Mr. DINGELL. I appreciate that. I understand you have just taken office and you have to acquaint yourself with a maze of information of proceedings that have gone on for the past 7 or 8 years. That is all, Mr. Chairman. Thank you. Mr. GILLETTE. (No response.) Any further questions? Mr. KELLY. Thank you very much, Mr. Chairman and gentlemen. Mr. GILLETTE. Thank you, Mr. Kelly, for coming here and giving us this information. Mr. HARRIS. Mr. Chairman? Mr. GILLETTE. Mr. Harris. Mr. HARRIS. I notice we have another one of our colleagues from Michigan here, Mr. Jonkman, who, I am sure, is interested in this very critical problem. I am sure the committee would be glad to have him suggest questions at any time which he might have to offer. Mr. JONKMAN. Mr. Chairman, I very much appreciate the gentleman's kindness and opportunity, but I am not prepared to ask any questions or make any statement at this time. However, I do know that we are interested in this situation in my district, and if I may follow the proceedings, perhaps I might have something to say later on. Thank you, very much. Mr. GILLETTE. The next witness will be Mr. Stuart B. White, chairman, Michigan Public Service Commission, Lansing, Mich. STATEMENT OF STUART B. WHITE, CHAIRMAN, MICHIGAN PUBLIC SERVICE COMMISSION, LANSING, MICH. Mr. WHITE. Mr. Chairman, members of the committee, as chairman of the Michigan Public Service Commission it is quite natural to approach and view the problem from the standpoint of the State as a whole. In other words, our interest as a commission is State-wide and is not directed especially to Detroit or any other part of the State. For that purpose I desire to discuss the State picture from the commission standpoint, and confine my remarks largely to that, although I may have some detailed information, technical information, upon the subject I can say frankly that if I come to a point where I do not know the answer there are plenty of other people here who do, on technical matters and details. Mr. CROSSER. Mr. Chairman? Mr. GILLETTE. Mr. Crosser. Mr. CROSSER. Before we go on with another long discussion here that leaves out any reference to the real question, I would like to know what they claim the Federal Government can or should do here. Mr. SADOWSKI. That is a question, Mr. Crosser, I asked the other witness and that I shall ask this witness when he gets through. Mr. WHITE. I shall come to that. Members of the Federal Power Commission are here who can speak for the Commission. From a discussion so far it is apparent that there is not a complete understanding of the over-all State picture. I will try to help you understand it by a very brief, I might say, word picture of the gas condition in Michigan. In the first place there are three possible sources of gas in Michigan for industrial, residential, and commercial consumption. Those three sources are natural gas, which subdivided into two sources, one being that supplied by Panhandle Eastern, finding its origin in the Hugoton and Panhandle storage field with many years reserve supply, and an abundance of supply if it could be furnished to Michigan, or other consumers along its line. It is an interstate line and as such its interstate operations are under the sole and exclusive jurisdiction of the Interstate Commerce Commission. The other source of natural gas comes from natural-gas wells in the State of Michigan. These wells in turn are divided into two general groups. One in the so-called Austin field area, in the general vicinity of Big Rapids, north of Grand Rapids, and several other smaller storage wells and natural-gas wells. This area that I will now talk about serves, generally speaking, the western district of Michigan. The natural-gas wells have what geologists refer to as a safe base pressure beyond which-in other words, if the gas is drawn beyond that base pressure you encounter the danger and risk of salt, brine water, entering the wells, which will ruin them for all time to come, not only as natural-gas resources but also for the purpose of storage of natural gas. That is what I want to emphasize in my statement. The outer general area is the so-called Winterfield-Cranberry Lake area, up in that general central Michigan vicinity, which is owned and controlled by Michigan Gas Storage Corp., which in turn is a subsidiary of Consumers Power. Consumers Power supplies natural gas, you might say, to the central area of Michigan. I want to speak about that. Mr. SADOWSKI. Where does Consumers Power get its source of supply? Mr. WHITE. Its source of supply is partly from its wells, and I might as well discuss that now, because the central area of Michigan looms as a very dark picture to the Michigan Public Service Commission. Little has been said about it; there has been no publicity about it; but it is a very serious situation. Consumers Power takes