U.S. INTERSTATE PIPELINES MAKE PAINFUL ADJUSTMENTS IN 1991

Nov. 23, 1992
Warren R. True Pipeline/Gas Processing Editor Federally regulated natural gas and liquids pipeline companies in the U.S. continued to adjust in 1991 to new market and regulatory realities brought about by federal mandate and continuing sour economic conditions. These adjustments were evident in the revenue and income figures for companies in the two industry segments (Table 1 and Fig. 1). Both sets of figures significantly declined as reported in annual reports for last year to the U.S.
Warren R. True
Pipeline/Gas Processing Editor

Federally regulated natural gas and liquids pipeline companies in the U.S. continued to adjust in 1991 to new market and regulatory realities brought about by federal mandate and continuing sour economic conditions.

These adjustments were evident in the revenue and income figures for companies in the two industry segments (Table 1 and Fig. 1). Both sets of figures significantly declined as reported in annual reports for last year to the U.S. Federal Energy Regulatory Commission (FERC).

One time charges by several major natural gas pipelines in 1991 resulted in declines of more than 75% for all companies in net incomes and 14% in operating revenues.

Declines in incomes occurred among oil pipelines, as well, but were not nearly so drastic.

Natural gas pipelines also continued shifting the collective focus of their operations to the business of transportation and away from sales. Volumes of gas moved for others continued increasing; volumes sold continued their declines.

These data along with others from annual reports filed with the FERC are tracked in this annual Oil & Gas Journal Pipeline Economics Report. (See company tables pp. 56 62.).

Additionally, more information is provided in this year's report on how much natural gas pipelines actually spent to build segments compared to what had been estimated at the time the projects were set before the FERC for approval.

CHANGE SLOWS

The pace at which interstate natural gas pipelines continued to shift their historic roles from being merchants of gas to transporters slowed somewhat in 1991; the trend, however, showed no signs of abating.

Volumes of gas moved for others by these companies last year increased by more than 6% for major companies and by almost 8% overall. This follows an increase in 1990 of more than 16% for majors and almost 10% for all companies.

Gas sold by these same companies, however, declined again last year: by almost 11% for majors and by more than 9% overall. In 1990, the decline was 17% for majors and 20% for all companies reporting. In 1989, the decline was 13% for majors, 5% for all companies.

For common carrier oil pipelines, moving both crude oil and product, operations continued to be sluggish. Revenues declined by almost 5% and incomes by more than 23% for data tracked for the Journal's Pipeline Economics Report.

On the construction front, U.S. gas pipeline projects proposed to the FERC for the 12 month period ending June 30 (Table 2) amounted to more than 2,300 miles. Large portions of these proposed pipelines are to supply gas to Florida and to increase a major network in the U.S. Northwest.

It is likely to be the final flurry of construction proposals for a few years, as 1991 92 saw the completion of major systems in the U.S Northeast and from the Rockies and New Mexico to California.

Nevertheless, the public continues to pressure for cleaner air, and natural gas is a leading candidate to displace dirtier hydrocarbon fuels such as coal and heavy fuel oil.

By far the market with the greatest potential to spur growth in natural gas demand is electric power generation. But the natural gas industry as a whole producers, transporters, distributors must continue to convince this market of the fuel's dependability. Many electric utilities continue to distrust natural gas, remembering curtailments of the not too distant past.

Evidence of increased reliance on natural gas, however, may be seen in the improving price picture for natural gas starting slightly before the middle of this year and continuing to date.

Cost figures for gas pipeline construction projects are taken from estimates accompanying companies' applications to the FERC for approval to build the systems. And this year, Oil & Gas Journal continues exclusive coverage begun in the 1990 report of the actual costs for some of these projects proposed much earlier than the dates of their completion (Table 3).

INCOMES AND MILEAGE

Led by one time charges among a handful of major natural gas pipeline companies and by a general decline for all companies, net incomes for regulated major and nonmajor interstate natural gas pipeline companies, as mentioned earlier, plummeted last year.

Annual reports (Forms 2 and 2A) to the FERC reflected a decline in net income from 1990 of 76%, to $277.9 million from $2.8 billion.

Operating revenues also showed declines, although much less drastically: for majors, these dropped by $3.7 billion ( 14%); overall, operating revenues for majors and nonmajors fell by $4.4 billion (-4.73%).

Operating revenues for major and nonmajor natural gas transmission companies were falling beginning with 1983 until a slight uptick for 1988 (Fig. 1). Similarly, net incomes fell in 1983 and for 2 years beginning with 1986 and 1987.

