limited amounts available with the large requirements of oil pipe lines and with foreign pipe requirements manufactured in this country. Only two steel pipe mills in the United States roll the 26-inch diameter which is now generally preferred for long-distance gas pipe lines, and only four are now producing 16-inch pipe and larger. The maximum annual production capacity of these mills is about 1,150,000 tons, but at present output is considerably below that figure because of a lack of steel billets and plates.

Against this capacity and production, the requirements for naturalgas pipe lines for which certificates were authorized or requested between January 1, 1946. and April 30, 1947, amounted to slightly over 3,000,000 tons for the larger sizes alone. Thus, if there were no further growth of the demand for pipe by gas companies, and if all the mills could be operated to full capacity for gas pipe-line requirements alone, nearly three years would be required to catch up with the demand now indicated. How much longer it would actually take would, of course, depend on the drain on available large-size steel pipe for other uses.

The plain fact of the matter is that pipe-line companies which for months have been authorized to expand their facilities have been unable to do so because of the pipe situation. While this may not be generally understood outside the gas industry, it is well known to those responsible for pipe-line operations. Thus, on March 14, 1947, L. I. Shaw, attorney for the Northern Natural Gas Co. in oral argument before the Commission stated, in response to a question on the point:

I wish to state on the record that there was extensive evidence in respect to the delay in the acquisition of steel pipe occasioned by the manufacturers being swamped with orders. And I most certainly do not want any implication on this record that Northern is suggesting that any delay of that character was occasioned by any fault of the Commission in any way, shape, or form.

In similar vein, a letter received from Mr. S. B. Irelan, president, Cities Service Gas Co., dated February 24, 1947, reads in part as follows:

Of course, I fully recognize that the Federal Power Commission is in no manner responsible for our present plight with respect to supply and capacity the Federal Power Commission has been most cooperative in dealing with our problems.

*

*

That back of the shortage conditions are the causes which I have outlined is further illustrated by the following excerpt from a statement in connection with an application filed May 1, 1947, by the Southern Natural Gas Co. (Docket No. G–796) :

Applicant's representatives have literally scoured the country in search of large steel pipe suitable for looping its main line. This search, as the Commission and every pipe-line company knows, has been futile except for the 181⁄2 miles of 20 and 22-inch pipe which has been located and can be used for looping the main line this year, and 14 miles of 20-inch pipe to be used for main line looping next year.

There is reason, too, for beliveing that similar materials shortages, and particularly the lack of pipe, have been a factor in retarding the reduction of gas flaring, about which so much was said during the earlier hearing before this committee. A dispatch from Austin, Tex., which recently appeared in the New York Journal of Commerce

(April 15), is so pertinent to this entire matter that I shall read it in full:

Scarcity of materials, particularly steel pipe, are handicapping efforts to reduce the waste of casinghead gas in Texas, operators told the railroad commission at a series of hearings here. The final hearing on K. M. A. field, near Wichita Falls, is scheduled to be held today, April 15, after which the commission will determine what action it will take to eliminate flaring of casinghead gas in oil fields, Although the hearings were called to determine whether 15 major fields should be shut down because of excessive gas waste, Chairman Ernest O. Thompson of the commission has promised a reasonable period of time will be allowed for operators to obtain necessary conservation equipment.

The first fourteen hearings disclosed projects, mostly gasoline extraction plants with arrangements for utilizing residue gas, have been arranged for most of the fields involved. Gathering systems and other equipment are slow to build, and the projects are in stages ranging from completed to merely planning the commission was advised. A highlight was the hearing on five big west Texasfields, which will furnish some gas to the new pipe line to California. Cliff Brien, an engineer for the Braun Co. which is constructing the California line, testified that materials are more difficult to obtain now than during the war. Most of the gas is stripped of its liquid contents before flaring but the amount burned in the west Texas fields includes the following: Slaughter field, 38,000,000 feet daily; McElroy, about 25,000,000; Goldsmith, 10,000,000; North Cowden, 6,000,000; and Wasson, 12,000,000. Only present use for casingheead in most cases is manufacture of carbon black, but both pipe-line sales and repressuring are in propsect, the operators reported. The Railroad Commission is now restrained by a district court from closing a Gulf Coast oil field, Seeligson, where it said gas was being produced wastefully. The producers there asked for time to complete conservation projects.

ACTIVITIES OF THE COMMISSION

Confronted with these conditions, the Federal Power Commission has sought to deal with them realistically, both through the most expeditious handling of certificate applications consistent with fairness to all concerned, and through the exercise of its very limited regulatory powers in such a way as to assure that the insufficient pipeline capacity available would be so utilized as to meet the most urgent needs of the public.

