Mar 23 - McClatchy-Tribune Business News Formerly Knight Ridder/Tribune Business News - John Stancavage Tulsa World, Okla.

The world's energy markets are being reshaped by alternative fuels, new technology and production from nontraditional areas, a federal official said Thursday.

Suedeen Kelly, a member of the Federal Energy Regulatory Commission, spoke at the University of Tulsa College of Law.

In a speech to students, Kelly said the energy law field offers a variety of job prospects. She said she has held about a dozen positions in the past 27 years, including stints as a university professor and lawyer in private practice.

Kelly began her five-year FERC term in December 2004.

After talking to TU students, Kelly said in an interview that energy markets in the United States and abroad are changing rapidly.

One trend is the growing interest in renewable energy, such as wind power and biofuels. Wind power uses tower-mounted propellers to generate power, while biofuels are created from products such as corn or sugarcane.

"Currently, about 7 percent of domestic energy production is from renewable sources," Kelly said. "That will grow as more states look to diversify their economic base by harvesting renewable resources."

A related trend involves new systems that will

generate power from the waves and currents found in oceans and rivers. One test project is under way in the East River in New York.

"We've seen a flood of interest in this type of technology," Kelly said. "In fact, we've received so many applications for wave and current power that we've had to stop taking them."

The energy industry also is working hard to recover fuels from nontraditional areas, she said.

Two are the Barnett Shale, a 5,000-square-mile natural-gas field in northern Texas, and the Fayetteville Shale, a slightly smaller leasing area in north-central Arkansas.

In those fields, producers are using new technology to recover gas that's been trapped in hard, black shale for 300 million years.

"We've seen a 2 1/2-fold increase in pipeline capacity out of the Barnett Shale alone since 2003," Kelly said. "We expect that it will continue to increase."

Production from areas like the two shale formations is helping offset declines in production from more traditional areas, she said.

Growth also is being seen in liquefied natural gas. LNG currently represents 3 percent of the nation's energy supply, but that could grow to 17 percent in 10 years, Kelly said.

Much of today's LNG comes from Trinidad and Tobago, Nigeria and Algeria. Other countries are looking to add production, however, such as Russia, Norway and Libya.

Major energy companies, including Exxon Mobil Corp., are building LNG facilities, Kelly said.

The nation's financial markets are taking notice of all these trends, she said.

"There has been more investment recently by private equity firms," Kelly said. "They're be ginning to look at long-term investments, especially in advanced energy technology. That is different for these firms."

Turning to the consumer side of the market, Kelly addressed concerns about potential problems that could be caused by a particularly hot summer.

"The electric grid will be OK," she said. "But many parts of the country are strapped for generation capacity."

New ways to encourage energy conservation and add incentives for large and small users to control power use could help the situation, she said.

FERC is an independent agency that regulates the interstate transmission of electricity, natural gas and oil. FERC also reviews proposals to build LNG terminals and interstate natural gas pipelines, and licenses hydropower projects.

------

John Stancavage 581-8314

john.stancavage@tulsaworld.com