April 2014, Vol. 241 No. 4


Making America Understand Benefits Of Natural Gas Top Priority For AGAs Gregg Kantor

Rita Tubb, Executive Editor

The American Gas Association (AGA) elected Gregg S. Kantor to serve as Chairman of the Board of Directors for 2014. Kantor is president and CEO of NW Natural. Headquartered in Portland, OK, NW Natural provides natural gas service to 689,000 residential, commercial and industrial customers in Oregon and southwest Washington. It is the largest independent natural gas utility in the Pacific Northwest.

Kantor became president and CEO of NW Natural in 2009, having joined the company in 1996 as director of Public Affairs and Communications. He later was senior vice president of Public and Regulatory Affairs from 2003-2006, executive vice president from 2006-2007 and president and COO from 2007-2008.

With nearly two decades of leadership experience in the natural gas industry, Kantor’s commitment to his community and his background in environmental and urban planning make him well-suited to advance the role of natural gas. Here, Kantor speaks candidly about America’s unprecedented chance to chart an energy path toward a clean and secure future while keeping prices at an affordable level. He outlines how utilities will help lay the groundwork to support increased usage so that the nation and customers benefit.

P&GJ: What is the first priority of AGA members?

Safety is hands down the top priority for AGA and its member companies. This has consistently been our first priority and always will be. There are many factors that go into carrying out AGA’s Commitment to Enhancing Safety. Whether it’s joining as an industry to foster and enforce a culture of safety throughout the workforce or investing in our physical and cyber infrastructure, AGA and its member companies are constantly focused on safe and reliable service. As one example: The dedicated efforts of natural gas utilities to replace pipe no longer fit for service and reduce cast iron pipe, as well as to enhance maintenance and monitoring over the past three decades, have led to a nearly 90% decline in serious pipeline incidents.

The U.S. Department of Transportation says the pipeline network we operate is the safest energy delivery system in the country and this record is getting better all the time. Natural gas utilities spend more than $19 billion annually to help enhance the safety of gas distribution and transmission systems. In 2014, we’ll continue to invest in natural gas infrastructure – in expanding and upgrading natural gas systems and in enhancing the day-to-day monitoring and maintenance of existing infrastructure. We’re committed to proactively collaborating with public officials, emergency responders, excavators, consumers, safety advocates and the public, and will work to improve communication and information sharing that effectively informs and enhances pipeline safety. We’ll support research and development of safety-enhancing technologies, conduct industry forums that facilitate the sharing of leading practices, and work to raise public safety awareness through efforts such as the “Call 811” program.

P&GJ: When you talk with AGA members, what do they express as their greatest concern?

Kantor: The discussion always returns to the same theme – defining the role for natural gas utilities in the transformation of America’s energy future and how we can lead a national conversation about gas. We are committed to continuing our core business of safe and reliable delivery while helping to fully realize the potential benefits of natural gas in all sectors of the economy.

We must make sure there is a fact-based credible discussion about natural gas emissions. Emissions from the natural gas sector are declining as a result of efforts from utilities to enhance the safety and efficiency of our infrastructure – currently just 0.3% of produced natural gas is emitted from systems operated by local natural gas utilities and that number is on a downward trend.

We’re really at an historic moment in the gas industry and in America’s overall energy landscape. The recent report by the American Gas Foundation and IHS CERA – “Fueling the Future with Natural Gas: Bringing it Home” found tremendous opportunity to grow natural gas demand across all sectors of the economy, and that local distribution companies can be a big part of clearing the way for that growth and providing the leadership and delivery infrastructure necessary to make it possible.

P&GJ: What do you see as the greatest challenge facing the gas utilities industry going forward?

Kantor: America can now chart an energy path that drives us toward a clean and secure future while keeping prices affordable for customers. Natural gas provides solutions for our economy and our environment. Local utilities have the ability and incentive to help the public understand what natural gas offers while also laying the groundwork that will support increased usage for our nation and customers. With natural gas, we do not need to choose between providing essential energy to people and protecting the planet, and it’s imperative that customers and businesses understand that when making their energy choices.

Utilities are focused on continuing that progress by investing in infrastructure and working to overcome the logistical and policy hurdles that impede growth. There is a lot of work to do, but we’re seeing significant progress in developing and implementing innovative rate designs and cost-recovery structures that will help companies grow their infrastructure without unduly burdening ratepayers. Eighteen states have adopted or are considering innovative pipeline expansion proposals to get gas to communities that don’t yet have it and that number is quickly growing.

In the Northeast we’ve seen increasing interest for greater natural gas use, but additional transmission infrastructure is needed to shield customers from seasonal volatility associated with increased demand on pipeline capacity from electric power generation. The governors of New England, where weather has really driven up demand for natural gas, announced they will work together to expand infrastructure in the region. Similar commitments from policymakers and stakeholders will facilitate and enhance the investment and construction activities of local natural gas utilities.

