CHAPTER 4 THE EMERGING ROLE OF THE INTERSTATE GAS PIPELINE IN A MORE COMPETITIVE MARKETPLACE: DEALING WITH THE VESTIGES OF A HEAVILY REGULATED PAST, CURRENT CHAOS, AND FUTURE UNCERTAINTY

• Jurisdiction: United States

Natural Gas Marketing
(May 1987)
CHAPTER 4
THE EMERGING ROLE OF THE INTERSTATE GAS PIPELINE IN A MORE COMPETITIVE MARKETPLACE: DEALING WITH THE VESTIGES OF A HEAVILY REGULATED PAST, CURRENT CHAOS, AND FUTURE UNCERTAINTY
R. Casey Olson
Enron Northern Natural Gas Company
Houston, Texas

I. 3 Things

1. Great moments in history

2. Talk a bit about chaos/change

3. Where pipeline fits in

II. Great Moments

A. Start of industry 20-30's

B. Phillips Decision 54

C. Curtailments 70's

D. NGPA 78

Two really major industry upheavals in 50 years

E. Now 3 or 4 in past 1 or 2

Brings me to change or chaos

III. Change/Chaos — simply an indication of unpredictable/uncertain future we have

A. We understand change — 6 years w/Enron — changed name 4 times NNG/InterNorth/HNG-InterNorth/Enteron/Enron

B. Sweeping through the industry like a tidal wave tossing things out of its path as it goes

1. Swim/or Surf

2. or Fight

3. We have said swim — as have many others — no other choice

C. Step back — 4/5 years — Give ourselves a perspective of that change — how dramatic it has been

Think About

1. Spot market over 50% of all consumption

2. "Feeding Frenzy" of consolidation — just as quick spin offs

Amazing — What was strategic 1-2 yrs ago now isn't

3. Oil prices $10-12/per barrel or less

4. Gas prices — $1.20-1.30

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5. Old gas prices

a) 2-3 years ago decontrol — devintaging was never viewed as a real possibility

b) overnight old gas priced 6/7/8 times less than market — now 2 times more

6. Who would have predicted elimination of minimum bills, minimum take requirements in market contracts, CD rollbacks —

We no longer can get market commitment due to regulations —

But others can

Who would have thought FERC would box

7. Unbundling of charges, 436 open access, 451

8. FERC even redefined voluntary

9. New entrants — hundreds of marketers/brokers

a) used to think

b) now just quarters

D. Said at beginning what I wasn't — don't have crystal ball — no clearer than yours — a lot of unanswered questions

1. Who will customer be tomorrow

Who will they be 1/3 years from now

2. What services will we provide — sales, transport, balancing, gathering — all or none

3. How will I price those services?

a) FERC

b) Market

4. Unanswered supply questions

a) will I ever acquire

b) if so, will there be any for me to acquire

a) lowest rig count in years

b) producers simply electing to shut-in

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c)

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