Natural gas prices have been partially or totally controlled at the wellhead since 1954.1 While regulation has created problems for natural gas producers, it has spurred the development of the most extensive and sophisticated natural gas processing industry in the world. The 1.5 MMBPD of gas plant NGL production in the United States is a vital part of the economy. Under current law, in 1985 it is estimated that approximately 50%-60% of the natural gas production in the United States will be deregulated. In 1987 an additional 5%-10% will be deregulated.2 Deregulation removes the guaranteed ceiling cost of fuel and shrinkage for gas processors. This paper assesses the effect of deregulation on the gas processing industry, and discusses how the industry may change after deregulation.

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