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Natural Gas-
Pipeline Industry Responds
To Challenge of Declining Reserves
........
~-----------------------------------------
'I'he gr .
gas . OWIng. shortage of natural
tnen7lll reqUIre far-reaching adjustand . s on the p~rt of consumers
lead ~dustry alike. Not only will it
and d 0 further changes in prices
the d ell1and, but it will also call for
sUPPleveloPI?ent .of new sources of
llle y, forcIng dIfficult adjustdus~~ on t.he ~as transmission inand y. BrIdgIng the production
this ~onSumption of natural gas
cili/ndustry is tied to existing faing_~~Jor production and marketin th
both are bound to change
W~ Years to come.
Pipell~h proved r.eserve~ dwindling,
Perien : compames are already exe";st. CIng declining utilization of
'" lng . li
are WorJlpe ~es. As a result, they
tryin
ng wIth gas producers,
the a~ t? .encourage discovery of
thetn tditlonal reserves needed for
kets. A0 SUpply established marthe POsn.d ~?:y are also looking at
Plies b Slbllit~es for boosting supreServ y ~apPIng vast undeveloped
frotn es In Alaska, bringing gas
theti oVerseas, and building syn~asiccctas pla~ts. All this marks a
1ndust a~ge In the transmission
ry Itself.
-----------------
plies to fill their lines, pipeline
companies are facing the prospects
of making additional enormous investments at risks they have not
had before.
The present network of pipelines was developed under conditions of an excess supply of natural
gas. While the pipelines were expensive to lay, the pipeline companies themselves were not usually
involved in developing sources of
supply. By taking on the risks of
trying to develop sources of gas,
they are taking on a new role. The
change in their role-and level of
risk-is a direct result of the emerging scarcity of natural gas.
Long-distance lines
The nation's pipelines developed
into a major industry in response
to an abundance of natural gas in
fields far from urban areas. Discovery of giant oil and gas fields
Nation's gas transmission lines
increase nearly threefold since World War II
THOUSAND MILES
_
300
Without·
.
fields . Pipelines to connect
was c Wlt~ mass markets, gas
to Oil onsldered a hindrance
flarel.roduction and was
In the field
-----
.. •
-
.
.\snew
the hat. SOurces of gas are found
. " lOn'
,
~ill have s network of pipelines
III addit. to b~ extended. The cost
and Po l?bal hnes and facilitiesa~ilI to ~l ly even new technology
billion e developed-will run into
Patingsi~f dollars. And by partici11
the development of suplIsiness
throughout the decade leading up
to World War II produced an enormous backlog of gas that was certain to be available for many years
to come. As a result of the search
for oil, gas reserves that had been
about 20 times the demands on
them in the 1920's ballooned to
about 40 times actual usage by the
outbreak of World War II.
With these vast reserves overhanging the market, gas prices
plummeted. Gas became almost
worthless as reserves continued to
expand and markets still went underdeveloped. Without pipelines
to connect fields (mostly in the
Southwest) with mass markets
(mostly in the North and East) ,
gas, in fact, was considered a hindrance to oil production and was
flared in the field.
Long-term contracts made during these years of abundant gas
still make the average sale of Texas
neVlew I October 1974
.
o
SOURCE:
American Gas Association
1
-Three-fourths of nation 's proved gas reserves
located in states of the Eleventh District
PERCENT OF U.s. PROVED RESERVES
40
30 -
20 -
10 -
o
TEXAS
LOUISIANA
NEW
MEXICO
OKLAHOMA
ALASKA
REST OF
UNITED
STATES
SOURCE: American Gas Association
gas look inexpensive. Last year,
Texas gas sold at an average of
about 20 cents per 1,000 cubic feet.
At the same time, some sales of
new gas exceeded $1 per thousand.
Not until the development of
large pipe and high-volume
pumping stations could
enough gas be moved to
serve mass markets.
The potential market for gas
predated development of this once
vast reserve base. Even before the
turn of the century, gas manufactured from coal was sold in urban
areas, creating the "Gaslight Era."
First developed in England, processes for making gas from coal
were later improved with the discovery of water gas, which contained hydrogen that burned to
water vapor.
Despite these advances, however, manufactured gas was of a
2
low quality-low, certainly, compared with natural gas. And the
cost of manufacturing gas rose
throughout the early part of the
century, making coal and oil more
attractive fuels.
The way to link an overabundance of cheap gas in the Southwest with a need for more competitively priced gas in large urban
areas was, of course, to pump it
through pipelines. But first, significant new technology had to be
developed.
Pipelines seldom exceeded 150
miles until after the midtwenties.
And although lines were later laid
to carry gas from the Southwest to
such cities as Chicago and Detroit,
it was not until after the development of large pipe and high-volume
pumping stations that enough gas
could be moved to serve mass
markets.
The first major pipelines were
built to reduce tanker traffic in
World War II. The Big Inch (a
24-inch pipe) was run 1,250 miles
to carry oil from East Texas n~rth
eastward through the nation's In-h
dustrial heartland. The Little Inc
(a 20-inch line) moved oil 1,475 d'miles in a slightly more easterly 1
rection, terminating in the New
York area.
t
After the war, sale of these fi~s
long-distance lines to transmisSl~n
companies that converted them 0
interstate carriers of natural gas
opened the whole Eastern Sea- I
board to large supplies of natura
gas, laying the basis for the formation of a separate pipeline industry. Eventually, gas lines were t
extended to link fields throughoU
Texas, Oklahoma, and Louisiana
with all major metropolitan areas.
The net of long-distance transmission lines was extended fro~
about 80,000 miles at the end 0
World War II to about 26~,000 'al
miles in 1972, boosting residentIIY
consumption of nat~ra~ gas nea~t1t
eightfold. Today, pIpelines fan to
from these southwestern state~he
reach urban areas throughout
country.
High-capacity lines
were
More than long-distance lines t
needed, however, to open up vaS
new markets for what had once il
been a low-value byproduct of 0 st
production. To hold down the.{~
of moving gas thousands of mi e d..
,
.
the flow of gas had to be Increase
.
a need calling for large hlgh -p.reS-of
e
sure lines. By increasing ~he ~~ d
lines and spreading the hIgh ll~e
cost over larger volumes of gas'the
pipeline companies could k~ep lo\\"
unit cost of delivered gas faIrly 11
Early pipelines were very ti~o
by standards of today. Usua Yr
larger than 8 inches in diameJer'
they could carry gas only un ;'ne
low pressures. Today, gas tur ~O
compressors operating at 30'1° s
horsepower (compared WI·th eS )
than 5,000 only a few year.s ~g:and
push gas through welded-J?In
hes
seamless pipes of up to 30 Inc
O
in diameter (some are even 4
.....
inches
of
or more) and at pressures
sqlno re. than 1,000 pounds per
uaremch.
transmission companies. To keep
use of their lines close to capacity,
they have sold some gas to industrial users at lower prices but with
the understanding that deliveries
~Y increasing the size of
could be interrupted during periods
nes and spreading the high
of peak demand when more of the
o:ed co~t 0v.er large volumes
gas had to go to other users.
