361 



Mr. DeFazio. Thank you. Let's go to a couple of questions. Mr. 

 Hathaway, I know we've had this discussion before, but why don't 

 you give me an update on what is the long-term outlook for gas 

 supply and costs, briefly, given the fact that a lot of questions 

 about Tenaska revolve around that? 



Mr. KD^THAWAY. If you consider, and we need to consider in the 

 Pacific Northwest, too, natural gas availability, first of all, in the 

 lower 48 states and in Canada, the estimates purely for the U.S. 

 are that we have about a 60-year supply of conventional gas re- 

 serves. 



Added to that are what, for lack of a better word, to lump them 

 together, but what would be called unconventional reserves, and 

 those are gas reserves in the ground that require technology, high- 

 er costs to get out, but which, nonetheless, are there and, under the 

 right economic circumstances, can be brought forth; probably, an- 

 other estimate range, fi*om 100 to 150 years worth of natural gas 

 resources altogether, certainly enough to take us into an era where 

 we're going to be much more dependent upon renewables. 



We buy a lot of gas fi*om Canada. The reserves in Canada, I 

 think, are going to prove to be even better, from our point of view. 

 We buy about 65 percent of our gas fi*om the Canadian reserves 

 now. 



One of your earlier witnesses commented on the concern about 

 being dependent upon Canada and cited the time back in the early 

 1970s when the Canadians raised the price of gas tremendously. 

 Over the period, I think they raised it by about a factor of seven 

 times at one point. 



The result of that was that we shifted our use and other utilities 

 who purchased from Canada shifted our use to a much higher per- 

 centage of domestic resources, something like 70 to 80 percent. 

 And, at the same time, we xmderwent the deregulation processes 

 and deregulated the price of gas in the U.S. 



The result of that has been a surplus of natural gas that has per- 

 sisted since about the late 1970s. The price of Canadian gas very 

 quickly came back down to become competitive, very competitive 

 with U.S. resources. And the Canadians changed their entire pol- 

 icy, their national policy, because there were far more of the re- 

 sources than they could ever consume domestically, that it was tar- 

 geted as a resource for export and that it would be priced along the 

 border at whatever the necessary market price was to export it. 



Maybe it's a longwinded way of saying that I think we have 

 enough natural gas to get us into the era of true renewables, which 

 we will, I think, approach long before we run out of the resource. 



Mr. DeFazio. Thank you. One thing that seems common among 

 the emphasis of the other witnesses on the alternate energy con- 

 servation resources is capital and money. I would just like to ex- 

 plore that a little bit in terms of— now, with CARES, this wind 

 project, are you issuing the debt with any guarantees fi-om BPA or 

 are you issuing the debt on your own? 



Mr. Johnson. The bonds will be issued by CARES, which is a 

 mxmicipal government in the State of Washington, but they will — 

 there are guarantees by Bonneville. I've probably got somebody 

 here that can give you some of the details. 



Mr. DeFazio. Which would bring down, obviously, the premium. 