The increase in 1989 was the largest of the decade, eclipsing a big jump in 1985. Now the decrease for 1991 is the largest since 1985.

Causing the drop last year in net incomes were several adjustments to operating incomes by a few major companies that reflect amounts set aside to cover corporate restructuring costs or to remediate environmental damages as well as shifts in income generating properties:

  • Columbia Gas Transmission Corp. and United Gas Pipe Line Co., both of which operated last year under Chapter 11 of the U.S. Bankruptcy Code, reported net losses for 1991 of $669.7 million and $12 million, respectively.

    Both companies have claimed those losses as the result of exposure to "above market" gas purchase contracts. Columbia Gas' annual report states that the provision of $1.3 billion reflects "serious problems created by older high cost producer contracts, related gas supply management costs, and the impact of contract rejection and renegotiation on costs previously capitalized."

  • In 1990, Tennessee Gas Pipeline reported to the FERC a net income of $658.7 million; for 1991, it reported a net loss of $340.3 million, representing a turnaround in net income in a year of almost $1 billion.

    By far, most of the turnaround is accounted for by restructuring charges of $552 million the company announced earlier this year to cover costs associated with ongoing losses at its farm and construction subsidiary J.I. Case. That company reported an operating loss of $618 million for 1991.

    Additionally, in its 1991 Form 10 K, Tennessee Gas' parent Tenneco Inc. reported to the U.S. Securities and Exchange Commission that in October 1991, Tennessee completed a study to estimate remediation costs for compressor station sites.

    "As a result of this study and a review of all other sites known to be contaminated [by polychlorinated biphenyl PCBs] on Tennessee's interstate and intrastate pipeline systems," said Tenneco, it "recorded a reserve in September 1991 for estimated future environmental expense of $260 million."

  • Other majors which reported large declines in net income for 1991 cited other one time charges along with generally weak markets.

Transcontinental Gas Pipeline Corp. reported a net loss on its FERC Form 2 of $59.7 million.

By way of explanation, parent Transco Energy Co.'s annual report states that on Aug. 1, 1991, Transcontinental took a one time charge of $47.6 million to resolve an extended dispute involving "above market priced" contracts.

Additional charges in 1991, according to the parent company's annual report, included $54.8 million for producer contract settlements and $39.8 million for "other restructuring costs."

Texas Eastern Transmission Corp. reported a net loss on its FERC Form 2 of $45 million. The company stated that the figure includes a "significant provision" for its share of parent Panhandle Eastern Corp.'s PCB clean up program.

Arkla Inc. reported a net loss of $53.5 million after reporting a net income for 1990 of $37.5 million.

The company's annual report notes that operating income decreased about 61% from 1990 to 1991, "reflecting continued weather related demand pressures, failure of the price differential between Midcontinent gas supply and Gulf Coast gas supply...to move back toward historical levels and increased interstate and intrastate competition for markets and throughput."

Although this group of companies accounted for a large portion of the drop in 1991 net incomes for regulated interstate natural gas pipelines, a large number of both major and nonmajor companies (67) reported declines in net income from 1990 levels or otherwise reported losses for the year. Total declines for these companies amounted to $2.7 billion.

For 1991, 29 natural gas pipeline companies actually reported net losses, up from 18 for 1990.

Petroleum liquids pipeline companies' net incomes in 1991 also reflected a large decline, of nearly 24% (more than $551 million) on operating revenues that also decreased by $351 million (nearly - 5%). That decrease in revenues resumes a 5 year trend begun in 1985. The drop in income reverses the generally upward movement for the decade 1982 91 (Table 1).

Pipeline mileage reported by major natural gas companies was essentially flat for 1991 compared with 1990, rising 2.81% (more than 7,700 miles). Majors operated almost 7,500 new miles of transmission, field, and storage lines last year, an increase of 3%.

For major and nonmajor pipeline companies, there was little change in the U.S. interstate gas pipeline system for 1991 compared with 1990.

The exception is for storage lines which increased by more than 1,700 miles (38.9%). This trend reflects the growing reliance of pipelines on underground storage to balance their systems' loads in the face of varying demand.

Liquid pipeline companies showed virtually no change (+ 2%) in total pipeline mileage utilized during 1991 compared with 1990. Mileage for gathering lines fell; crude oil and product pipeline mileage increased slightly last year.

Total mileage reported for 1991 was 448,334 with 171,471 miles for crude oil and product pipelines and 276,863 miles for gas transmission, field, and storage (Table 4).