S , Plpehne companies
c
Further facilitation of the flow
d~~ d keep the unit cost of
of natural gas to rapidly expanding
Ivered gas fairly low.
but fluctuating markets came with
the development of underground
storage close to points of consumpBut ev .
0Per t. en m these large-capacity tion. Use of these storage facilitieslllaj a ~ons, fixed costs remain a
usually depleted oil and gas fields
nat~r ltem in the marketing of
or abandoned coal mines-allows
0Per r~! gas. With a big pipeline
near-capacity deliveries to continue
capa~.~ng.at 85 percent or more of
even during off-peak seasons.
Cent 1 y, It costs from 1.5 to 2
Pumped back underground, the
gas ;o~o ~ove 1,000 cubic feet of
gas can later be reclaimed for use
this
nu.les. And four-fifths of
when demand rises again. Altogether, there is underground storCO\1e~~~ must be assigned to reline its e fix.ed cost of the pipeage for more than 6 trillion cubic
gas elf. Flxed costs per unit of
feet of natural gas in the United
\Vhe;oved can roughly double
States.
50 p use of a line drops to about
Recent years have seen still
ercent.
further development of gas-storage
de!ith seasona1fluctuations in
technology with the introduction
of cryogenic plants operated in
U.ti1i:~~ for natural gas, keeping
connection with pipelines. Superl'ound hlon of pipelines high year
as been a problem for
cooled to a liquid at these plants,
------------------------f:
gr
----------------------
............
---------------------------
Growth'
as With~n natural gas reserves slows
raWals continue to rise . . .
1' 1ll l li
30
ON CUBIC FEET
---------------------------------------ADDITION TO PROVED RESERVES (LOWER 48 STATES )
10 ....
o
INCREASE IN PRODUCTION
T----I,------~,----~,~----~,-----,,------r,19 45
SOlJll
1950
CE : A
1955
1960
1965
1970
1975
.
merlcan Gas Association
...............
1lIlSitle-ss-n--.- - - - - - - - - - - - - - - - - - - - - - eVlew I October 1974
gas is shrunk to a tiny fraction of
its gaseous volume. There is storage for about 36 billion cubic feet
of liquefied natural gas.
With seasonal fluctuations in
demand for gas, keeping utilization of pipelines high year
round has been a problem.
Having adjusted the flow in their
lines to the seasonal demand for
fuel, pipeline companies completed
their adaptation to the special conditions of their industry. They had
successfully linked widely separated sources of supply and commercial outlets halfway across the
continent. And by making the
most of long-lived facilities and a
highly dependable demand for gas,
they were able to hold down costs
to consumers-at least as long as
reserves lasted.
Declining reserves
The nation's gas reserves are now
being drawn down far faster than
new discoveldes add to them. From
a peak of 289 trillion cubic feet in
1967, proved reserves (excluding
those in Alaska) dropped to 218
trillion in 1973-falling for the first
time below the ten-year life expectancy considered necessary for
deliveries to continue nationwide
without some interruption of
service.
The concept of effective life of
reserves is more meaningful than
any measure of the reserves themselves-especially with reserves continuing to decline in the face of the
rapidly growing demands on them.
Where reserves at the end of World
War II were adequate to meet the
demand for over 30 years, reserves
in the lower 48 states in 1973 were
adequate for only 9.7 years of production. For the past several years,
in fact, reserves have not been
large enough to prevent scattered
disruption of service.
3
be reserves to keep them in operation for many years.
With the declining availability
YEARS
of gas, interstate pipelines have
40-----------------------------------------------been having to curtail deliveries
since 1970, cutting back service to
all categories of customers. Not
only do industrial users noW find
30RESERVE-TO-PRODUCTION RATIO
supplies scarce, but in some areas,
gas is no longer available for gas
utilities to extend new service to
large numbers of residential and
20commercial users.
Nationwide, sales increased only
half a percentage point last year~
compared with an average anou ,
10 - -----------------------------------------CRITICAL LEVEL
increase of 5 percent in the 1960 s.
And preliminary estimates show
electric utilities may have used
o--._----~I------~----_r------._----~----~-over 9 percent less gas last year
than in 1972, even though they
1955
1960
1950
1945
1965
1970
1975
generated close to 6 percent IIlore
SOURCE : American Gas Assoc iation
electricity.
To meet emergency shortages
last year, the Federal power CoIllmission set priorities for the inte~
When the nation's total reserves tion's proved gas reserves are as1state delivery of natural gas. Res'eJ
were large, the declining reserve
sociated with oil reserves. And as
dential users and small comIIle!~1es
life was generally believed to be
gas provides the driving force that
.
customers were given top p~lO ptl ·
d
merely an adjustment to conditions pushes the oil into the well, much
The lowest priority was asslgne ca.of excess reserves. But it is now
of the gas has to be kept in the
. g
well understood that a backlog of
ground as a conservation measure. to large industrial users haVln 1
pabilities for burning other fue s.
reserves equal to about ten years
Without the gas, pressure in the
The impact of the gas shortage,
of production is necessary to avoid oil-bearing formations would be
moreover, has fallen unevenly onn
interruptions. There are both tech- lost, causing a loss of much of the
nical and economic reasons for
oil. But even wells that produce no pipeline companies, depending 0
;_
keeping a backlog of that size.
oil would become clogged with sand the size of the reserves they hav
backing their deliveries. One co ,,_
if the gas were withdrawn too fast.
pany with reserves having a deli rS
On the economic side, there are
the problems of balancing producery life that dropped from 1.1 ~~2
Where reserves at the end of
in 1966 to only three years In urWorld War II were adequate to tion against investment. The high
was told to freeze deliveries at C
cost of developing a field requires
meet the demand for over 30
rent levels and take on no neW
that production continue long
years, reserves in 1973 were
customers.
adequate for only 9.7 years of enough to earn a return. To withdraw gas faster, more must be
production. And a backlog of
As reserves have continue~ t:erspent on wells, pipelines, and other drop-reserves committed to In erreserves equal to about ten
long-lived facilities. But the faster
state pipelines fell, in fact, 8.5 Prosyears of production is necesproduction may not provide the
sary to avoid interruptions in
cent from 1972 to 1973 alo~e-~nts
returns to cover the increase in
deliveries.
pects for ending such curta~onY
investment.
appear bleak. In recent tes t1Ill f
before Congress, the chairIIl~n 0
This seems especially true of
the Federal Power CommiSSIon
On the technical side, there is the pipelines. They are expensive to
problem of pacing production so
predicted major shortages o~ g:tlay, impossible to move, and so
that the full potential of a field can durable that their service life is
throughout the northern an enett
be developed without damaging the almost indefinite. For these facilern parts of the country in t~e 81reservoir. About a fifth of the nafive years. As measures to he P
ities to earn a return, there must
... forcing effective life of reserves
below the required ten-year minimum
4
......
