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Title: Fundamentals Of Energy Determination
Author: Thomas E. Sowell
Source: 1993 Gulf Coast Measurement Short Course (Now called ASGMT)
Year Published: 1993
Abstract: It has long been the practice of gas companies to record custody transfer strictly on a volumetric basis. This practice began to change, however, when Congress passed the Natural Gas Policy Act of 1978. Federal intervention came as a result of large price differentials between state and federally regulated natural gas. The Act sought to restore consumer confidence and instill a sense of fairness in the gas system. One of its provisions specified that natural gas was to be bought and sold on the basis of energy content. End users were free to purchase gas on a commodity market basis and use participating pipelines as conduits to transport gas to their particular locale. The cost benefits were initially impressive - but only to some customers. It soon became apparent that gases were of varying qualities resulting in increased consumption at some sites whereas others used less. As a result, unknown qualities had an unsettling effect on the entire system.




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