CONSTRUCTION PACE

For the 12 month period ending June 30, more than 2,300 miles of pipeline construction were proposed to the FERC; no projects were formally proposed for offshore U.S. waters (Table 2).

This total mileage was proposed in 131 construction projects.

For the 12 month period July 1, 1990, to June 30, 1991, more than 3,000 miles of pipeline were proposed, of which 36 miles were planned for offshore.

A portion of the construction filed for approval with the FERC during the 1991 92 period consisted of projects being refiled as a result of changes in volumes, diameters, lengths, or compression of earlier filed proposals.

These refilings comprised approximately 230 miles of the mileage proposed for the 1991 92 period.

Oil & Gas Journal's Worldwide Construction Report (OGJ, Oct. 26, p. 118) lists 128 individual pipeline projects of U.S. pipeline construction reported by surveyed companies as either proposed, planned, or under way.

By comparison, OGJ's Oct. 28, 1991, construction report listed 110 U.S. pipeline projects proposed, planned, or under way.

With major proposals to supply natural gas to Florida expected to reside before FERC well into 1993 and with major systems already in place to serve U.S Northeast and California markets, the next 24 36 months may be relatively inactive for major pipeline construction.

This anticipated slowdown in construction is suggested by the fewer projects proposed to FERC over the past 2 years, as well as by company statements. An example is the Altamont project to bring Canadian gas from Wild Horse, Mont., to near Opal, Wyo., there to feed into the newly constructed Kern River pipeline.

Earlier this year, Altamont officials announced a 1 year delay in the project to allow market demand to solidify. The expansion of Pacific Gas Transmission's system to bring Canadian gas into California over a more direct route continues to be built.

COMPLETED PROJECT COSTS

Table 2 reflects cost estimates for projects proposed to the FERC for construction approval. Not all projects proposed are built, however.

Actual costs for a project which is approved and built must be filed with the FERC within 6 months after the line's completion. That point is determined by the line's successful hydrostatic test, its commissioning date.

Table 3 shows such actual costs for projects completed and reported to the FERC for the period July 1, 1990, to June 30 of this year. Some of these projects may have been proposed or even approved much earlier than the surveyed period. Others may have been filed for, approved, and built less than a year before completion.

And in its initial filing, each of these projects may have been reported in segments. (That's how projects are broken out in Table 2.)

Completed cost information, however, is reported to the FERC for an entire filing.

Overall, actual costs exceeded anticipated ones by almost $42 million (8.8%). This was due entirely to greater than anticipated labor costs for those projects reported to the FERC during the 12 month period.

For the projects reported, actual labor costs exceeded estimated ones by more than $76 million (32.6%). R.O.W. and damages were overestimated by $7.5 million (36.7%); miscellaneous items, by almost $14 million (22.5%).

Estimates for costs of materials were closer. Operators overestimated material costs by $12.9 million (8%).

Cost per mile estimates missed the actual figures by almost $93,000/mile.

U.S. INTERSTATE NETWORK

Revenue, income, and mileage changes cited earlier are evident on the pipeline company tables (pp. 56 62).

As stated, these data are based on annual reports of regulated interstate pipeline companies and provide a variety of details on each of them, including pipeline mileage, crude oil and refined products deliveries, natural gas sales and gas transported for other companies, operating revenues, and net incomes.

Beginning with the 1988 Pipeline Economics Report (OGJ, Nov. 28, 1988, p. 33), the Journal began tracking volumes of gas transported for others by major interstate pipeline systems. This provides a method of keeping track of the changing nature of the U.S. gas transmission industry.

SYSTEM UTILIZATION

Comparisons between any years of U.S. petroleum and natural gas pipeline mileages must be made with care for two reasons:

The number of companies required to file reports with the FERC varies each year.

And secondly, the FERC's system for classifying interstate natural gas pipeline companies changed with the 1984 reporting year (OGJ, Nov. 25, 1985, p. 55).

Since 1984, FERC regulated gas pipeline companies are classified as "major" or "nonmajor" based on total natural gas transmissions for each of the 3 immediately previous reporting years. (See FERC Accounting and Reporting Requirements for Natural Gas Companies, para. 20 011.)

Major pipeline companies are those whose combined gas sold for resale and gas transported or stored for a fee exceeded 50 bcf (at 14.73 psi and 60 F.) in each of the 3 previous calendar years.