IeViat th
reco e reatened shortages, he
Proportion ot energy consumption
\Vell~end~d the deregulation of
accounted tor by natural gas tapers ott
of off had PrIces and increased sale
PERCENT OF U.S . ENERGY CONSUMPTION
s ore leases.
. Such ch
.
lllcent.
anges would Increase the
findin Ives and opportunities for
rapid ~ ne~ g~s. But with the
30the
ecline In reserves overall
probably would not greatl;
in th OVe the outlook for supplies
25NATURAL GAS
Pedee ear future. A study by the
(STRIPPED OF NATURAL GAS LIQUIDS)
the ra Power COmmission shows
WithutloOk bleak through 1990.
20in So out a marked improvement
stud;rces of gas, according to the
drop toannual prod~~tion could
by th about 11 trIllion cubic feet
in
~ompared with 22 trillion
lnent . ut even with improve10 , I
I.~.--------.---------_r--------_,----------T__
to eJ{ S, production is still not likely
1945 1955
1960
1965
1970
1975
ed 22 trillion.
into' Ie the field price of gas going SOURCE: U.S. Bureau ot Mines
been I~terstate pipelines has not
have b eregulated, prices of new gas
Cantl een allowed to rise signifishar ~. ~nd the Government has
all, pipeline companies will have to trillion. And reserves in the Arctic
ofiShP y Increased its offerings of
islands could exceed 240 trillion.
undertake very large construction
close~~e leases. In addition, a
projects-and they are.
of th oo~ has been taken at some
These companies are investing
Pipel~ envIronmental objections to to encourage exploration of new
If large amounts of gas are
fuelinn~s and other proposals for
reserves, pursuing economic and
found in the Far North, they
A. g Industry.
technological possibilities for imwill far exceed the proved reterln~:~se changes indicate a de- porting natural gas, extending
serves in the continental
their lines to fields previously conability a n to expand the availUnited States, easily justifying
fuel A. 0 gas and other forms of
sidered inaccessible, and looking
construction of the facilities
cubic f ltogether, nearly 32 trillion
ahead to the eventual production
needed to connect them with
of synthetic gas. Taken as a whole,
availab1et. of new gas might be
markets in Canada and the
trelnel e.InI990, and with exthese changes will not only cost
lower United States.
of 49 t~J~ber~1 incentives, a supply billions, adding thousands of miles
to the nation's pipeline system,
Ilot Pr b IOn IS conceivable though
PrOjeco. ab~e. A more reasonable
but will even change the pattern
If such large amounts of gas are
fairly tion IS probably the FPC's
of the system itself.
actually found, they will far exavaila~~ll assured forecast of an
ceed the proved reserves in the
•.. in the North ...
Cubic f 1 ty of about 25 trillion
continental United States, easily
eet.
justifying construction of the facilPipelines from the Far North prol'he ind t '
ities needed to connect them with
vide a case in point. Although dis'l'h . Us ry s response •••
urban markets in Canada and the
cussion of the Alaskan pipeline so
e PIPel' .
~o the de ll:e Industry's response
lower United States. But the full
far has centered on the movement
extent of these reserves cannot be
III the ut.~!Ine.in reserves and drop
of oil, there is believed to be as
beeh surpIZatlOn of its lines has
1
known until they have been develmuch as 26 trillion cubic feet of
",
..
Pansio n f rISIngly, to continue exoped further. And further developnatural gas under the North Slope
o
ment waits on pipelines with access
Pl'osPe t t~e lines, even though
and possibly as much as 300 trilability c ; of Improving the availto markets.
lion. In addition, there are large
fact if 0 gas appear dim. But in
In Alaska, there are only enough
reserves in Canada's Mackenzie
, USe of
.
proved reserves now to support
h
gas IS to increase at
River Delta that could exceed 100
35------------------------------------___________
ilnJr
1
19;9,
,Ir
,
,
,
,
wh7
t
QUs'
lIless~
.
eVlew I October 1974
5
one pipeline. The gas could be
moved to market either through a
pipeline to the coast, with facilities
there to liquefy it for shipment by
tanker to the West Coast, or
through a pipeline across Canada
to the northeastern United States.
Either approach would spur exploration to enlarge the reserves. And
discovery of new reserves could
make another pipeline possible.
Gas produced near the coast of
Alaska is already being liquefied
for shipment to Japan. And with
the rising price of gas, shipment of
gas by tanker to the West Coast is
becoming economically feasible.
A gas pipeline from the North
Slope could be laid parallel to the
oil line, bringing gas to the coast,
where additional liquefaction facilities would have to be built. According to some studies, gas shipped
that way would cost no more than
gas piped through Canada.
A gas line across Canada would
be built-initially, at least-as an
alternative to a line across Alaska
to the sea. Running 4,200 miles,
such a line would probably cost
about $7.5 billion. The main line
would reenter the United States
in Montana. Reaching eastward
from there 1,600 miles to Pennsylvania, it would make gas from the
Arctic available in 26 midwestern
and eastern states. A spur could
cross the border in Idaho, making
northern gas available west of
the Rockies.
Whether running to the coast or
across Canada, an Alaskan gas line
will pose problems different from
those of an oil line. To speed the
flow in such a cold climate, oil in
the line will be kept warm. And to
avoid damage to the tundra, the
oil line will have to be laid above
ground. But to increase the flow
in the gas line, the gas would be
refrigerated and, therefore, the
line buried.
Agreements, of course, would
have to be worked out first with
Canada, detailing the amount of
6
gas to go to Canadian markets, the
extent of Canadian responsibility
for management of the line, and
the preference to be given Canadian companies during construction. But this line would offer the
advantage of also providing the
means of tapping Mackenzie River
Delta reserves and bringing gas to
hard-pressed eastern markets.
