Nucor CEO urges Washington action on natural gas

March 28, 2006

"Now I don't expect our government to guarantee us low natural gas prices. I do expect that our government will not withhold natural gas supply that they control," said Dan DiMicco, Nucor Corp. vice chairman, president and CEO, speaking today at a press conference in Washington with other CEOs of industrial consumers and producers of natural gas.

DiMicco urged Congress to pass legislation to allow more production of natural gas from the outer continental shelf (OCS), including legislation on the OCS Lease 181 bill sponsored by Sen. Domenici (R-NM). He also asked Congress to expedite liquid natural gas site approvals and he called on the Administration to provide more resources "to cut the backlog in permits" on onshore areas already approved for drilling.

Describing how Nucor has to compete with foreign steelmakers with access to much lower cost natural gas, DiMicco revealed, "In 2005 there were times when Nucor was paying three to five times as much for natural gas as some of our foreign competitors." He noted that higher natural gas prices cost American iron and steel producers an extra billion dollars last year.

Explaining how the high gas prices " ... ultimately hit our employees hard in the wallet twice, in home heating costs and in their paychecks," DiMicco said that Americans and American industry are all hit a third way by rising natural gas costs as they drive the cost of electricity. "Our over reliance on natural gas for electric generation has compounded the country's need for more gas supply. The result ... is both higher, and wildly volatile, natural gas prices, and consequently higher electricity prices," he added.

DiMicco continued, "We have been our own worst enemies on this issue. We, as Americans, were urged to use clean burning natural gas to heat our homes and generate our electricity, thereby increasing demand for gas dramatically (over 27%) but were denied the opportunity to increase the supply here at home or by bringing in liquified natural gas from overseas. We can't have it both ways. If we want to dictate the use of clean burning natural gas for its environmental benefits, then we must allow for significantly increased drilling in previously restricted areas to bring us both the supply and pricing necessary to not penalize our families and our jobs. This is a must!"

The CEO cautioned that additional natural gas supplies would not be enough. "We need both more gas supply and more efficient use of gas. We also need to fully utilize new and safer technology to generate electricity including alternative energy, clean coal and nuclear."

He emphasized how serious Nucor is about improving their efficiency in the use of gas. "In 1987 we literally bet the company on trying to perfect an unproven, revolutionary technology called 'thin slab casting.' That effort paid off with a technology now used by Nucor domestically and others around the world that uses only a third of the natural gas normally used to make sheet steel."

DiMicco revealed that his company has an even more efficient Castrip® technology that "leapfrogs both conventional and thin slab sheet production by eliminating the need for the natural gas-fired reheat furnace and slashing the electricity needed for rolling." Nevertheless, he warned, "We will still need gas for decades to come."

In describing the technology that Nucor is pursuing to reduce its natural gas consumption and improve the efficiency of steel production, DiMicco said, "Nucor is doing its part. Now Congress and the Administration need to do their part."

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