Nonmajors are companies not classified as majors and which have had total gas sales of volume transactions exceeding 200 MMcf (at 14.73 and psi 60 F.) in each of the 3 previous calendar years.

One effect of this change has been that companies classified as nonmajor are exempt from filing certain data. Chief among the excluded figures are mileage and gas sales or transportation figures.

Many nonmajor companies nonetheless file such data voluntarily, but consistency exists only among major companies.

In comparisons, figures for nonmajor companies should be excluded from a calculation of total U.S. interstate pipeline utilization for any given year because of their unreliability year to year.

Therefore, combining 1991 mileage data for all regulated liquids pipeline companies (171,471) with mileage reported by the major natural gas pipeline companies (47 companies reporting 253,310 miles) yields a total figure of 424,781. This represents a 2% increase of 8,083 miles over comparable figures reported for 1990 (168,364 + 248,334 = 416,698).

The 1990 figures represented an increase over 1989's total of 410,322 miles.

Whether a liquids pipeline company must file an FERC annual report (Form 6) is determined by whether the FERC designates the company as an interstate common carrier pipeline.

These reports for 1991 show that gathering lines decreased by 1,164 miles. Crude oil lines increased by 3,530 miles; products lines, by 741 miles over totals reported for 1990.

These figures are in line with the erratic pattern of liquids pipeline utilization for the past 10 years (Table 4).

Natural gas transmission lines for all companies (major and those nonmajor which reported mileage) were up slightly compared with 1990's, by 7,731 miles (2.81%), and up slightly for major companies, by 7,452 miles (3%).

DELIVERIES

Throughput for liquids pipeline companies in 1991 was flat when compared with 1990.

And for all natural gas pipelines, sales of gas in 1991 fell significantly if less sharply than in recent years by 534.4 bcf ( - 9.3 %), and for majors, by more than 500 bcf ( 10.8%).

These latter figures reflect the ongoing shift of natural gas pipeline companies to transporters of gas from their historic role as buyers of gas for resale.

This shift has been evolving for 8 years and was evident in 1991 in the volumes of gas regulated interstate pipeline companies transported for others.

For last year, all regulated U.S. interstate gas pipelines carried more than 22 tcf of gas for others; of those volumes, majors carried more than 21 tcf.

For all companies, volumes of gas transported for others rose by almost 1.7 tcf (8%) when compared to volumes carried in 1990; for majors, the rise was more than 1.2 tcf (6.3%).

Volumes of gas transported for others in 1991 reported by major and nonmajor interstate gas pipeline companies (22.2 tcf) comprised 82.9% of total volumes (26.8 tcf) moved through the U.S. system, up from 78.6% for 1990 and from 72.9% for 1989.

For major companies (whose total volumes exceeded 25 tcf), the share was larger: more than 84.3%. This share also represented an increase over the 1990 figure, up from 81.2%, and over the 1989 figure, up from 75.5%.

Crude oil and product deliveries last year approached 11.5 billion bbl, a minimal increase over 1990 of 117.6 million bbl (1.03%).

Crude oil deliveries through the U.S. interstate system rose slightly last year by 122.2 million bbl (1.9%). Product deliveries declined by 4.6 million bbl ( 0.1%).

Trunkline traffic for U.S. crude oil and product pipelines also showed a small decline last year when compared to 1990. It fell by 29.5 billion bbl miles (-0.84%) over that for 1990.

RANKINGS

Oil & Gas Journal ranks the top 10 natural gas and liquids pipeline companies in three categories (mileage, barrel mile throughput, and operating income) for oil pipeline companies and four categories (mileage, natural gas sales, volumes transported for others, and operating income) for natural gas pipeline companies (p. 43).

These rankings are broken out from the pipeline company tables (pp. 56 62).

For all natural gas pipeline companies, net income as a portion of gas plant investment reversed a trend begun in 1988.

This portion stood at 0.5% for 1991, down from 5.2% for 1990, from 4.6% for 1989, and 3.1% for 1988. The 1988 figure was up from 2.9% in 1987. It was 3.4% in 1986, 4.5% in 1985, and 8.7% in 1984.

For major gas pipelines in 1991, net income as a portion of gas plant investment hit 0.4% after being at 4.7% for 1990 and 4.8% in 1989. The figure had risen to 3.2% for 1988. It fell to 2.6% in 1987 from 3.2% in 1986. It was 4.3% in 1985, and 7.6% in 1984.

The term "gas plant" refers to the physical facilities compressors, metering stations, and pipelines used to transport natural gas.