In addition to these lines connecting Alaska and the United
States, a third major gas pipeline
is under study to tap possibly even
more vast reserves in the Arctic
islands. Several proposed routes
would bring gas down one side or
the other of the Hudson Bay to
markets in southeastern Canada
and the eastern United States.
Any of these lines would blaze
new trails in terms of economics
and technology. They would
stretch further than lines have ever
stretched before, cross country
that has been considered almost
inaccessible, and have to be built
under extremely cold climatic conditions. All this would be technically feasible, but it would be economically possible only with still
higher gas prices.
... offshore .•.
Natural gas found offshore presents problems similar in magnitude to those of tapping reserves
in the Far North. To make offshore gas accessible to hard-pressed
markets ashore, it, too, must be
brought into the nation's network
of distribution lines. And like
northern gas, it can be brought to
distribution points only at great
expense.
Extension of gas lines to connect
offshore wells has involved major
technological achievements. And
as exploration is extended into
deeper water further from shore,
the technology must be continually
refined-at ever greater expense.
The most impressive offshore
pipe project so far in the United
States is a 36-inch system being
built off Louisiana. The project
will link wells drilled in water
depths of 365 feet. That will be a f
record for offshore pipe in the Gul .
And the wells are 125 miles froIll
shore, which will make another
Gulf Coast record.
Construction will require the use
of barges the size of football fields
and costing $10 million each.
Where the water is too deep fO~
divers, miniature submarines .
be needed to inspect the line as It
is laid.
When completed in about three
years, the system will bring ashore
up to 1 billion cubic feet of gas a
day. But it will have cost some
$155 million to build.
Even more ambitious pipe systems are being developed to gat~er
gas in the North Sea. There, fie ~e
are considerably further fro~
than the new wells being dnll e
the Gulf of Mexico, and the wellS
are in deeper water.
ffn
----
---------------------
By participating in explora"
tion, pipeline companies are
departing from their old role
as merely the link between
points of production and
points of consumption.
------------------------Although such projects alloW
the search for gas to extend further out into the oceans, they are
much more expensive than pipelines laid ashore and take much
longer to complete. It often takeS
three or four years to develop a If
field offshore, compared with ha ts
that time ashore. Constant efft
are being made to speed comP
tion of such projects and expall
the nation's reserve base.
Part of these efforts offshore. ",
.. atla,·
have involved actual parhcIP On'
in the search for new reserves. f «
til shortages became evidex:t a eere
years ago, pipeline companIes W
concerned only with moving g~s
to market. Now, to find enoug
d
--gas to fill th . l'
tivel
el: mes, they are acNation will probably find
promotmg exploration.
over a third of its new gas reserves offshore
Off ?st of this effort has gone into
erlng
I
.
TRILLION CUBIC FEET
ad
exp oratIon companies
1,000 ag~eance payments in return for
GULF OF MEXICO
e..; elllents to commit new discov4,es to th . lin
sio n co
el~
es. Some transmisATLANTIC
800 OFFSHORE
PACIFIC
been aslllpallIes, however, have
. .
rectI S.Oclatmg themselves diALASKA
Pi Yev.:Ith exploration companies.
Part P line companies have been
Plor~~flar!y active in spurring exGulf Con In gas-rich areas off the
lllent i oast. ~nd.with the GovernLOWER 48 STATES
Offsh ncreasmg Its offerings of
ONSHORE
bOOlllo:e leases, there has been a
In drilling in the Gulf.
Gov
cOax de~r.unent lease sales have
prod~c' Id~ of billions from the
ALASKA
ners i Ing In,dus.try and its parto
SOURCE: American Gas Association
this a~ t.he ~Ipehne industry. It is
with th~~.bIlity o~ l~ases, together
for int
19her PrIces being paid
On th erstate ~as, that has brought
and .e uPturn m offshore drilling
has been estimated by the FPC as
into the United States from Althe ~~~ turn.' a marked increase in
punning from 80 trillion to 150
geria by refrigerated tankers in
origi ~ortlOn of interstate gas
trillion cubic feet, depending on
1973. And far more could be
h ~atIng along the Gulf Coast
the incentives for exploration. In
bought there and in other African
.c-rlces of
.
.
still si . gas sold mtrastate are
the most probable range, estiand Middle Eastern countries-and
Ptic ~llIficantly higher than the
mated at between 99 trillion and
possibly the Soviet Union-if there
Pay en Interstate companies can
117 trillion cubic feet, offshore pro- were facilities for handling it.
ing ~r ut many of the new producduction will have grown from about
Altogether, ten terminals are
juris/~~ offshore are outside the
15 percent of all gas produced in
being planned to receive liquefied
C
gas th IOn of anyone state. The
the lower 48 states in 1970 to begas in the United States. Conint~rst ertef~re, has to be sold in
tween 33 and 36 percent in 1990.
struction has already started on
h
a e hnes.
some of them. The terminals will
.oYPa t· · . .
••• overseas •.•
Pipeline ~ IClpatI~g m exploration,
cost about $300 million each and
depart' ompames are, of course
There are enormous foreign rerequire about $700 million in suplllerelyl~g fr?m their old role as '
serves of natural gas, most of them porting ships, pipelines, and facilProdu t.he hnk between points of
overseas. In several countries, the
ities for handling and storing gas.
c IOn
·
tIOn. The a d '
n pomts of consump- situation is much as it was in the
Prospects for increased use of
of the he Yare. now taking on some United States in the early years
imports from overseas have been
. The 0 ady rIsks of exploration.
dampened, however, by the recent
after World War II, when for lack
IS oil 0 nlY.way to know if there
energy crisis. Once the investment
of a means to market gas, large
\VeIl. A~~a~ In an area is to sink a
was made in ships and terminals,
amounts of gas produced in conCOst in th In s?me areas, that can
overseas suppliers could raise
nection with crude oil were flared
lllillion ane ~elghborhood of $1
prices for their gas, just as they
in the field.
~han a band Involve a greater risk
have done for their oil, leaving forAs a result of the abundant reInvest
k or most other outside
eign gas supplies no more secure
serves that are going largely unCon~~s Would tolerate.
used overseas, costly efforts are be- than foreign oil supplies.
drilling l!Jued emphasis on offshore ing made to expand facilities for
Thus, while the outlook is for
the dev \S nevertheless, central to
,
supercooling natural gas to a liquid increased imports, most of the inreserv e oPlllent of adequate gas
crease is expected to be within
for shipment in cryogenic tankers.
offSho:s. OVerall, production from
North America. According to the
Some 3.4 billion cubic feet of
e Wells from 1971 to 1990
liquefied natural gas was imported Federal Power Commission's pronUs'
10./
1tlessR
.
eVlew I October 1974
7
jection of the most likely case, imports from 1971 to 1990 could
range from 67 trillion to 110 trillion cubic feet. Roughly a third of
these imports, however, would
probably come by pipeline from
fields in Canada.