natural gas from these wells in Winterfield-Cranberry Lake area. Those lakes have a safe base pressure of 350 pounds. They have reduced that pressure by serving their customers to 325 pounds, 25 pounds below what geologists consider as a safe base pressure, to such an extent that they are now experiencing water and brine in those wells, and they, of course, cannot draw on them any further. They also receive natural gas from the Panhandle Eastern. In fact, Panhandle Eastern is the owner of a 25 percent interest in Michigan Gas Storage Corp. So that Consumers Power and Panhandle have more or less common interests and are very cooperative in their efforts. Mr. SADOWSKI. The Austin fields are owned by whom? Mr. WHITE. By Michigan Consolidated. I will come to that in a moment. Moreover, Consumers Power has inaugurated, with the authority and permission of our commission, a very comprehensive and I will say even severe curtailment program. We have authorized them to curtail space heating, curtail industrial use, and so forth. Many of the industries which are on that curtailment program are rapidly reaching their limit under that program. And when they have reached that limit they will be cut off entirely under our direction and our instruction. In a recent conference with officers of the Consumers Power Co. this was brought to our attention. We instructed them to issue severe admonishing letters to the industries that were going to exceed, going beyond their regular allotment or requirement and were going to end up with no gas. They have done that in a cooperative way and have filed proof of service with us, of notices to these industries. Now, in order to bring these fields-I am talking now about the central area, Cranberry Lake and Winterfield, back to their proper pressure, we are informed by Consumers Power that they will require 11,000,000,000 cubic feet of gas next summer to restore the pressure and 8,000,000,000 cubic feet from that time on to maintain that storage pressure. Mr. SADOWSKI. How much did they get this year, this past year? Mr. WHITE. I can not tell you how much they got. They got several billion feet from the Panhandle Eastern. But, of course, that cannot be used and was not used for storage purposes because it was not a surplus. In fact, they have a deficiency in their customer requirements. Therefore, all they got this year was, of course, consumed by their customers. Mr. SADOWSKI. Then their demands will be increased for the coming year? Mr. WHITE. That is correct. Mr. SADOWSKI. To what extent? Mr. WHITE. To the extent of several billion cubic feet per season. Now, going to the western district, let us take that up, in the socalled Austin storage field. The Austin storage field is owned, generally speaking, by the Michigan Consolidated Gas Co.; it was acquired by them under authority of our commission and the Federal Power Commission and designed first as a reserve field-that is, a supply field-but primarily, and after supplies were dropped, as a storage field, as a part of their program, to bring into Michigan gas from the Michigan-Wisconsin pipe line. There is no connection-bear this in mind-between the Austin field, so-called, and any outside source of natural gas in Michigan. It is wholly isolated so far as the Panhandle Eastern pipe line is concerned and the Panhandle Eastern is the only outside source of natural gas. I say that is owned by Michigan Consolidated, and from that field they have served and are serving domestic and industrial and commercial consumers in western Michigan, principally in Grand Rapids and Muskegon. They are here-I will not go into details on thatbut, generally speaking, the pressure in that field is now, I would say, between 460 and 470 pounds, with a safe pressure of 402. But their demands are such that on May 23, 1947, they served notice. upon 12 industrial consumers in that district, notifying them that they were going to curtail all of their industrial gas on December 31, 1947. Mr. SADOWSKI. Before you leave those reserve fields, does the State commission have to grant authority to a company to use a field like that for storage purposes? 