P&GJ: Are regulatory policies keeping pace with changes in the energy industry?

One key implication of the “Fueling the Future” study is that the nation’s transformed energy landscape, which is shaped by our supply of natural gas, needs visionary policies that reflect this new reality. Many existing natural gas policies were developed when gas was perceived to be scarce, and they need to be re-evaluated at all levels – local, state and federal – to identify new opportunities for gas utilities and for the benefit of more consumers. This includes supporting natural gas in transportation, evaluating fuel efficiency on a full-fuel cycle basis, and finding ways to encourage greater natural gas use in industry, manufacturing and power generation. We are not asking for government support, but rather for a level playing field where natural gas can compete fairly with other energy sources.

P&GJ: How has the natural gas industry held up under this record cold? What kind of a strain is this putting on the utilities?

Kantor: There’s no doubt this winter has tested the limits of supply and the industry’s ability to deliver that gas to homes and businesses. This test proved how significantly the shale revolution has transformed our energy landscape. The record cold demonstrated the positive impact that our record supply of natural gas which, when combined with the planning and performance of natural gas utilities, has provided reliable service while keeping costs relatively low for customers. We’ve seen unprecedented natural gas consumption this winter, but compared with cold-driven price spikes of years past, the rise in commodity prices has been relatively muted. Meanwhile, AGA member companies have been able to meet the rise in demand thanks to careful planning, a portfolio of supply resources and firm pipeline contracting.

P&GJ: Low domestic prices of natural gas have provided considerable savings for customers the past three years. Do you see a downside if low prices continue long term?

Kantor: With accessible U.S. supplies at their highest level ever, Americans can be assured there are sufficient natural gas resources to support a significant growth in demand throughout all sectors of the economy for decades to come. That’s good news, as increased use of natural gas will reduce emissions, enhance energy security and drive economic growth. The challenge – and the opportunity – lies in facilitating and nurturing this increase in demand to support a market dynamic that creates sufficient incentive for producers to fully develop our nation’s abundant resources.

When the price of natural gas falls below $4, many shale gas resource plays and traditional production models become less economically viable for producers, thereby skewing the supply-demand balance. AGA’s analysis finds that significant growth in demand can be supported within a relatively stable price band of $4-6.50 per MMBtu – a range that is stable and still comparatively lower than past levels and other energy choices.

P&GJ: What in particular would you like to achieve during your tenure as chairman?

Kantor: The atmosphere in Washington is characterized by a lot of polarization. When it comes to the conversation surrounding energy policy, there is a tendency for some to argue that we face an either/or scenario – that we can’t find solutions that work for both our economy and our environment. As the nation’s natural gas utilities, it is our responsibility to lead a dialogue that details how natural gas offers solutions on all fronts without having to compromise.

P&GJ: What led to your position as president and CEO of NW Natural Gas?

Kantor: My career trajectory is a bit circuitous when compared with other utility executives, but it’s given me a unique perspective on the intersection of energy, policy and business that guides my planning and decision-making. In college, I studied and earned degrees in geography and environmental studies, which drove me toward classes in energy policy and planning. This spurred a fascination for the role energy plays in our lives. Later, while working in energy, it was this interest in how energy shapes and sustains cities that prompted me to pursue a Masters of Urban Planning.

The more I studied it, the more I became interested in how politics and government drives these decisions. I pursued work in government and served as communications director for Oregon’s governor at the time. I joined NW Natural as director of public affairs and communications, and I think it was this experience in policy and communications, grounded in my academic background, that really sets my vision as CEO of NW Natural. I’m committed to public service and believe utilities really are at the intersection of business and public policy. We are responsible for a foundational piece of our nation’s infrastructure that affects almost everything we do as a society.

P&GJ: What is NW Natural Gas involved with concerning new construction?

Kantor: NW Natural is working on one of our largest construction projects in recent years. We just completed a 10-mile pipeline in the Corvallis area to bring greater reliability to customers there. We are expanding a nearby 30-mile pipeline in the Willamette Valley to enhance reliability and support growth in that area of our service territory. Both projects will allow more Oregonians to access natural gas.

P&GJ: Is there any new technology that your company is using, or available, you would care to comment on?

Kantor: We’re constantly exploring ways to enhance and expand our infrastructure, increase the efficiency of our operations and better serve our customers. As part of our focus on expanding service, and meeting the growing interest in natural gas, we’re taking advantage of the technology that is available today. We know that more and more Americans are getting their information through mobile devices, so we’ve created a new system that allows potential customers to go online from any device – computer, tablet or smartphone – to immediately determine whether they can get gas to their house.

We plan to expand this web-based portal to better serve our trade allies. Through a secure, personalized account, builders and HVAC contractors will be able to order service, track the progress of their orders and manage multiple projects. Both aspects of our web-based portal make it easier for customers to make the switch to natural gas.

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