Amount of gas pipelines committed to deliver,
but cannot supply, continues to rise
BILLION CUBIC FEET
2,000
·-----I 1,845.8
I
1,500-
... and in gasification
Pipeline companies have also
joined efforts to supplement natural gas supplies with manufactured
gas. Exploration, though promising-especially offshore-is just
that. And even if the possibilities
of finding new reserves were more
certain, without other sources of
gas, the additional reserves would
eventually be exhausted.
Of the hydrocarbons used in
making synthetic gas, petroleum
products are the easiest to work
with. In fact, propane mixed with
air can simply be added to gas
lines without any further processing to boost the heating quality of
natural gas and extend the supply.
Petroleum feedstocks are being
used in 12 gasification plants.
With a combined capacity of 295
million cubic feet a day, these
plants were built at a total cost of
$588 million.
Gasification would solve the
two big problems with coal in
the past-the pollution it
causes when burned directly
and the expense of its cumbersome delivery to distant
markets.
Recent boosts in prices of petroleum products have discouraged
further construction of gasification
plants based on petroleum, however, especially as continued expansion of synthetic gas capacity
based on petroleum would leave
these plants to compete with producers of petrochemicals for the
raw materials. Petrochemical producers are already concerned about
8
1,191.1
1,000
-
823.4
480.6
500
o
I
I
I
1971
I
1972
1973
1974
I
•
1975
II
SOURCE: American Gas Association
the availability of feedstocks-certainly at the prices on which their
industry was built.
But there has also been discouragement with the dependability of
petroleum supplies, regardless of
price. The growing dependence on
foreign sources of crude oil has
raised a national security issue.
Many feel that the country should
be moving toward self-sufficiency
in its energy needs.
Gasification of coal provides an
appealing alternative to synthetic
gas plants using petroleum products. There is a wealth of domestic
coal that could be drawn on for
gasification.
Coal, in fact, is the nation's most
abundant fuel resource. There are
reserves of 300 billion tons that
could be used with existing technology. And gasification would
solve the two big problems with
coal in the past-the pollution it
causes when burned directly and
the expense of its cumbersome delivery to distant markets.
All the essential know-how of
converting coal to gas has long
since been developed. Although
early use of manufactured gas was
suspended in the United States as
pipelines were built to carry nat-
ural gas to market, commercial
gasification of coal has continued
in Europe-where there was little
natural gas until recent years and
manufactured gas has remained
an important fuel. Further improvements have been made in
manufacturing processes there,
and some of this technology is nOw
being imported into the United
States.
There are some problems with
the location of the domestic reserves available for gasificatio~.
Mines near the nation's large Industrial and urban centers are PrD'
ducing coal under long-term contracts that leave their output d
committed for years to come. An
new mines will take years to oP~~~e
Reserves further away from t
large markets could, nevertheles~p.
be developed. In many cases, strI
mining could be undertaken in
these remote locations to pro Vl'de
fairly low-cost fuel.
But the gasification plants
would have to be located near~h'
Otherwise, costs would rise WIt
the handling and shipping of the
large amounts of coal needed to
meet demand for gas. And if the Jl1
gas were manufactured so far fr~d
market, the price of the gas wou
havet . 1
di t 0 Inc ude the cost of longs ance transmission.
Po I~ Some areas that could be im\Va~ ant sources of coal, the lack of
ga .~r pr~sents a major barrier to
to ~ cabon. This barrier will have
lllak: overcome. be~ore coal can
a
tion to really ~Ig~Iiicant contribuNo the ~atIon s fuel supplies.
the t only IS steam essential to
gas ~anufacturing of synthetic
th' ut water is needed to prepare
by~ co~ for processing, to treat the
ro
eQUi ucts of gasification, to cool
B~~ent, and to control dust.
able If enough water were availCoal near the mines to support a
nee gas operation, it might not be
anyessary to 1 t e th e plant there
oca
coatay. With enough water, the
thro could be crushed and washed
Plan~g? pipelines as slurry to
Ne s In better locations.
acre fW Mexico has allocated 72 000
'
gasificeet.0f water to support seven
lllak . ation plants planned to
But :t~~e of its large coal reserves.
lllake f I more water is needed to
Bee u 1 Use of these reserves.
lllay ause of these problems, there
iticatfot be mor~ than six coal gas\Vide n plants In operation nation"'ill no~ the end of the 1970's. That
than be enough to meet more
lllandafsmaU fraction of the deorgas
b
----
.
---------------III th' ,
erll~s fiscal year alone, Gov9asjfe nt ,expenditures on coal
Pect Icallon research are exPlIbl~d to exc,eed the total of
Oil th~ and private spending
the piS tYpe of research for
ast ten years.
-----------------'l'he
COlllnust';ldy by the Federal Power
be Useds~lon indicates coal could
26 trilli 111 producing 8 trillion to
1971 t on CUbic feet of gas from
range ? ~990. The most likely
'l'hat ~~ 2 trillion to 16 trillion.
the ga fUl d be about 3 percent of
h
s rom domestic sources.
QIls'
lIlessn .
eVlew I October 1974
Falling gas reserves and higher
world oil prices, nevertheless, keep
interest in coal gasification running strong. In this fiscal year alone,
Government expenditures on coal
gasification research are expected
to exceed the total of public and
private spending on this type of
research for the past ten years.
And some recommendations call
for even more spending by the end
of the decade.
The Federal Power Commission
has ruled favorably on several of
the coal gasification projects proposed for New Mexico, all of which
would send synthetic gas through
interstate pipelines. This gas would
be considerably more expensive
than most natural gas.
Gas produced at one New Mexico complex would cost about $1.51
per 1,000 cubic feet the first year.
Thereafter, the cost would drop
somewhat but still average $1.25
per thousand over the 25-year life
of the plant.
By contrast, natural gas bought
by interstate lines seldom commands more than 43 cents. The
price of new gas sold in intrastate
markets has also been rising, however, and, in some cases, has already reached the level expected
for New Mexico's synthetic gas.
Use of hydrogen as a fuel is not
altogether new. A century ago,
manufactured gas was close to half
hydrogen. And today, it is used in
liquid form in space programs, as
a propellant and for generating
electricity through fuel cells.
Commercial hydrogen could be
piped into distribution systems
now used for natural gas. Initially,
it would be burned. But eventually, with the further development of fuel cells, it could be used
to generate electricity in the home.
