Profile of Intrastate Gas Pipelines

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.