Natural Gas Gathering Competition Heats Up

Article excerpt

Journal Record Staff Reporter

Competition in the natural gas gathering business is becoming evermore fierce as segregation of interstate pipeline functions nears fruition, giving the bigger underground thoroughfares common carrier status.

"The competition in this business is getting just wild," said Gary C. Lobaugh, corporate relations representative for GPM Gas Corp. of Houston, the operating arm of Phillips Gas Co., owned by Phillips Petroleum Co. of Bartlesville.

The so-called federal deregulation of secondary interstate pipeline services has sparked some concern about states picking up where the federal regulators left off. In Oklahoma, for example, a bill was enacted last year by the Legislature to give producers a venue for complaints about gas gathering rates charged by pipelines.

Comments are due next week with the Oklahoma Natural Gas Policy Commission on the issue of state regulation of gas gathering lines. GPM Gas, whose assets are concentrated in Oklahoma, New Mexico and Texas, is preparing comments, Lobaugh said.

"If somebody is charging rates that are out of line, the producer should have a forum," to correct the abuse, said Jim Kevra, vice president of Centana Energy Corp. of Houston, a subsidiary formed in March by the interstate pipeline Panhandle Eastern Corp.

"We are concerned that the burden of proof will be laid on the pipeline. I don't think there's much abuse going on right now, though. I think we're most concerned about a level playing field.

"Right now, there's no regulation at all on the interstate gatherers, you see," Kevra said of gathering firms not affiliated with interstate pipelines, like GPM Gas. "But, Panhandle is still regulated by FERC (Federal Energy Regulatory Commission)."

Gas gathering historically was an incidental sideline for pipelines and local distribution companies, the gas utilities.

In April 1992, FERC ordered separation of the various segments of interstate pipelines _ transportation, storage, gathering and marketing. Before FERC Order 636, which is to be in full implementation by year end, pipelines offered the services as a bundled package.

Under the new rule _ the final phase of open access that began in the mid-1980s _ interstate pipelines must provide their affiliates and outside shippers access to interstate lines indiscriminately. All other business segments of the pipeline must be operated separately.

With the change, sights are being set on secondary services as new moneymaking sources. Gas gathering is a natural target since it is what connects a gas well to the interstate pipeline that carries gas to market; storage demand is rising, but not all participants in the market need or want it. …