Although some modification
of existing pipelines would be
needed for them to carry hydrogen, current technology
makes gas transmission more
economical than electric
power transmission.
One of the impediments to
quicker use of nuclear power in the
generation of electricity has been
concern for the environment-especially concern over heat pollution.
With advances being made in offshore pipelines, however, nuclear
facilities could be built on floating
platforms similar to those used in
offshore drilling operations. If
these plants were otherwise feasible from an environmental and
Further in the future
safety standpoint, their location
Hydrogen would make an even betat sea, with underwater pipelines
ter gaseous fuel. It has all the adto shore, would remove the probvantages of cleanness and convenience that natural or synthetic gas lems of heat pollution near urban
can offer, without the serious disad- areas.
Although some modification of
vantage of a limited reserve base.
existing pipelines would be needed
If nuclear fusion were perfected,
for them to carry hydrogen, curplants on the coast could provide
rent technology makes gas transenough cheap power to break seamission more economical than
water down into an almost inexelectric power transmission. There
haustible supply of hydrogen.
is always some loss on a power
Perfection of this new technolline but little in a pipeline. And
ogy would bring on a hydrogenalthough these modifications
powered economy, and replacement
of the old economy based on hydro- would boost gas transmission costs
somewhat, the lines would be more
carbons would present the pipeefficient than they are now because
line industry with even greater
they could pump a much greater
challenges.
9
volume of hydrogen than they can
natural gas.
Such a changeover is, of course,
still well in the future, and, yet,
with the rapid decline in gas reserves and demand still rising unabated by the increase in prices,
there will have to be marked
changes in the future. And pipeline companies are watching the
considerable progress being made
in the development of both nuclear
fusion and fuel cells.
When the changeover comes, it
will end the Southwest's domination of gas production. With nuclear fusion, hydrogen can be produced as easily on the East Coast
as on the Gulf Coast. And with the
shift will come further changes in
the nation's network of pipelines.
-Stephen L. Gardner
New member banks
The Brownsville National Bank, Brownsville, Texas, a newly organized
institution located in the territory served by the San Antonio Branch of the
Federal Reserve Bank of Dallas, opened for business August 23, 1974, as a
member of the Federal Reserve System. The new member bank opened with
capital of $440,000, surplus of $440,000, and undivided profits of $220,000. The
officers are: Joe Zavaletta, Chairman of the Board; Raymond E. Barr, President;
Jean M. Webb, Executive Vice President; and Anita Salinas, Cashier.
The Continental National Bank, EI Paso, Texas, a newly organized institution
located in the territory served by the EI Paso Branch of the Federal Reserve Bank
of Dallas, opened for business September 16, 1974, as a member of the Federal
Reserve System. The new member bank opened with capital of $600,000, surplus
of $200,000, and undivided profits of $200,000. The officers are: W. R. Squires, Jr.,
President; Mark Valentine, Vice President and Cashier; Stewart M. Pinkerton,
Jr., Vice President; and Marlene Banks, Assistant Vice President.
New par banks
The Jersey Village Bank, Houston, Texas, an insured nonmember bank located
in the territory served by the Houston Branch of the Federal Reserve Bank
of Dallas, was added to the Par List on its opening date, August 12, 1974. The
officers are: George Gentry, President, and George Martinez, Vice President
and Cashier.
The Exchange Bank, Houston, Texas, an insured nonmember bank located in
the territory served by the Houston Branch of the Federal Reserve Bank of
Dallas, was added to the Par List on its opening date, August 30, 1974. The
officers are: George W. Cone, President; Jeff C. Suttles, Vice President; Dave
Schmidt, Vice President; and Ron Smulcer, Cashier.
-------------------------------------------------------------~
10
Faster Gains in Per Capita Income
Expected for the Southwest
POPULAl ION _
PERSONAL INCOME
PERCENT CHANGE, 1967=100
PERCENT CHANGE, 1967=100
150-
60NATIONAL
_____ AVERAGE
~"", J
100-
~
40-
[:{{:·:::~:·l
:0;;--."';.- :":" -
NATIONAL
AVERAGE
20-
50-
o
1950-70
1970-90
PERCENT CHANGE , 1967=100
100NATIONAL
AVERAGE
.
PI·t a Income for
states of the Eleventh
F=ed eral Reserve District
.
Per
Ca
. exp ected to grow a
little f aster in the years
80-
\_!!i'L...:.~j. .:.!.
60-
IS
ahead
o . Pr· .
oJectlons
by the
epartment of Commerce
show the increase in
Personal income in these
five southwestern states
slowing over the 1970's
and 1980 's, dropping back
closer to the national
average. But with the
expansion in population
expected to slow even
40-
more, the outlook for per
capita income is improved.
20-
1950-70
1970-90
PER CAPITA INCOME
SOURCE :
1lllSiness
Survey of Current Business
neVlew I
.
11
October 1974
Research Department
Federal Reserve Bank of Dallas
Station K, Dallas, Texas 75222
Federal Reserve Bank of Dallas
October 1974
Statistical Supplement to the Business Review
.......
~--------------------------------
'rotal b k
.
ing ban. credIt at weekly reportdec!, anks In the Eleventh District
fiv Ined contraseasonally in the
tatl:a,eeks ended September 18. TohOldin ns were d~~n sharply, and
wer gs of mumcIpal securities
POSi~ reduced moderately. Total dell1al s rose about in line with norbank:xpectations, however, and
to reduused t~ese funds primarily
Federalc~theIr net purchases of
nds.
'rhe
SUIted de c.l' In total loans reIne .
busin maInly from a reduction in
Cline:::s !oans-the first such dehaVe r SIX months. Area bankers
strict· ep~rtedly become more rePrinI~1 m then: len~ng policies,
leVels Cy to maIntaIn liquidity
ciably ~nsuI?er loans rose apprecrease,.a out In line with the inannou In consumer prices. Recently
ll10del nced price increases for 1975ll1any automobiles have caused
able l~~;sumers to purchase avail'rotal . models.
banks d myestments at reporting
riod, as med in the five-week pePortfol' hes e banks reduced their
"
C redu ofm umclpa l'
ent lOS .
