the cosponsors of the National Energy Security Act of 1991 are proposing to authorize funds for natural gas research and development that are intended to increase America's energy security in ways that are |