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Show 1985 GRI BASELINE PROJECTION OF GAS PRICE TRENDSa- ADVANCED TECHNOLOGY SCENARIO (1984$/MMBtu) 1984 1990 2000 2010 Natural Gas 2.55 2.84 4.40 4.98 Supplemental Supplies 4.02 3.77 4.87 5.97 Average 2.62 2.92 4.50 5.33 a Weighted average price at wellhead, border or plant gate. Figure 7 GRI'S INDUSTRIAL R&D PROGRAM The industrial sector has traditionally been a major market for natural gas. Despite the historical importance of natural gas in the industrial market, consumption has been decreasing in absolute terms. Declining demand for natural gas remains a major concern of the regulated gas industry and an issue of nationwide importance. The negative consequences of the erosion of this vital market have become increasingly apparent: a higher cost for providing service to all gas users, especially the residential consumers; increased dependance on foreign energy; and the serious impact upon the environment resulting from the combustion of dirty fuels in industrial processes or in the production of elec tricit y. The table below summarizes GRI's industrial utilization program budget for 1986. from residual fuel oil and coal. Uncertainty about fuel use legislation and customer apprehension that supply interruptions experiences in the 1970s could recur may also be significant. Load has been lost due to the perception that gas is "outdated" and electricity is "modern." The failure by traditional gas equipment manufacturers to update their products with the latest advances in materials, controls, and process technology have only assisted the growing use of electricity. New and innovative electric equipment is capturing markets once dominated by combustible fuels, predominantly gas. This has been accomplished by emphasizing electricity's high form value, defined as high end-use efficiency coupled with the ability to precisely control its application. Consumers of high form value energy sources, such as natural gas and electricity, pay more on a Btu basis but get their payback on the bottom line. Utilizing such technologies as laser, microwave and induction, electric equipment is finding application in a variety of processes such as metal melting and heat treating, glass annealing and tempering, and food drying. The success of electric equipment in the industrial sector has been achieved by focusing technology development on productivity, product quality, precise control, automation, cleanliness and operator convenience. These are the current concerns to end users and must be considered in the development of new gas-fired equipment in order to retain or increase industrial gas demand. The continued use of gaseous fuels in industrial applications through introduction of improved equipment provides a variety of TABLE 1. GRI PROJECT AREA BUDGETS Industrial Energy Systems Advanced Heat Transfer Systems Burner Systems Developments Metals Industrial Processes Nonmetals Industrial Processes Industrial Materials & Components Total - Industrial Utilization Several factors are affecting the utilization of gas in industry. The gas industry has suffered along with most of the industrial sector over the last several years as increasing foreign competition has forced the venerable smokestack industries to restructure their outdated methods of manufacturing and marketing products. Gas sales have been affected by energy conservation measures and price competition 11 1986 $ 5,240,000 2,700,000 2,700 ,000 3,900,000 3,000,000 1,800,000 $19,340,000 important consumer benefits, including: a) the reduction of manufacturing costs through improved productivity and process efficiencies; b) the maintenance of U.S. manufacturing competitiveness in the international marketplace; c) enhancement of industry's ability to expand operations and still comply with environmental regulations on process emissions; and d) the ability of gas utilities to maintain or increase gas |