Gas lines to rely on capital markets
According to M.P. Gilman (Salomon Bros.) at an American Gas Association seminar, U.S. gas pipeline companies will increasingly rely on capital markets to finance their transportation and exploration operations during the next decade, and pipeline investments will increasingly depend on a risk/reward analysis. However, the Federal Energy Regulatory Commission (FERC) sets rates of return on equity based on its view of pipeline operations alone, with the risk involved in expanded exploration being virtually ignored. Sponsors of supplemental gas supply projects, e.g., coal gasification, frequently diffuse the risks through project and consortium financing, but with a deterioration in the risk/return relationship, the sponsors will probably ask for government support. LNG terminals are comparatively immune to financing problems since capital requirements and technological risk are smaller than for other gas projects. The Alaska gas pipeline is questionable due to the high risk of cost overruns and noncompletion coupled with FERC refusal to allow loan guarantees and cost-of-service tariffs.
- Research Organization:
- Salomon Bros.
- OSTI ID:
- 6784397
- Journal Information:
- Oil Gas J.; (United States), Journal Name: Oil Gas J.; (United States) Vol. 77:44; ISSN OIGJA
- Country of Publication:
- United States
- Language:
- English
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COST BENEFIT ANALYSIS
ENERGY SYSTEMS
EXPLORATION
FINANCING
INDUSTRY
INVESTMENT
NATURAL GAS DISTRIBUTION SYSTEMS
NATURAL GAS INDUSTRY
PIPELINES
RISK ASSESSMENT