Issues. Renew 011 .chons in the amount of
tUring .enngs probably made maCUlt to Issues somewhat more diffitel'lll 'r replace. Holdings of shortSlightly~easury securities increased
.'rhe tis .
tl'ict hanks In t~tal deposits at DisCease in d maInly reflected an inovernm emand deposits of the
and othere~t. Inflows of large CD's
\\Tere Con 'dIme and savings deposits
l'
SI erably less than usual.
d heseaso
~strial naUy adjusted Texas inS
lightly ,Production index dropped
lonsecll~ August, following five
s~Ull1 refi~e mont~ly gains. Petroeadiiy . mg, whIch had increased
smce March, accounted for
:cl
much of the decline. With large
stocks of finished products, refiners
were forced to trim production,
bringing crude runs to stills down
nearly 4 percent from July.
The continued weakness in construction resulted in lower output in building-related industries.
Production of lumber products and
stone, clay, and glass goods was off
from a month before. And the output of furniture and fixtures fell for
the fourth consecutive month.
Mining was up slightly, but the
recovery of crude oil and natural
gas stayed below year-earlier levels.
Output by utilities; on the other
hand, was down 3 percent from
July. Although utilities may be feeling the impact of consumer reaction
to recent rate hikes, the lower distribution of electricity and gas was
due, in part, to unseasonably mild
weather in August.
The decline in crude oil production
in Texas has continued since 1972,
the peak year for output. According
to recent Government statistics,
production in 1973 was down more
than half a percent from a year earlier. Total value of crude production, however, has increased. The
average value per barrel at the wellhead rose from $3.48 in 1972 to
$3.98 last year, resulting in an increase of 14 percent in the value
of production.
For the nation as a whole, crude
petroleum prices in the first eight
months of 1974 averaged slightly
higher then $7 a barrel. With the
sharply higher prices, demand for
crude oil eased some 4 percent.
Employment in the five southwestern states was strong throughout the summer-much better than
in the nation as a whole. In August,
the number of jobholders increased
rapidly for the second consecutive
month, reaching a level 3 percent
higher than a year earlier. Only in
durable goods manufacturing was
there any sizable loss of workers.
Jobless statistics also improved.
The number of unemployed workers dropped, following a substantial
increase last month. The unemployment rate, therefore, fell from 4.8
per cent in July to 4.7 percent.
~ ew
car sales, seasonally adjusted,
the four largest metropolitan
counties of Texas rose 2 percent in
August, after increasing 13 percent
in July. The slowdown resulted
largely from a sharp depletion in
inventories of lower-priced 1974
models.
In
Seasonally adjusted department
store sales in the Eleventh District
rebounded from mid-August to
mid-September, rising nearly 2 percent. The gain came on the heels of
a downturn in the previous four
weeks. But even with the rise, the
trend in purchases has been flat
since last spring. Given price increases, moreover, it is evident that
unit sales fell during the summer.
Range and livestock conditions in
the Eleventh District were generally improved in September. But
even with a favorable outlook for
grazing, the cattle market was still
sluggish. Limited feed supplies and
dismal prospects for harvests combined to drive grain prices even
higher, discouraging placements in
feedlots. As a result, the number of
cattle on feed in Texas and Arizona
on September 1 was down a fourth
from a year earlier. Instead of being
fed, many calves were slaughtered.
(Continued on back page)
CONDITION STATISTICS OF WEEKLY REPORTING COMMERCIAL BANKS
Eleventh Federal Reserve District
(Thousand dollars)
Sept. 18,
1974
ASSETS
Federal funds sold and securities purchased
under agreements to resell
Other loans and discounts, gross
Aug. 14,
1974
Sept. 19,
1973
Total deposits
1,202,129 1,400,740
10,517,817 10,563,631
1,001 ,502
9,729,332
Commercial and Industrial loans
Agricultural loans, excluding CCC
certificates of Interest .............. ..
Loans to brokers and dealers for
purchasing or carrying :
U.S. Government securities ..
Other securities ................................ .
Other loans for purchasing or carrying:
U.S. Government securities ......... .
Other securities ...... .. ........................ ..
Loans to nonbank financial Institutions:
Sales finance, personal finance , factors ,
and other business credit companies ..........
Other
.............................. ..
Real estate loans .................................. ..
Loans to domestic commercial banks .
Loans to foreign banks .......
Consumer Instalment loans .............. ..
Loans to foreign governments, official
Institutions , central banks, and International
Institutions ...................... .
Other loans
T otallnvestments .................................................... .
4,734 ,735
4,764,616
4,405,737
252,659
258,712
283,442
1,253
35 ,309
1,259
41,039
851
46,163
5,292
432,765
3,452
440,634
7,076
479,036
Total U.S. Government securities
Treasury bills
...................... .
Treasury certificates of Indebtedness ....
Treasury notes and U.S. Government
bonds maturing:
Within 1 year ...
1 year to 5 years
..................... .......... .
After 5 years ................................................ ..
Obligations of states and political subdivisions:
Tax warrants and short·term notes and bills
All other ........................... ..................... .......... ..
Other bonds, corporate stocks, and securities:
Certificates representing participations In
federal agency loans ...................... ..
All other (Including corporate stocks) ..
Cash Items In process of collection ..
Reserves with Federal Reserve Bank
Currency and coin ................. .................. ..
Balances with banks In the United States .. ..
Balances with banks In foreign countries .............. ..
Other assets (Including Investments in subsidiaries
not consolidated)
.................. .
TOTAL ASSETS ............................... .... .... ..
169,578
719,125
1,564,974
47,054
93,745
1,121,050
161,748
734,941
1,553,513
57,078
84,477
1,088,673
145,158
651,955
1,367,185
32,412
74 ,151
1,062,766
73
1,340,205
4,175,540
76
1,373 ,413
4,207,384
270
1,173,130
3,951 ,594
910,294
96,375
907,427
71,519
975,473
169,812
o
o
o
135,506
521,900
156,513
129,883
528,181
177,844
172,057
2,828,849
9,484
289 ,567
1,469,271
943,369
130,765
425,571
30,105
8,561
244,015
1,433,964
755,292
124,102
446,822
15,321
924,037
882,200
815,253
1 74
14,965,583 14,758,541
7,178,912
5,099,677
533,837
166,417
1,209,144
7,000,489
5,106,551
506,311
52,583
1,159,046
2,385
64,945
102,507
7,786,671
2,464
70,711
102,823
7,758,052
1,129,426
4,445,869
2,064,971
10,272
114,366
1,140,778
4,369 ,978
2,106,261
8,279
110,770
11,780
9,987
8,099
13,887
2,640,137
229,304
591,366
187,963
20,436
1,363,186
TOTAL LIABILITIES, RESERVES, AND
CAPITAL ACCOUNTS .. .. ......................
----
Sept. 19,
1973
Au~. 14,
2,949,032
223,999
559,637
183,131
20,413
1,358,283
-
13524,412
.:..:.:.--:
7
6700,02
4:871.8~~
8
271.
