ENERGY: PROGRESS SLOWED BY REGULATIONS

It’s not much fun running a utility company anymore. Gearing up to meet the energy demands of the future, Texas Utilities decided to bite the financial bullet and build a $778-milIion nuclear electric generating plant near Glen Rose. Inflation and government regulations have jacked up the price by nearly billion dollars and the thing’s not finished yet. Since Three Mile Island, people are holding town meetings to figure out some way to keep the plant from opening at all. Lone Star Gas and Southern Union Gas have bombarded customers with leaflets in monthly bills, with titles like “Another 1,726 Ways To Cut Your Gas Bill That You Might Not Have Thought Of.” Then, at the end of the year, they have to tell their stockholders that one of the reasons earnings are lower is that their customers didn’t use as much gas as they did last year.

Pitts Oil Company doesn’t have any stockholders. All it has is Frank Pitts, sole proprietor. The independent oil and gas production business is one of the last industries in America where people, rather than corporations, operate multi-million dollar businesses. Frank Pitts, who holds forth in the Meadows Building on North Central Expressway, might be considered a typical independent gas operator, were it not for the fact that he hit 16 straight wells in Denton County a few years ago. (The industry average, depending on whether spokesmen are trying to borrow money or encourage favorable legislation, is said to be anywhere from one out of two to one out of ten.) The financial comfort afforded by Pitts’ good fortune has allowed him to spend an inordinate amount of time during the last two years politicking and evangelizing on the subject of energy. It all began with an offhand remark on television by John O’Leary, then chairman of the Federal Energy Administration, to the effect that the country has no more significant deposits of natural gas. Pitts worked up a map and took it to Mr. O’Leary to show him that 98 percent of all the natural gas we ever had is still in the ground. Pitts has since distributed a million copies of his map.

The American Gas Association also claims an abundance of reserves, though their figure is a more conservative two-thirds of the original deposits. In either event, toat’s a lot of gas, but it’s way down there. “The big elephants are at 18,000 to 22,000 feet deep,” says Pitts. “The average well drilled today is at about 4000 feet. For every 2800 feet you go down, the drilling cost doubles.”

Needless to say, the gas producers aren’t going down to 20,000 feet unless someone makes it worthwhile. The deregulation of interstate natural gas prices passed by Congress last fall has provided some incentive, but progress has been slowed by incredibly complex implementing regulations. But the gas is there, and Pitts says that the producers can bring it up and sell it at a price lower than what we’re paying for synthetics and foreign substitutes.

“Petroleum is another story.” says Pitts. “I don’t think that we can find enough crude oil to be self-sufficient. They’re going to have to make it worthwhile for the drillers to go out and get all they can find, but we’re going to have to cut back on consumption too. Carter’s energy message seemed straightforward enough, but the wrapup the following morning at the White House attended by Pitts and other energy industry leaders told the same old story: Decontrol of oil won’t be quite that simple. There’ll be different prices for old oil and new oil and stripper oil and marginal well oil and special production technique oil, and so on.

We covered up all of our lignite coal mines decades ago when oil and gas became plentiful and cheap in Texas. Now the utility companies are out furiously digging up lignite to power the area’s ceiling fans and hair dryers. Texas Utilities had the foresight to get cracking with a huge lignite mining operation near Fair-field in 1971, long before energycrunch became one word. Lignite doesn’t burn as clearly as anthracite and bituminous, because it’s a couple of hundred million years younger. But like natural gas, it’s abundant – enough to last decades, maybe centuries. Lignite was first considered to be an interim fuel, between oil and gas and nuclear energy, but now it looks like we may have to suffer through this sooty “stopgap measure” for a lifetime or so.

Actually, nuclear energy was in big trouble long before the trouble at Three Mile Island. It takes about 12 years to build a nuclear-powered electric generating plant in this country because of the myriad of regulatory bases that have to be touched. (In Japan, it takes six years.) If anything, the regulatory burden will worsen as a result of the accident, making the cost virtually prohibitive.