Natural Gas Purchasing Workshop

The Natural Gas Purchasing Workshop was held in Indianapolis, Indiana, on November 3, 2003. Approximately 30 people from 10 transit authorities and 11 support organizations attended the workshop to learn about reducing fuel costs for natural gas–powered buses.

Experts gave presentations on natural gas supply, the natural gas market, stable fuel pricing, utility regulation, and how a transit authority can strike a good fuel purchasing deal.

DOE logo (top) APTA logo (bottom)

Meeting Summary

Dennis Smith from the U.S. Department of Energy (DOE) opened the workshop with an explanation of how a transit authority's consistent fuel use puts them in the driver's seat when it comes to negotiating a gas purchasing deal.

Next, the Gas Technology Institute's Bill Liss presented on natural gas supply and the transportation market. Drawing on information from a recent National Petroleum Council report, Liss showed that proven reserves could supply natural gas for up to 90 years at current levels of use (this number changes yearly as additional reserves are found). The price of natural gas moves with market demand, and well drilling activity depends on a price that allows for reasonable return on investment. The volatility of the natural gas market has increased owing to an increase in buyers on the spot market.

Jim Clarkson from Resource Supply Management and Mitchell Pratt from Clean Energy described opportunities for taking advantage of volatility in the natural gas market and the consistency of a transit authority's gas use. Using hedging techniques in planning long-term natural gas purchases allows for more accurate budgeting and protection from price volatility. There is risk associated with hedging (i.e., future prices are much lower than expected), but "the risk of doing nothing is the greatest risk of all." To take advantage of the marketplace, transit authorities must be flexible and be able to lock in purchases at any time of year. Pierce Transit's Gisela Ratajski reiterated the fact that flexibility in locking in the final natural gas contract price is key to a successful gas purchasing program.

In closing, Dennis Smith urged the assembled transit representatives to follow up with DOE's Tiger Teams for answers to questions about establishing an effective gas purchasing program. Attendees expressed interest in having the workshop repeated to reach more transit agencies and other large natural gas customers.

Slides from workshop presentations

Presentations

The workshop featured the following presentations.