The Tennessee Oil and Gas Association (TOGA), which representsoil and gas producers in the state, is gearing up to fight a groupof gas utility districts over the definition of what constitutes”retail distribution.”
The association is supporting Tengasco Pipeline Corp.’s bid tobypass local utility districts and transport gas directly toindustrial customers in Claiborne, Hancock and Hawkins counties,TN. Tengasco Pipeline is a wholly owned subsidiary of Tengasco Inc.- a gas and oil company with E&P operations in Tennessee andKansas. Tengasco Inc.’s estimated Tennessee reserves representswhat is believed to be the largest newly found gas field in NorthAmerica.
Tengasco, which is more than a year away from establishing aninterconnect with interstate East Tennessee Natural Gas, currentlymust sell its Tennessee gas production in state. The company wantsto sell directly to industrial end-users, but Tennessee law isunclear on whether such a direct sale would constitute retaildistribution, which by law is the province of only the utilitydistricts.
“We can no longer allow unregulated utility districts to standon the necks of Tennessee producers,” said TOGA Executive DirectorBill Goodwin.
The Tennessee Oil and Gas Association says if Tengasco isallowed to transport gas directly to industrial customers, thosecustomers will pay less money than they pay now. Less expensivenatural gas means lower overhead costs for those industrialcustomers.
Tennessee State Rep. Joe Armstrong (D-15th District), a memberof the Tengasco board of directors, said bills are being drafted todefine retail distribution. “[The utility districts are] sayingbasically that if we’re allowed to go directly to the end-user,then we’re going to cherry pick the customers. They don’t wantcompetition, point blank. The gas market has changed, deregulationhas brought in competition. These small utilities are just tryingto hold on to the last bastion of monopoly. In other states allaround the country, they have competition in gas. This is the firsttime that significant production has been discovered [inTennessee], and that Tengasco’s production exceeds the local usesof the utilities.” Given a market, Tengasco production could be 20MMcf/d, he said, whereas the Hawkins County utility only uses about6 MMcf/d.
The Tennessee Regulatory Authority (TRA) granted approval inJuly for Tengasco Pipeline to transport gas directly to end-users.
©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |