OIL & GAS: Battle for New England

OIL & GAS

The U.S. natural gas pipeline industry is a lusty, brawling infant whose two major operators, Tennessee Gas Transmission Co. and Texas Eastern Transmission Corp., sprang up from nothing within the past decade. For the last three years, these two quick-grown giants have fought each other for control of New England, the biggest untapped market. Last week, before the Federal Power Commission in Washington, their battle reached a crucial round.

Grudge Fight. Up to last week, Tennessee Gas’s hard-fighting President H. Gardiner Symonds, 49, had won the edge in what for him was a grudge fight. He had been smarting ever since Texas Eastern outbid him in 1947 to win control of the war-surplus Big Inch and Little Big Inch oil pipelines and converted them to gas (TIME, Feb. 24, 1947). Determined to beat his rivals into New England, Symonds formed a subsidiary, Northeastern Gas Transmission Co., and in 1950 filed an application to build a line into New England from the Buffalo terminus of Tennessee’s pipeline from Texas.

But Texas Eastern’s President Reginald H. Hargrove was not far behind. He also formed a subsidiary, Algonquin Gas Transmission Co., jointly financed by his company and two big New England gas utilities, and asked to supply New England. The FPC, arguing that a single supplier was logical, tried to get the two enemies to join hands but Symonds refused. So FPC split the market, giving Northeastern the bigger share (54%) but Algonquin the best market, Boston.

Symonds hustled to extend Tennessee’s terminus from Buffalo, 300 miles into New England. Last fall he began serving 35 utility companies in New England. Algonquin still has not finished its $44 million, 254-mile pipeline from Lambertville, NJ. to Boston, but has only a few gaps (e.g., a quarter mile near Peekskill, N.Y.) to go. Symonds has done everything he could to keep Algonuin from finishing it.

New Blow. Two years ago, Symonds made a seemingly pointless request: he asked FPC for the whole New England market. The FPC, having already decided the case, threw his plea out without a hearing. Symonds went to court, charging that FPC’s action denied him due process of law. Cheerfully, he explained his action: “They [Algonquin] delayed us for two years . . . and made all the trouble they could. I’m just vindictive enough to want to do the same thing to them.”

Algonquin sniffed at the suit, went right ahead laying its pipe. Last April it got a shock. Philadelphia’s U.S. circuit court ruled that FPC had, indeed, injured Northeastern, ordered its plea for the whole market heard. Algonquin appealed to the U.S. Supreme Court and went on building. But last October the U.S. Supreme Court threw out the appeal. Algonquin finally woke up to the realization that it had spent $40 million on a pipeline which it had no legal right to use. It begged FPC for a temporary “emergency” permit to finish the line and use it.

Last week, before FPC, Algonquin argued that each day of delay would cost it $32,000 in idle men and materials. Replied Northeastern: the only “emergency” was that Algonquin had unwisely built a pipeline on a contested claim. Ruled the FPC majority: under the court decisions, FPC could not grant Algonquin’s plea. Instead, FPC ordered new hearings to decide if Northeastern should get the whole market. Not only did Algonquin face expensive delays while the new hearing dragged on. But should it lose, it faced the gloomy prospect of trying to sell its premature pipeline for what it could get to the only possible bidder: its No. 1 enemy, Gardiner Symonds of Northeastern.