This report focuses on the major intrastate natural gas pipelines operating in Louisiana, Oklahoma, and Texas, the intrastate gas market.
Major findings of the report are as follows:
- Intrastate gas pipelines represent an important component of their respective markets. These pipelines own 53 percent of the total transmission miles, and transport 43 percent of the total intrastate production.
- Intrastate market demand characteristics differ sharply from other U.S. markets. Large industriaUelectric utility sales, for example, represent close to 90 percent of the total market demand. Furthermore, gas holds a relatively high market share in the intrastate market, reflecting gas’ low cost and high availability.
- The relatively larger proportion of industriaVelectric utility gas consumption accounts for a laissez-faire regulatory environment for most of the intrastate areas. This environment is distinguished by minimal government regulation of intrastate pipeline rates and services.
- The intrastate pipelines continue to provide a merchant service to a greater extent than do interstate pipelines.
- Intrastate pipelines’ business activities are diverse. These can be (1) stand-alone pipelines in business solely to transport and/or resell gas; (2) pipelines that tansport on behalf of affiliates, e.g., to individual industrial and/or electric utility plants; or (3) pipelines that provide marketing assistance to affiliates, such as transporting affiliate production to the market.
- Effective competition is a characteristic of the intrastate market, stemming from: (1) surplus supplies in the area; (2) minimal intervention by state regulators; (3) excess capacity of some intrastate pipelines in the region; and (4) proximity of many interstate and intrastate pipelines in these states.
