A Study Of The Possibility Of Converting The Large Diameter War Emergency Pipe Lines To Natural Gas Service After The War

MUCH discussion has occurred as to the use or uses which might be made after the war of either or both .of the large diameter (24 inch and 20 inch) War Emergency pipe lines built by y the United States Government during the war, to move crude petroleum and refined products such as gasoline and light distillate fuels. Indeed, the disposition and future use of these lines constitutes, in the minds of many people, one of the most important problems of postwar readjustment in the Oil Industry. The two lines, running from points in Texas to the New York-New Jersey-Philadelphia area, were constructed only because of the inability during the war to continue normal ocean tanker movements from the Gulf Coast to the East Coast. Physically they could continue after the war to move crude or refined products, and it appears that lines of such large diameter as these, if operated at or near capacity, could move these liquids at costs per barrel which might be considered in the same general cost range as for tanker movements.1 If, therefore, we were to look forward at the end of the war to a shortage of tankers, it is probable that the continued use of these pipe lines for petroleum movements to the East Coast would be worth considering, as against building new tankers to take over the movement, provided there were no other economic or national defense reasons for restoring tanker fleets and no other better use for the pipe lines. Because of the extensive tanker construction program which has been and still is in progress, and because of our Navy's marked success in combating the submarine problem, it appears to be quite possible, however, that instead of a shortage of tankers at the end of the war, we may have a surplus instead. If this should turn out to be the case, then there would seem to be considerable doubt that these lines would continue to be used for moving petroleum or products to the East Coast at the expense of tying up tankers. It would hardly seem probable that the owner of any such tankers would ship via one of the large lines at the expense of tying up one of its own tankers, unless the pipe line tariff rate charged was lower than the out-of-pocket cost of operating a tanker as against the out-of-pocket cost of keeping it tied up. And considering that a substantial part of the cost of operating a tanker goes on even when it is tied up, it is very difficult to figure out how any pipeline tariff could be established that would be low enough to compete with individually owned tankers that otherwise would be idle. Certainly a pipe line tariff rate high enough to cover direct costs plus even a low rate of depreciation and return on the investment would be far above the out-of-pocket tanker operating costs. In view of these considerations, it has seemed desirable to examine with some care some of the various alternatives that have been suggested as to other possible uses to which these lines might be put. One of these is for transportation of natural gas to the New York-New Jersey Philadelphia area. This Eastern area, located at the destination of these lines, contains the heaviest concentration of population in the United States, and is not now served with natural gas. At the other end of the lines lie the greatest discovered natural gas reserves in the United States, if not in the world, and many