Wall Street Journal, July 31, 2008

by Siobhan Hughes

WASHINGTON -- Chesapeake Energy Corp. Chief Executive Aubrey McClendon, trying to capitalize on potential U.S. gas discoveries, stepped up his campaign Wednesday to persuade Congress to encourage broader use of natural gas.

Mr. McClendon told a U.S. House committee that the country could attack rising gasoline prices and climate change by converting more coal plants to gas and using tax credits to spur sales of more natural-gas vehicles. He said this could be done without raising prices for fertilizer, chemicals and other products that are made with natural gas.

Asked whether natural-gas supplies were enough to reduce the nation's reliance on coal-fired plants to about 35% of electricity, from 50% currently, without raising natural-gas prices, Mr. McClendon said: "Three years ago I would have said, 'no.' Today I say, 'yes.' "

Mr. McClendon was appearing before the Select Committee on Energy Independence and Global Warming.

Some regulators and companies that use natural gas are concerned that natural-gas prices will rise if the government adopts policies to increase its use. "We are concerned that adding new uses for natural gas, such as in transportation, will create new and relatively inelastic demand that we may not be able to meet without high prices," Rich Wells, a Dow Chemical Co. vice president, said in prepared testimony.

Behind the gas industry's recent efforts to promote its product as a solution to high oil prices are recent discoveries in northern Louisiana and Texas, along with discoveries in an area that stretches from western New York to Virginia.

A new report financed by The American Clean Skies Foundation -- a group started and now chaired by Mr. McClendon -- showed that the country has more natural gas than previously thought.

Write to Siobhan Hughes at siobhan.hughes@dowjones.com