ing additional pipe-line facilities, combined with sharply increasing demands for natural gas in nearly all consuming areas.

During the war it was possible to make only the most urgent additions to pipe-line facilities, limited to those which were granted high material priorities by the War Production Board. These limitations bad to be imposed at a time of general tightness in fuel supplies, affecting other major fuels as well as natural gas. Also, particularly in the Appalachian areas of New York, Pennsylvania, Ohio, West Virginia, and Kentucky, the depletion of local fields was accelerated during the war by necessary heavy withdrawals to meet requirements of war industries. Additional customer installations for the use of gas in house-heating and in many industrial applications had to be suspended in order that service to existing users might continue as fully as possible, while some industrial service taken under contracts for relatively low so-called interruptible rates was given special protection because of its essential relation to the war effort.

These necessary wartime restrictions have caused a strong upward surge of the pent-up demand for natural gas, which apparently was being preferred as a type of fuel by increasing numbers of customers. Industrial customers, often without adequate stand-by fuel sources, in many instances sought large quantities of natural gas on as firm a basis of continuous service as they could get. When domestic spaceheating installations became possible again, demands for gas for such use, both in conversion from other fuels and in connection with new housing construction, accounted for a large part of the increases. With end of the war these strong demands became clearly apparent and the pipe lines and distributing companies endeavored to meet them as well as they could.

It is clear that neither the industry nor anyone else fully anticipated such striking increases in demands for natural gas as soon became, and continue to be, so much in evidence. It was soon evident, too, that facilities could not possibly be enlarged fast enough to take care of these enormously expanding demands, quite regardless of any action which the Commission might take, primarily because of the shortage of steel pipe and other facilities necessary to provide increased pipeline capacity.

Gas has been available, as was pointed out earlier, to nearly double the deliveries through pipe lines between 1938 and 1946. Evidently it will continue to be available in substantially increasing volumes from the Southwest producing areas. A recent tabulation by our staff shows that as of January 1, 1946, there was total pipe-line capacity for daily deliveries from the five major gas-producing States in the Southwest-Louisiana, Texas, New Mexico, Oklahoma, and Kansasamounting to 4,405 million cubic feet, of which about 1,800 million was for delivery within, and nearly 2,600 million for delivery outside, that area. Since January 1, 1946, 16 existing and 5 proposed new natural-gas companies have filed applications for facilities, much of which construction has been authorized, which would just about double that daily delivery capacity, to some 8,450 million cubic feet. Of that total, something over 2 billion would be for delivery within, and nearly 6,400 million would be for delivery outside, the south

western area, the ratios of increase being 15 and 145 percent, respectively.

But, while more intensive use of existing facilities permitted substantially increased gas deliveries, getting the necessary pipe to enlarge capacity has been a real problem for virtually every major pipe-line company. In their quest for the needed materials they must compete, for the limited quantities available, with the wide range of other steel uses and with the others who are in the market for pipe which, according to the statistics of the American Iron and Steel Institute, accounts for only about 8 percent of the total production of finished steel products. In this market the gas pipe lines must compete for the limited amount 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, and probably amounts to between 700,000 and 800,000 tons a year.

Against this capacity and production, the requirements for natural gas pipe lines for which certificates were authorized or requested between January 1, 1946, and March 15, 1947, amounted to nearly 2,590,000 tons for the larger sizes alone. Thus, at present production rates, it would take between 3 and 4 years to meet the demand, even if the entire output of the mills were used for gas lines, and if there were no further growth of their demand. If the mills could be operated to full capacity for gas pipe line requirements alone, at least 2 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 have for months 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, Mr. 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 cooperative in dealing with our problems.

