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Ohio Steel Council Sounds Alarm on High Natural Gas Prices; Supports Rep. Hagan's Proposal to Open State Lands and Lake Erie to Drilling

Posted on: Thursday, 20 October 2005, 12:00 CDT

COLUMBUS, Ohio, Oct. 20 /PRNewswire/ -- As one of the largest energy users in the state, Ohio steel producers are expressing grave concern over natural gas prices, which have increased 400 percent in five years. In the most recent price run-up, natural gas costs per ton of steel produced have tripled.

The Council is urging state legislators to consider a more flexible yet environmentally sound policy to open Ohio public lands and the Great Lakes to oil and natural gas drilling and extraction. The Council is also calling for the streamlining of the approval process for new pipelines to bring additional supplies to Ohio.

The Council supports a proposal by Ohio Rep. John P. Hagan (R-Alliance) to bring oil and gas wells to Ohio's public lands and Lake Erie. Hagan is expected to introduce legislation in the next three weeks.

However, the United Steelworkers of America (USWA), which is a voting member of the Council, does not support the proposed legislation. Rather, the union backs the Apollo Initiative, which calls for large scale federal commitment to the development of renewable energy resources, including wind, solar and biomass, as well as conservation incentives.

Steel producing companies also support the development of alternative and renewable energy resources, but maintain that government policy must address the immediate supply and availability of conventional energy resources. Ohio steel producers have made great strides in reducing consumption of both natural gas and electricity per ton of steel produced.

"Hurricanes Katrina and Rita exposed the vulnerability of concentrating so much of our nation's energy infrastructure in a small geographic region of the country," said William Brake, co-chairman of the Ohio Steel Council and executive vice president, Eastern Operations for Mittal Steel USA.

"In Ohio, we must do all we can to develop our ample, native energy resources, so we can ensure adequate supplies. This will not only protect jobs, but also will protect both residential and industrial consumers from the extremes of price volatility. While exercising good environmental stewardship, we should investigate all possible options, including drilling and extraction on public lands and in Lake Erie," Brake said.

Steel producers favor the following measures to increase the supply and lower the cost of energy resources nationwide and in Ohio:

- Opening of additional federal lands and offshore lands that are currently undrillable due to land use restrictions; - Expediting the permitting process for exploration on federal lands and the Outer Continental Shelf; - Increasing natural gas pipeline capacity and streamlining the approval process for new natural gas pipeline projects; - Revising the current Power Pool Committee-determined price of electricity to meet a just and reasonable standard.

Collectively, the nine steel companies that make up the Ohio Steel Council spend nearly $1.5 billion annually for energy to operate their Ohio-based plants. Of this cost, approximately $1 billion is spent on natural gas, or about 5 MCF (thousand cubic feet) per ton.

The price and availability of natural gas also affects electricity prices. The wholesale cost and eventually retail cost of electricity is set to soar due to high natural gas costs. The Ohio steel industry purchases more than 8 billion-kilowatt hours, or more than $300 million, of electricity each year and will bear a huge share of the increased costs.

The Ohio Steel Council is a public-private partnership designed to strengthen ties among the steel industry, the state of Ohio and its citizens. The Council's member organizations are AK Steel Corp., Lorain Tubular Operations (of U.S. Steel), Mittal Steel USA, Ohio Department of Development, Ohio House of Representatives, Ohio Senate, The Ohio State University, PRO-TEC Coating Company (a joint venture of U.S. Steel and Kobe Steel, Ltd.), Republic Engineered Products, Inc., Stark State College of Technology, The Timken Company, United Steelworkers of America, V&M STAR, WCI Steel, Inc., and Wheeling-Pittsburgh Steel Corp. For more information, visit http://www.ohiosteel.org/.

For more information, contact: Tim Bennett 1-800-OHIOSTL (1-800-644-6785)

Ohio Steel Council

CONTACT: Tim Bennett, +1-800-OHIOSTL (+1-800-644-6785), for the OhioSteel Council

Web site: http://www.ohiosteel.org/

Source: PRNewswire

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