Things have an interesting way of coming home to haunt you, in some cases, more rapidly than other:;. Last week I was a panelist a t an AGA marketing meeting in San Francisco and Dick Nelson from Shell attended that meeting and discussed the producers' point of view with respect to current problems in the gas industry. He did a great job and I am sure he enjoyed the meeting, but nevertheless, he was somewhat like a Christian in Lion's Den. I feel somewhat the same today. However, let me tell you why I may be a little bit different than the average gas distributor.
National Fuel is an old natural gas company, reaching way back to the 1870's and 1880's. We pushed the first long transmission lines across the Alleghenies from the Pennsylvania gas fields to western New York in 1888. We developed the first underground storage of gas in Welland, Ontario in 1913 and the Zoar Field in New York in 1914. We have over 4000 producing and storage gas wells in our service area and we have a producing subsidiary headquartered in Houston. We also have a pipeline subsidiary and a storage company providing underground storage for non-affiliates. So we really have a widely diversified gas company in addition to our distribution function.
In 1956, I attended the first meeting of AGD in New York, by invitation, I concluded and reported to our officers that in my judgment, AGD was formed to fight the producers and I believed that effort was counter-productive for our industry. National Fuel did not join that organization. Later we were instrumental with Consolidated, Columbia and Nicor, to name a few companies, in forming IJDC. These companies all had production affiliates and we felt our interests coincided with the gas industry as a whole. To continue, we are an old gas company; we do know the facts of life about drilling gas wells; we appreciate and understand' the risks .and the rewards of natural gas production.
In 1952, we negotiated for the purchase of gas from Shell in the Sheridan Field in Texas and Tennessee hauled the gas for us. That contract evolved because of a favored nation clause in a Tennessee contract. Shortly there after, we had the Phillips decision with all of its ramifications in 1954 and now we have come full circle . Last week at that AGA meeting, I told the assembled AGA executives and I quote:
"With the usual dire threats about supply, the industry settled down to digest wellhead regulation. Surprisingly, we discovered that wellhead controls weren't all that bad. The price of gas was held well below oil and coal wasn't really a factor. We quickly gobbled up almost 100% of the new home heating market -- better than 65% of the industrial market and were aggressively competing in the cooking and even air conditioning markets.