In an effort to deal with first things first, the commission, between July 1, 1945 and April 15, 1947, issued 144 certificates of public convenience and necessity for the construction of natural-gas facilities intended to add capacity for the delivery of at least 2,000,000,000 cubic feet daily in a number of communities in 20 States.12 They provided for over 7,200 miles of new gas pipe lines and for over 440,000 horsepower of compressor installations, at a total cost of $345,000,000. Without exception they provided additional supplies for markets already having natural-gas service, although included in the list are several lines augmenting the gas available to those communities by

as

13 The 78 cities of 50,000 or more population to be reached by these authorizations were follows: Alabama-Birmingham, Mobile, Montgomery; California-Glendale, Los Angeles, Pasadena, Santa Monica; Colorado-Denver, Pueblo District of Columbia-Washington: Georgia-Atlanta, Columbus, Macon; Illinois-Chicago, Cicero, Decatur, East St. Louis, Evanston, Oak Park, Peoria, Rockford, Springfield; Indiana-East Chicago, Evansville, Fort Wayne, Gary, Hammond, South Bend; Iowa- Cedar Rapids, Davenport, Des Moines, Sioux City; Kansas Kansas City, Topeka, Wichita; Kentucky-Covington, Louisville; Michigan-Dearborn, Detroit, Flint, Grand Rapids, Hamtramck, Highland Park, Jackson, Kalamazoo, Lansing, Pontiac; Minnesota, Minneapolis; Mississippi-Jackson: Missouri-Kansas City, St. Louis Nebraska-Lincoln, Omaha; New York-Binghamton. Buffalo, Rochester, Syracuse; Ohio-Akron, Canton, Cincinnati, Cleveland, Cleveland Heights, Columbus, Dayton, Hamilton, Lakewood, Springfield, Toledo, Youngstown; Pennsylvania-Altoona. McKeesport, Pittsburgh, York; Tennessee-Nashville; West Virginia-Charleston, Hunttington, Wheeling; Virginia-Árlington.

attaching new sources of supply. Perhaps the most striking case of the latter sort is the unopposed project to supplement the supply to California, particularly in the Los Angels area. Because of the depletion of local reserves and the desirability of retaining gas for use in raising oil, other sources were sought to meet the greatly increasing demand. A large-diameter line from the Southwest was approved, which, I may add, was designed to capture and utilize considerable gas which otherwise might have been lost through venting or flaring.

In order to avoid unnecessary expense and trouble to the applicants, burdens on its own limited staff, and generally to expedite its work, the Commission in the autumn of 1945 devised a shortened procedure in certificate cases where lack of protest and the relatively unimportant or noncontroversial character of the situation would make its use appropriate. This shortened procedure, which reduces the required hearing to a pro forma matter on the written pleadings, was first tried out in a minor case.13 Since April 20, 1946, when the procedure was adopted for general application (Order No. 130), it has been used satisfactorily in about 90 cases, or two-thirds of all the certificate proceedings coming before the commission, with about half of these matters disposed of withing 30 days of the filing of the application. It has been favorably regarded by the natural-gas industry as a constructive step.

As stated earlier, further steps to simplify procedures and provide needed flexibility to natural-gas company operations, where that can be done without jeopardy to the public interest and service, have been proposed as a result of the staff report in the natural gas investigation dealing with the matter of service area determinations. Nothing thus far considered by the Commission, however, would provide for anything approaching the relaxation of certificate controls evidently contemplated by the "gas bills."

The Commission, furthermore, has made extensive use of such authority as it has to grant temporary authorization of facilities to meet emergency situations. It must be kept in mind in considering these matters that the Natural Gas Act provides for substantially less than the usual public utility obligations and responsibilities of regulated companies. We are, however, authorized to grant temporary certificates for the construction and operation of facilities in such cases, and we have done so in many small, and in several very important instances.

That was the basis of the Commission's action of December 2, 1946, permitting the temporary emergency use of the Big and Little Big Inch Lines by Tennessee Gas and Transmission Company, under lease from the War Assets Administration which expired on Apr. 30, 1947, and was so helpful during the past heating season.

Depletion of local gas supplies and storage, which was accelerated by large withdrawals during the war, together with the sky-rocketing of demand, had made the Appalachian area increasingly dependent upon natural gas from the Southwest. The pipelines bringing in this gas for extensive use-particularly in Ohio, West Virginia, western Pennsylvania, and western New York-had met the usual difficulties of the natural-gas companies elsewhere in their efforts to enlarge their facilities to keep up with the growing demand. Thus, the Ten

13 Docket G-638, In the Matter of Frannie Gas Company.

nessee Company, which had been authorized in July 1946 to enlarge its capacity by 118,000,000 cubic feet per day, to a total of 380,000,000, has up to now been able to add only 38,000,000 cubic feet daily to its system. The remaining 8,000,000 capacity is expected to be installed by next winter.

Although the steel situation is still uncertain, this company is now applying for authority to further increase its capacity up to 600,000,000 cubic feet per day to meet the demands which it anticipates in the very near future. Shortage conditions in the midwest areas in Missouri, Illinois, Indiana, Ohio, and Michigan served by the Panhandle Eastern Pipe Line Company likewise were very serious.