71869-48-pt. 1-30 Mr. WHITE. Not for storage purposes. They need our authority to acquire and to use that field for general purposes, but not for storage purposes. We do not purport to say what they shall use it for. Mr. SADOWSKI. They must get authority from the State commission before they can use that? Mr. WHITE. That is correct. That was granted. Also the financing of it. Mr. SADOWSKI. When was authority granted to use the Austin fields? Mr. WHITE. It was a couple of years ago. They can tell you that, They are here. How long ago was that? Mr. FINK. In 1947, August. Mr. SADOWSKI. Did you not grant authority, or suggest that you would grant authority, to the Panhandle Eastern, that they could use those storage fields back in 1943? Mr. WHITE. The Panhandle Eastern could use the storage fields? Not that I know of. Mr. SADOWSKI. What was the suggestion made by the city of Detroit, then? When was such a suggestion made, or an offer, from the city of Detroit? Mr. WHITE. That Panhandle could use those storage fields? Mr. SADOWSKI. Yes. Mr. WHITE. Let me tell you about that. Mr. SADOWSKI. Back in 1943, I am talking about. Mr. WHITE. I will tell you about that. As has already been stated the Michigan Consolidated Co. has a contractual right to purchase 125,000,000 cubic feet of gas per day from Panhandle and, incidentally and in passing, 2,000,000 more per day for the city of Ann Arbor, making 127,000,000 in all, as the maximum requirement to be furnished by Panhandle to Michigan Consolidated. Up until now, right today, there has been no way to store any surplus gas under that contract. Therefore, it has all been used up until now in the Detroit area, Detroit, Mich., generally speaking, served by Michigan Consolidated. So that any surplus gas over and above their summer needs in Detroit could not have been stored anyhow because there was no storage field. It is contended-and this is important-by Panhandle that a proper construction of their contract, although it does not say so in express terms, and we have read the contract and analyzed it-contracts, I should say, there are several of them-it is contended at least that under the terms of their contract, all gas supplied by Panhandle to Michigan Consolidated must be used in the Detroit area. Therefore, even though that gas were stored in the Austin field, according to Panhandle's contention, it must be returned eventually and used in the Detroit area, and could not be used in the western district or any place else in Michigan. Mr. SADOWSKI. Did not Panhandle make some efforts to obtain that field as a storage field? Panhandle Mr. WHITE. The Austin field? Not that I know of. does not need a storage field because it is primarily and essentially an interstate transporter of gas. Michigan Consolidated, on the other hand, is a distributor of gas. Michigan Consolidated would need a storage field to store gas in the summertime for its peak load in the winter. That need is not apparent in the case of Panhandle, because they are not in the storage business. Mr. SADOWSKI. I do remember that 5 years ago the need for a storage field was made known, publicly made known, to everybody. I read about it, and you read about it, and everybody knew about it, that there was that need for a storage field. Mr. Fink is here and Mr. WHITE. Application was made in 1941. can tell you about the history and details of that. Mr. SADOWSKI. Why was it held up all this time? · Mr. WHITE. If I had to answer the question I would guess that it was largely due to the absolute inability to obtain materials during the war period. Mr. Fink will have to answer that. Mr. SADOWSKI. It was not due because of a favoritism on the part of any State officials? Mr. WHITE. Not in the least. Mr. SADOWSKI. You say one company can use it and this company cannot. Never. Mr. WHITE. Not in the least; no, sir. Now, to go back to the western field, as I say, in May of 1947, this led to a proceeding before our commission on the part of several industries among those 12; and I will say that the 12 that were cut off were only the 12 consuming 20,000,000 cubic feet a year. proceeding was carried on before us at some length. That We were called upon by these industries to require Consolidated to countermand its curtailment order. After an extended hearing, at which everybody had a right to be heard, they were taking all the testimony, the commission decided that it could not do so. In other words, it denied the applications of the industries and sustained the curtailment order because it was apparent to us, as a commission, that to permit continued use of the natural gas from the Austin field would endanger that field as a storage field, and would endanger the domestic customers in the future. So we had to preserve, you might say, the diminishing resources of that field. Mr. SADOWSKI. When was that curtailment order issued? Mr. WHITE. May 23, 1947; but following numerous verbal conferences and admonitions on the part of Consolidated to these industries that they would have to be curtailed. Mr. SADOWSKI. That was a curtainlement order to industry? Mr. SADOWSKI. When did your commission issue a curtailment order to domestic users? Mr. WHITE. We did not issue one. Mr. SADOWSKI. For house heating and store heating? Mr. WHITE. We never did in the case of Consolidated. We did issue the right to them to not take on more domestic users, spaceheating users, and also the right to curtail certain users on a certain table that was established at that time. But we have never had any domestic users cut off in Michigan that I know of. |