Producers are eating a bigger slice of the revenue pie,pipelines claim. Pipelines, however, are piling up a much greaterreturn for a much smaller investment, producers retort. And that’sjust the beginning of the arguments spawned by FERC’s probing thepossibility of lighter-handed regulation of pipelines, includingnegotiated terms and conditions.

An analysis paper issued by the Interstate Natural GasAssociation of America Wednesday includes a pie chart showingproducers collecting the lion’s share or 53% of revenues in 1997,while pipelines took home only 16% and LDCs collected 31%. Revenueshares for both pipelines and local distributors have declined from23% and 36%, respectively, in 1986, while the producers’ share hasgrown from 40%, INGAA says, claiming producers are threatening thegrowth potential of the natural gas market by insisting oncontinued regulatory control of their transportation monopoly.

But that’s not the whole story, the Natural Gas SupplyAssociation says. To get that share of the revenue, producersinvested $89 billion or 57% of the overall industry’s $157 billioninvested between 1986 and 1997, while pipelines invested just $26billion or 17% of the total, according to NGSA’s Phil Budzik. Thatmeans a 15% to 17% rate of return for pipelines, while producershave collected less than 6%.

Going forward the pipeline paper claims regulated rates willhamper the development of new pipelines to get to the projected 30Tcf market. Producers, however, say that since much of the newmarket will be during the summer peak when pipelines are not full,there is no need for a massive pipeline investment. They citevarious analysis which show producers investing between $40 and $80billion, while pipelines top out at $25 billion in getting to the30 Tcf market.

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