The emergency operation of the Inch lines without compression permitted the delivery of upwards of 130,000,000 cubic feet of Southwestern gas a day for the relief of these areas. The Commission has authorized the continued temporary operation of these lines for this emergency purpose by Texas Eastern Transmission Corporation, Tennessee's successor to the lines under lease and purchase arrangement with the War Assets Administration. With the permission limited to the delivery of gas to the customers and markets now being served, Texas Eastern has also been authorized to install three compressor stations, which are expected to increase deliveries to at least 250,000,000 cubic feet per day by December 1, 1947. This additional gas, particularly with summer deliveries into storage near the markets and if utilized where it is most urgently needed, should help out greatly in the shortage areas next winter. But it will fall far short of satisfying their full demands.

In addition to the problem of pipe-line capacity, there has been the further difficulty, which usually arises when a much-desired commodity is in short supply, of who is to get how much of what there is.

The Federal Power Commission has, and has sought to assert, no authority to nationalize, regiment, or otherwise dictate the fuel economy of the Nation. It has only very limited power to deal with the adequacy of pipe-line service. But, confronted with a situation and not a theory, just as the several State regulatory bodies have been, the commission was of course willing to use its good offices in every proper way in a cooperative effort among all concerned to deal with that situation.

Thus, in determining where the Big Inch gas was to go last wintera matter over which the commission was able to exercise control through a condition included in the certificate for operation-the commission called in an industry advisory committee, which has continued to function as needed, consisting of representatives of the various companies most concerned. Although they were not always unanimous, the recommendations of this group, based on careful and cooperative study of the relative needs of their customers, were with minor modifications followed. The result was that, while no area received all the gas it wanted and could have used, all shared in the relief afforded.

Through direct service or by substitutions and transfers of gas among connecting lines, these benefits extended from Missouri on the west to western Pennsylvania and New York on the east and as far north as Detroit and Buffalo. This would not have been possible without the cooperation of the State commissions and the companies

involved and the hard work done by their representatives in conjunction with our staff; full credit is due to all concerned.

Similarly, as the seriousness of the shortages developing in the Midwest areas served by the Panhandle company was appreciated, plans for the orderly curtailment of service and the equitable allotment of gas, when necessary, were worked out in cooperation with the State regulatory commissions of Illinois, Indiana, Michigan, Missouri, and Ohio, and with representatives of the Panhandle system and of the principal companies buying its gas for resale. Temporary emergency tariffs filed by Panhandle to cover these arrangements went into effect under the commission's order of December 12, 1946. Subsequently, similar problems were dealt with in like fashion elsewhere-notably in the areas served by the Northern Natural Gas Co., the Natural Gas Pipeline Co. of America, and the Mississippi River Fuel Corp.

In these cooperative conferences with the State commissions and the distributing companies invited by them, the commission has recognized fully that the regulation of local distribution is within the province of the States, and, therefore, that the enforcement of curtailment schedules of the distributing companies is a function of the State authorities. That the States have assumed this responsibility is illustrated by the action of the Illinois commission reported in the Chicago Tribune for April 11, 1947, as follows:

The Illinois Commerce Commission yesterday ordered present restrictions against the use of fuel gas for space heating by new residential and industrial customers in the Chicago area continued indefinitely. The commission said the order was necessary because shortages of steel pipe are hampering efforts to bring additional supplies of natural gas from Texas fields. The order permits gas companies serving Chicago and northern Illinois to deny gas to new industrial customers who reasonably can use another fuel and to homes that do not already have gas space heating equipment installed and in use. There are no restrictions on the use of gas for cooking, water heating, or refrigeration. Similar action has been taken by the regulatory authorities in a number of other States.

Looking ahead to conditions to be expected next winter, the commission invited representatives of the regulatory commissions of the various gas producing and consuming states to consider with us the problems encountered during the heating season just past and measures which might be taken to relieve as much as possible the gas shortages which will have to be faced. This conference on February 21, 1947, was attended by representatives of the commission of Alabama, the District of Columbia, Georgia, Illinois, Indiana, Kansas, Louisiana, Maryland, Michigan, Montana, New York, Ohio, Oklahoma, Pennsylvania, Texas, West Virginia, and the National Association of Railroad and Utilities Commissioners.

It was the consensus that shortages requiring curtailments are to be anticipated in the 1947-48 heating season, and that every appropriate measure should be taken by cooperative action to cope with them. By general agreement, it served a very useful purpose. Further conferences with State commission and industry representatives concerned with the Appalachian area and that served by Panhandle are scheduled to begin on June 3.

In general, the pattern followed alike by the State and Federal commissions is to give first consideration to existing customers and markets. Within these groups, domestic customers, hospitals, public