Wednesday, December 3, 1975 The Dally Tar Hae! 3
by Bill Sutherland
Staff Writer
"Barring extraordinary mild
temperatures and the possibility of
unforeseen new natural gas supplies,
every North Carolinian will be
impacted, directly or indirectly, by the
current projected crisis situation. The
truly agonizing fact of the energy
situation is that the immediate and
long-term solution lies beyond the
direct authority of the State."
North Carolina Inter-agency Task
Force
Report on Natural Gas
The recent snow and cold snap
increased temporarily the demand for
natural gas and has some folks in
Ahoskie pretty worried.
"If we can't get the gas, Farmer's
Chemical is out of business," Al
Newsome, spokesman for the nitrogen
fertilizer plant in Ahoskie, said.
Other fertilizer and textile industries
worry about similar troubles. Natural
gas is a raw material in the manufacture
of their products; these plants cannot
use an alternative fuel when gas runs
low.
New Southern Dye, a textile finishing
plant in Henderson, may have too small
a natural gas allocation to get them
through the winter and no back-up
system in case they run low, a
spokesman said.
Until last week, things looked much
worse for North Carolina industry.
Now Al Newsome and other plant
officials have had their prayers partially
answered by legislation from the U.S.
House of Representatives. North
Carolina will now receive a greater
allocation of gas through a new
distribution plan for the East Coast.
In addition, interstate pipelines may
buy additional gas supplies during the
next 60 days from producers at
unregulated prices. This will provide
North Carolina with a greater amount
of gas and the extra costs will be passed
on to the customers.
But even with this legislation,
cutbacks in natural gas supplies for the
winter are expected to reach 40 per cent
said Marvin Wooten, chairperson of the
N.C. Utilities commission. A very cold
winter could worsen the expected
shortage. Also there is concern among
industry' and commerce officials over
whether gas price increases and
conservation efforts can be absorbed
into a competitive priced finished
product. ...
Al Newsome and others in North
Carolina can trace their misfortune to
several unfavorable circumstances.
Why us?
In simplest terms, the problem is
merely demand outrunning supply. The
growth of the textile industry and the
arrival of an interstate pipeline have
been roughly coincidental in North
Carolina since World War II, according
to the task force report. Unfortunately
Transcontinental Gas Pipe Line Corp.
(Transco) is the only interstate pipeline
serving the state.
For various reasons, only a handful of
pipelines are facing drastic shortages,
and Transco is one of them. Their
projected curtailment is estimated to be
close to 40 per cent for the year, the task
force report said.
"Transco's gas orders for South
Carolina will be significantly curtailed.
However, they are also served by
Southern Natural Gas which predicts
almost no shortages, so South Carolina
will be in pretty good shape this winter,"
Eugene Curtis of the state energy
division said.
Why Transco cannot come up with
the goods is still a debatable question,
although the federal government is
investigating.
One apparent reason is an interstate
pipeline's inability to buy competitively
from producers, since the pipelines are
limited by a federally regulated
purchase ceiling of 52 cents per 1,000
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a
nature I $m
Who is responsible for the 40 per cent cutback in natural gas to North
Carolina this winter? A lot of North Carolinians, and the federal government,
would like to know.
cubic feet of gas. Producers are much
more willing to sell at three times that
price to intrastate pipelines.
The current legislation makes it
possible for Transco to buy the more
expensive gas for the next 60 days.
Another bill still being considered by the
U.S. House of Representatives would
extend that emergency buying period to
180 days.
But the question still unanswered is,
"Why is Transco one of just a few
pipelines with a large shortage?"
Some point to poor management
within Transco. "Frankly, 1 am not in a
position to make such a judgment,"
Helms wrote, "but I do know that within
the last year or so, Transco has gotten a
new president who has substantially
shaken up the top management of the
company."
Another reason North Carolina
cannot get as much gas as other states
can is that over half of North Carolina's
natural gas is used industrially and the
remainder residentiary.
According to a priority system set up
by the Federal Power Commission
(FPC) and the individual states,
residential and small commercial users
are served first, because they answer
essential human needs. Last in line are
the large industries with the capability
to use alternative fuels.
"The gas passes right through North
Carolina and goes on up to Brooklyn,
where 90 per cent of the gas is used in
homes and stores," Curtis said.
Curtis added that New York's
industry is served by other interstate
pipelines which are not experiencing
any cutbacks. North Carolina took this
matter to federal court, but little came of
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Repercussions
Before 1971, industry was flocking to
North Carolina to take advantage of
cheap labor and energy. At that time, an
abundance of gas existed, according to
'Ann Hughes, a state energy division
member.
"With this oversupply of gas,
interstate pipelines like Transco started
selling some of the surplus at prices
under the FPC ceiling," she said.
"These customers were given the
status of 'interruptible,' meaning that if
there was ever not enough gas to go
around, they would be the first to be cut
off. Understandably then, all of these
customers have alternative fuel
capabilities."
Many North Carolina industries are
"interruptible" customers, which is one
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According to the task force report,
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North Carolina industry may no longer
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Some industries like the glass
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Frustration
"It is the old story of the haves and the
have-nots," Paul Hitchcock, director of
the energy division, said. "North
Carolina and some other states also
needing natural gas are the minority in
the U.S. Congress. That's why needed
legislation is so hard to come by."
Some legislation being considered
includes deregulation of the gas at the
wellhead and the interconnection of
interstate pipelines, which would
increase the availability and the price of
natural gas.
State officials can do more to alleviate
the gas shortage than wring their hands,
but only on the state level. Ed Hipp,
attorney for the N.C; Utilities
Commission, indicated that the
commission can set retail prices and also
has had, in effect, an order restricting
customers 1 5 per cent in their overall use
of gas on a state-wide basis.
The commission also has refused any
new hook-ups for the past year as well as
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restricting some special uses of the fuel,
Hitchcock said.
Otherwise, though, the commission
has no control over the amount of gas
North Carolina can receive from
Transco. The FPC decides with the
recommendations of the various
pipelines and their customers, on what
natural gas curtailment plan to follow.
As one energy division member said,
"All we can do is tell them how we feel."
The state is especially vulnerable, in
H itchcock's estimation, because it is not
a gas-producer. A state like Texas can
meet its needs by merely limiting their
exports, he said.
However, even with all the
uncertainty, most gas distributors know
roughly how much gas they will have
and have made tentative plans
accordingly. Fortunately, by the nature
of pipeline delivery, volumes can be
changed on a daily basis. Thus, a
business could be turned off one day and
on the next as needed, Hughes said.
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