For 1991, all gas companies reported an industry gas plant investment totalling more than $54.6 billion compared to $55.3 billion for 1990.

Majors' gas plant investment in 1991 was $48.9 billion compared to $47.9 billion for 1990 and $44.1 for 1989.

For interstate common carrier liquids pipeline companies, net income as a percentage of investment in carrier property dropped to 6.6% for 1991 compared to 9% for 1990 and for 1989. In 1988 it was 10.3; in 1987, 11.6%.

Liquids pipelines' investment in carrier property for 1991 increased by more than $1.1 billion (4.3%) over 1990 to $26.9 billion; 1990's figure had shown a similar increase of almost $1.2 billion (4.8%) over 1989.

Another measure of the profitability of oil and natural gas pipeline companies in recent years is the percentage net income represents of operating income.

Through 1987, trends for liquids pipeline companies and for natural gas pipeline companies had been heading in opposite directions for 10 years.

For liquids pipeline companies in 1991, income as a portion of operating revenues fell to 26.3% from 32.7% for 1990 and 34.2% for 1989.

TRACKED COMPANIES

In this annual Pipeline Economics Report, Oil & Gas Journal has for several years been tracking investment by five crude oil pipeline companies and five products pipeline companies.

Table 5 indicates that investment by the five crude oil pipelines stood at $1.89 billion at the end of 1991 compared to $1.82 billion at the end of 1990. That year's figure compares with $1.75 billion at the end of 1989.

Investment by the five products pipeline companies was $3.07 billion for 1991 compared to $3.01 billion at the end of 1990 and $2.942 billion at the end of 1989.

Fig. 2 illustrates the investment split in the crude oil and products pipeline companies.

CONSTRUCTION ACTIVITY

As Fig. 2 shows, the costs of line pipe and fittings and of laying pipelines make up almost 74% of the cost of a pipeline system.

Although these elements of pipeline construction costs have risen very little for the past few years, after rapidly increasing before 1982, the cost of labor has been showing signs of increasing more rapidly.

COST TRENDS

Table 6 lists a 10 year land construction cost trend for natural gas pipelines with diameters ranging from 8 to 36 in. The table's data are based on a mix of actual costs of completed pipeline construction and projected costs filed under CP dockets with the FERC.

As the table reflects, the average cost per mile for any given diameter may fluctuate from one year to the next as projects' costs are affected by geographic location, terrain, population density, or other factors.

The cost per mile trends from 1990 to 1991 are uniformly up, with all seven diameter classifications showing increases.

Yearly fluctuations in these figures are illustrated in construction figures for a 12 in. pipeline. These had leapt between 1984 and 1985 by 90%, fallen in 1988 by more than 30%, jumped again in 1990 by 233%, fallen for 1991 by 68%, yet have jumped again in 1992 by 17%.

PLANS AND MILES

Table 2 lists 131 land pipeline construction projects. No offshore projects were listed. This compares to 126 land and 3 offshore reported in last year's Pipeline Economics Report.

Land projects proposed during the period surveyed represent more than 2,300 miles of pipeline at an estimated price tag of almost $2 billion.

Total costs of projects surveyed in last year's Pipeline Economics Report ran more than $1.8 billion divided between $1.81 billion for land and $22.9 million for offshore.

COST TRENDS, COMPONENTS

Cost per mile figures may reveal more about cost trends than aggregate costs.

For proposed U.S. gas pipeline projects in the 1991 92 period surveyed, the average land cost per mile was $850,123 compared with $596,747/mile for the 1990 91 period.

There were no offshore pipeline projects proposed during the 1991 92 period covered. For offshore projects during the 1990 91 period, the average per mile figure was $637,332/mile.

Analyses of the four major categories of pipeline construction costs material, labor, right of way (R.O.W.), and miscellaneous can also indicate trends within each group.

Material costs include those for line pipe, pipe coating, and cathodic protection.

R.O.W. figures include the cost of obtaining right of way and of any allowance for damages.

"Miscellaneous" generally includes surveying, engineering, supervision, contingencies, allowances for funds used during construction (afudc), administration and overheads, and FERC filing fees.

For the 131 projects surveyed for the 1991 92 period covered in this report, cost per mile data for the four categories are as follows:

  • Material $306,288/mile

  • Labor $322,005/mile

  • R.O.W. and damages $35,298/mile

  • Miscellaneous $186,532/mile.

Table 2 lists proposed pipelines in order of increasing size (OD) and increasing lengths within each size. The average cost per mile for the projects shows few clear cut trends related to either length or geographic area.