* *

has been most

That back of the shortage conditions are the causes which I have outlined is also strikingly illustrated by the following Chicago dis-. patch in the Wall Street Journal just a few days ago, April 12:

Restrictions on the installation of space heaters in northern Illinois will continue indefinitely because of the "unprecedented" demand for gas and the shortage of steel pipe. The steel pipe shortage has prevented proposed pipeline construction by the Chicago District Pipeline Co. and the Natural Gas Pipeline Co. of America to provide an additional 145 million cubic feet of natural gas daily

I think that should have been 135

*

First deliveries of the pipe * ordered in 1945, are only now being received. In granting permission for continuing gas restrictions, the Illinois Commerce Commission said limitations will be placed on new industrial uses of gas. The earliest date the Chicago area can expect additional natural gas will be in December, the Peoples Gas Light & Coke Co. said.

With but a few changes, for names, dates, and places, that would pretty well describe the situation throughout the shortage areas.

There is reason, too, for believing 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 hearings before the House committee. A dispatch from Austin, Tex., which recently appeared in the New York Journal of Commerce for 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— Railroad Commission of Texas

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 14 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 Texas fields, 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. Much 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 casinghead in most cases is manufacture of carbon black, but both pipe-line sales and repressuring are in prospect, the operators reported. The railroad commission is now restrained by a district court from closing a Gulf coast oil field-Seelingson-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 pipe-line capacity

1

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 issued, between July 1, 1945, and September 30, 1946, 90 certificates of public convenience and necessity for the construction of natural-gas facilities intended to add capacity for the delivery of at least 1,106,000,000 cubic feet daily in a number of communities in 18 States.

The 70 cities of 50,000 or more population to be reached by these authorizations were as 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, Evanston, Oak Park, Rockford, Decatur, Peoria, Springfield; Indiana-East Chicago, Gary, Hammond, South Bend, Evansville, Fort Wayne; Iowa-Cedar Rapids, Davenport, Des Moines, Sioux City; Kentucky-Covington, Louisville; Michigan-Dearborn, Detroit, Flint, Grand Rapids, Hamtramck, Highland Park, Jackson, Kalamazoo, Pontiac; MinnesotaMinneapolis; Mississippi-Jackson; Missouri-St. Louis; NebraskaLincoln, Omaha; New York-Binghamton, Buffalo, Rochester, Syracuse; Ohio-Akron, Canton, Cleveland Heights, Cleveland, Lakewood, Youngstown, Columbus, Springfield, Toledo, Cincinnati, Hamilton, Dayton; Pennsylvania-Altoona, Pittsburgh, York; TennesseeNashville; West Virginia-Charleston, Huntington, Wheeling.

They provided for nearly 4,500 miles of new gas pipe lines and for over 275,000 horsepower of compressor installations. 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 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 Angeles 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 increased demand. A large diameter line from the Southwest was approved, which, I may add, was designed to capture and utilize considerable gas which might otherwise 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. It was later adopted for general application-order No. 130-and has since been incorporated in the Commission's rules of practice and procedure published pursuant to the Administrative Procedure Act. It has been used satisfactorily in about 80 cases thus far, or two-thirds of all the certificate proceedings coming before the Commission, with about half of these matters disposed of within 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 to 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 reports thus far issued in connection with the natural-gas investigation. Nothing thus far considered by the Commission, however, would provide for anything approaching the relaxation of control evidently contemplated by S. 734.

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, for example, of December 2, 1946, permitting the temporary emergency use of the Big and Little Big Inch lines by Tennessee Gas & Transmission Co., under lease from the War Assets Administration expiring April 30, 1947, which has been 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 skyrocketing of demand, had made the Appalachian area increasingly dependent upon natural gas from the Southwest. The pipe lines 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 Tennessee Co., 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 18,000,000 cubic feet daily to its system. Just when the remaining 100,000,000 capacity can be provided is still uncertain, although the same company is now before the Commission applying for authority to further increase its capacity 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 Co. likewise were quite serious.

The emergency operation of the Inch lines without compression permitted the delivery of upward of 130,000,000 cubic feet of southwestern gas a day for the relief of these areas. Upon expiration of the present lease, at the end of this month, the Commission has authorized the continued temporary operation of these lines for this emergency purpose by Texas Eastern Transmission Co., 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 about 250,000,000 cubic feet per day and is all that is considered feasible under the conditions existing at this time. 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