Petroleum Economics - Summary of Contribution 135: A Study of the possibility of Converting the Large-diameter War Emergency Pipe Lines to Natural Gas Service after the War

The 24-in. crude-oil line. and- the 20-in. petroleum-products line, built as a war emergency by the United States Government and 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 nor-inal ocean tanker movements from the Gulf Coast to the East Coast. The postwar disposition of these lines may be considered as one of the important problems of the postwar readjustments in the oil industry, if not the most important one. In the first place there appear to be many complications in keeping the lines in crude-oil or petroleum-products service. This conclusion was reached also in a study by T. E. Swigart, President of Shell Pipeline Corporation.' Since the lines are too largc for any one company to utilize, and since it appears likely that a surplus rather than a deficiency of tankers will exist after the war, most companies probably will feel that they can achieve lower costs and more satisfactoiy results from the resumption of tanker movements to the East Coast rather than by endeavoring to take over or utilize the capacity in the large pipe lines under some tariff-rate structure. As for using the lines for making deliveries to the middle west or central eastern areas, it would appear that when the war is over and normal transportation arrangements can be resumed, there will be no need of any extra capacity for such deliveries. Therefore, the War Emergency lines could be utilized for this purpose only if privately owned pipe lines and other transportation facilities were to be displaced. Against this rather unprepossessing prospect for use in petroleum or product service is the fact that at or near the source of the lines lie the greatest developed gas reserves in the world, for much of which there is at present no satisfactory market outlet; and at the other end of the lines lies one of the greatest concentrations of population in the world, which is not now served by natural gas. These who have been fortunate enough to use natural gas can have little doubt of its desirability as a domestic fuel. An analysis of the market potentialities and comparison with other areas where natural gas is being distributed, and where it has displaced manufactured gas, makes it seem clear beyond question that the full capacity of both of the large-diameter lines could be fully utilized in this service, and this without creating any undue drain upon the gas reserves of the nation. On the basis of an estimated capacity of roo to 120 billion cubic feet per year, the gas that might be marketed through these lines would amount to only 3 to 4 per cent of the total con-