ustxtxb_obs_1976_02_13_50_00010-00000_000.pdf

Happiness Om , Is Printing By 1? IFFUTURA Newspapers Magazines Political Specialists Signs and Placards Bumperstrips Office Supplies 100% Union Shop PRESS Phone 512/442 7836 1714 SOUTH CONGRESS P.O. Box 3485 AUSTIN, TEXAS 3′ \\sl els i f 03 ete1 43S vgi ‘7″ e ‘S C&c as 12’1 V os re.i’v.\\o’i, ca-t a ” ts t \\S’ ve kol ok s s 10 The Texas Observer watch subsequent issues for .. . BILLIE CARR REPORTS Paid Pol. Adv. by Billie Carr Expense Fund 2418 Travis, Houston, Texas. MARTIN ELFANT SUN LIFE OF CANADA LIFE HEALTH DENTAL 600 JEFFERSON SUITE 430 HOUSTON, TEXAS 224-0686 Bob and Sara Roebuck Anchor National Financial Services 1524 E. Anderson Lane, Austin bonds stocks insurance mutual funds optional retirement program I cents and $1.85 is better than a five-fold inNow the Delhi Corp. quite naturally has quite a different story. Bob Young, general counsel for Texas Oil & Gas, told the Observer the company’s contracts with the Reeves County farmers prior to Dec. 31, 1975, had an average price of 31 cents per mcf \(the first of several discrepancies between the and that in the last three or four years the contracts had resulted in an economic loss for Delhi. \(One trusts not a serious loss: according to Texas Oil & Gas Company’s annual report for 1975, net income was up by 55 “As is common knowledge,” said Young, “the price of natural gas at the wellhead has risen from about 25 cents per mcf in 1971 to $1.90 per mcf at the wellhead at the current time.” Young said Delhi is paying as much as $1.90 for contracts today and he doesn’t know where the farmers got the $1.00 top figure. But another attorney for the farmers, Jim Sloan of Austin, says he doesn’t know where Delhi got the $1.90 figure. “They may be paying $1.90 for some gas and it’s up to $2.25 in some areas where there’s a real shortage, but I doubt they’re buying any $2.25 gas out there.” In fact, Delhi has a customer in a high shortage area, to wit, the Lower Colorado River Authority, which is passing along most of its gas from Delhi to Austin and San Antonio. Delhi has three contracts for back-up gas with the LCRA which go under fairly complicated formulas. But the upshot is that LCRA, in the heart of the old shortage area $1.90 to $2.00 per mcf. That’s not Delhi’s cost, mind, that’s what it’s charging in a shortage area. Young said the 59 cents blended cost cited by the farmers was correct “at that time, I don’t know what it is now. But we don’t sell our gas out of a pool. Delhi, like most gas companies, has wellhead gas dedicated to it at various prices, and this is obligated to be delivered to certain customers under long term contracts. We have obligations under long term contracts to Texas Western Municipal Gas Corp., Southwest Texas Municipal Gas Corp., and to Southern Union Gas Co. When you add up the requirements of those three customers, they equal our undedicated gas resources.” But Young was apparently not saying that these three major customers ate , up all of Delhi’s 59-cent gas. In fact, he’s not sure what those customers are being charged, as their contracts stipulate they will be charged the average cost of gas plus a fee for Delhi’s gathering and delivery services. Young made it clear that Delhi would be just as happy to see all the farmers get off the line, new contracts or no. “They are only a miniscule portion of our business there,” he said. “We are selling to industrial and municipal clients. It’s a very small volume of gas that goes to the farmers, we have got other customers that make it a paying line.” In his formal statement, Young said, “Gas deliveries were continued after the end of 1975 to give the farmers time to find an alternate energy source. The management of Delhi hopes that these irrigation farmers can obtain a long term source of gas supply from some local distribution company and to that extent is expending considerable time and effort in an attempt to sell its irrigation lines to someone who would be willing and able to supply this market.” Sloan said, “Of course they’re trying to get rid of the farmers. The farmers paid for the system out there, it was built for them and by them and now Delhi wants to get rid of them because there’s a gas shortage and they can make more money with big customers. But I think the farmers have some equity rights in that gas system. That system was built under the specific statute that applies to supplying gas to farmers for irrigation purposes. And the company has been operating it under that statute all these years, escaping any regulation and all kinds of state taxes. Now the company is trying to steal the distribution system. Those farmers granted easements for limited purposesfor the purposes of irrigation and the country granted limited easements or permits for the same purpose.” Actually, it would be rather difficult for Delhi to steal the distribution system since the company happens to own the distribution system, but it will be interesting to see if Sloan’s theory about the farmers having equity in the system proves to be correct. Bo Worsham is 62 years old. “I wouldn’t mind for me. I could quit. I’m too old to learn anything else, but I just hate it on account of my kids. I’ve laid my two boys off here, one 40 and the other 35. It’s pretty sad to see the farms fold up, see the people startin’ quittin’. But they knew they couldn’t pay. They never made any a that kind a money. I had a good thing here. But they can destroy that.” Another Reeves County farmer who didn’t want his name used, said, “I’m 64 years old. I have a son, has three kids and a new house. I just wish I hadn’t talked him into comin’ back here. This is hurtin’ the community so bad. We were buildin’ a hospital an’ everything. We floated a lot of bonds, $3.5 million, to pay for that hospital. I guess this’ll put us all on relief. People already puffin’ out. Won’t nothin’ grow in this country without water. You got to have irrigation. I come here in 1947. Everything I’ve worked a lifetime for . . . but I wouldn’t sign that new contract. They don’t even tell you about the deposits until after you’ve signed. I . . . well I just . . . why do they have to make a dollar and a half on that gas?” M.I.