In general, however, the cost per mile within a given diameter indicates that the longer the pipeline, the lower the incremental cost for construction. And broadly, a line built nearer populated areas tends to have higher unit (per mile) costs.

Additionally, road, highway, and river crossings and marshy or rocky terrain each strongly affects pipeline construction costs.

Fig. 3, derived from Table 2 for land pipelines, shows the major cost component split for pipeline construction cost.

Material and labor are shown to make up more than 70% of the cost of constructing land pipelines.

Fig. 4 plots the average pipeline construction cost for land gas pipeline construction projects listed in Table 2.

COMPRESSOR STATIONS

Compressor station costs make up another major cost element of natural-gas pipelines. Table 7 lists 75 land compressor projects for new stations or additions to existing ones.

FERC applications for these projects cover the same period as for pipelines: July 1, 1991, to June 30.

Costs for new land compressor stations range from a low of $657/hp for a 25,000 hp addition in Alabama to a high of $3,175/hp for a 3,770 hp addition in Ohio. Cost per horsepower figures show no particular correlation with compressor station size or location. Fig. 5 shows the cost split for land compressor stations based on data in Table 7.

As an aid in determining the detailed costs for each major element in pipeline and compressor station construction for the pipelines and compressor stations, several tables covering specific projects are included in this report (above).

These give detailed cost breakdowns for each major component in a construction cost estimate.

They cover cost information from the FERC applications for the 1991 92 period surveyed and listed in Tables 2 and 7.

These detailed tables represent both a variety of land geographic locations in the U.S. and pipeline and compressor stations for land facilities.

OPERATING COSTS

Once a natural gas pipeline is laid, compressor stations constructed, and meters installed, the operating costs become the next consideration.

As an aid in estimating this element, transmission expenses for interstate gas pipelines for 1989 and 1990 have been included (Table 8). Data for these years are the most recent available in aggregate from the U.S. Department of Energy.

Fig. 6, which traces these expenses for a 10 year period, shows the rising trends of transmission costs for the 2 years 1989 and 1990. The rising curve for maintenance costs since 1987 suggests pipelines' increasing investment in maintenance to answer increased public concern for pipeline safety.

Table 8 is based on 254,059 miles of pipeline operated and 5.6 tcf of gas sold for 1989 majors and on 254,527 miles of pipeline operated and 4.5 tcf of gas sold for 1990 majors.

  • The highest component of transmission operating expenses is transmission and compression of gas by others: for majors in 1989, this component was $3,363/mile or $154/MMcf sold; for majors in 1990, this component was $3,384/mile or $193/MMcf.

  • The second highest cost component of transmission operating expense is gas for compressor station fuel: for majors in 1989, $1,484/mile or $68/MMcf; for majors in 1990, $1,358/mile or $77/MMcf.

  • The highest cost component of maintenance expense covers compressor station equipment: for majors in 1989, $989/mile or $45/MMcf; for majors in 1990, $1,062/mile or $61/MMcf.

  • The second highest cost component for maintenance is the maintenance of pipelines: for majors in 1989, $453/mile or $21/MMcf; for 1990 majors, $441/mile or $25/MMcf.

  • Table 8 indicates that the highest component of transmission expenses for natural gas pipelines is the operation expense: for 1989 majors, $8,412/mile or $384/MMcf, for 1990 majors, $8,773/mile or $500/MMcf.

  • Unit maintenance expenses for 1989 majors were $1,780/mile or $81/MMcf; for 1990 majors, $1,912/mile or $109/mmcf.

  • During 1989, major natural gas pipeline companies spent slightly more than $2.137 billion for operation expenses and $452 million on maintenance. Total expenditures by 1989 majors for operation and maintenance expenses reached almost $2.6 billion.

    Total operation expenses for majors in 1990 increased to more than $2.2 billion following a drop of almost $31 million from 1988 to 1989 noted in last year's report.

    Total maintenance expenses in 1990 rose to more than $486 million from a 1989 cost of $452 million, a marked rise of 7.6%. These expenses have shown a rise of more than 17% in two years beginning in 1998.

    Total transmission expenses showed a rise between 1989 and 1990. In the latter year, they reached more than $2.79 billion.

  • On a unit basis, the total 1989 transmission expense for majors was $10,192/mile or $466/MMcf of gas sold; for 1990 majors, it was $10,685/mile or $610/MMcf.

Copyright 1992 Oil & Gas Journal. All Rights Reserved.