150,032
1,231 ,179
2972
49:82 0
110,330
6,824,385
1 137,139
3:749,~~~
1,7~h54
103,691
25,000
20
2473,564
'311 ,1~!
561,3
165,81 4
14,359
1 222,568
.-:;:..--
73 182
19,997,975 20,053 ,036 ~
128,478
2,595,067
14,336
301,348
1,541 ,540
1,059,898
130,248
420,699
26,067
........... , .................
Total demand depoSits ................................
Individuals, partnerships, and corporations ..
States and political subdivisions
U.S. Government . ................. , " ,
Banks In the United States .
Foreign :
Governments, olllcialinstitutions, central
banks, and International Institutions
Commercial banks
Certified and olllcers' checks, etc . .
Total time and savings deposits ........
Individuals, partnerships, and corporations:
Savings deposits ... ....................
Other time depOSits ...... ,", ..................
States and pOlitical subdivisions ......
U.S. Government (Including postal savings)
Banks In the United States ......................
Foreign:
Governments, olllcial institutions, central
banks, and International Institutions
Commercial banks ................................
Federal funds purchased and securities sold
under agreements to repurchase
Other liabilities for borrowed money ...
Other liabilities ......
Reserves o n loans
Reserves on securities ...........................
Total capital accounts ..... ................ .. ..
151 ,180
494,950
159,531
183,454
2,766,108
Sept. 18,
1974
LIABILITIES
19,997,975 20,053,036 18,273,182
DEMAND AND TIME DEPOSITS OF MEMBER BANKS
Eleventh Federal Reserve District
(Averages of dally figures. Million dollars)
-"
-------------------------------~~~
~
DEMAND DEPOSITS
Date
Total
Adjusted '
U.S.
Government
Total
savini!:-_ _ _.
2,717
2,857
2854
2:863
2871
2:883
290 0
2'909
2'958
2'975
2'962
2'979
2'983
-----------~--------_:_:-:--
1972: August.. ..
12,420
8,824
226
11,441
1973: August.. ......
12,941
9,492
172
13,507
September..
13,039
9,442
208
13,618
October ..
13,289
9,461
239
13,795
November ..
13,455
9,816
167
13,953
December .
14,008
10,086
244
14,154
1974: January .....
14,384
10,276
302
14,533
February .
13,949
10,082
264
14 ,919
March .
13,933
10,150
260
15,126
April
13,984
10,289
236
15,143
May ...
13,553
9,880
278
15,148
June
13,742
10,030
240
15,333
July ......
13,809
10,056
212
15,442 ~
' 956
13,634
9,988
' caS~
August .._ _ _ _:......_ _ _ _ __ _ __175 _ _ _15,509 :
_ _ _.::..._
_
_ _-:---
CONDITION STATISTICS OF ALL MEMBER BANKS
Eleventh Federal Reserve District
(Million dollars)
Item
Aug . 28,
1974
July 31,
1974
Aug . 29,
1973
ASSETS
Loans and discounts, gross ....
U.S. Government obligations ..
Other securities ................................. .
Reserves with Federal Reserve Bank
Cash In vault .
........ ......
.. .................. .
Balances with banks In the United States
Balances with banks In foreign countrlese
Cash Items In process of collection .......... ..
Other assetse .
20,981
2,100
6,775
1,473
383
1,286
33
1,682
1,691
21,058
2,109
6,785
1,477
363
1,342
40
1,888
1,656
18,719
2,279
6,036
1,435
352
1,194
21
1,588
1,514
36,404
36 ,718
33 ,138
TOTAL ASSETSe
LIABILITIES AND CAPITAL ACCOUNTS
Demand depOSits of banks
Other demand depoSits
Time deposits
......................... .
Total deposits .................... .
Borrowing.. .......
Other liabilitiese
.
Total capital accountse
TOTAL LIABILITIES AND CAPITAL
ACCOUNTse .
e-Estlmated
1. Other than those of U.S. Government and domestic commercial bankS, leSS
Items In process of collection
RESERVE POSIT IONS OF MEMBER BANKS
Eleventh Federal Reserve District
____________________________________________. . . .~~:;nd ad
(Averages of dally figures . Thousand dollars)
1,662
11 ,834
15,579
1,702
12,234
15,485
1,568
11 ,199
13,574
29,075
3,174
1,572
2,583
29 ,421
3.244
1,475
2,578
26,341
3,143
1,327
2,327
4 weeks ended 5 weeks ended
5 weekS ~ 973
: s ept. 5, '::';""--Item
Sept. 4, 1974
Aug. 7, 1974
~1
- - - -- - -- - - - - - - -- - - - - - - - 1,795,~~;
Total reserves held .....................
2,021,581
2,008,762
1,491, 36
With Federal Reserve Bank .
1,684 ,363
1,677,397
30 4'\6
Currency and coin
337,218
331 ,365
1,786,5
2,005 ,361
2,001 ,836
9,042
6
Required reserves
Excess reserves
16,220
6,926
102 ,9~4
Borrowings
177,019
125,297
_93,9
-160,799
- 118,371
Free reserves .
I
BANK OEBITS, END-OF-MONTH DEPOSITS, AND DEPOSIT TURNOVER
SMSA' s In Eleventh Federal Reserve District
.
(Dollar amo
__
unts In thousands, seasonally adjusted)
DEBITS TO DEMAND DEPOSIT ACCOUNTS'
DEMAND DEPOSITS'
Percent change
____
(Annual-rate
1974
Standard metropolitan
Annual rate
of turnover
Aug . 1974 from
Aug.
$17.652.314
5,834 .236
23.211 .631
1.447.098
Aug.
July
12%
8
8
2
1974 from
8 months.
Aug.31 .
Aug.
July
A
25%
14
25
20
$379.547
128.164
346.806
52.346
47 .0
46.0
65.4
27.5
42.5
43.7
57 .2
26.8
44.5
425
6 .
0.8
27.4
sa s ca area
basis)
1974
1973
1973
1974
1974
ug.
t tl tl I
AAIZON~~::--------~~~------------------~~~----~~~----~;-----~~~------~~----~~~----1~9~7~4______~1:97~3~__
lOUISIA~A~~~~~~
.... ...... .. .............................
Sh
.... ..........
NEW MEX
reveport ..........
iEX AS: AbileneRoswell' ........
ICO:
~~~r~lo
:::::::::::::::::: :.:::::::::::::::::::.... ...... .. ..............
~reoawuni~ni~.pori.Arthu;::o;~nge
Cor~~~C~~~I~~
~~~'lN~rtii ""'"''C' "liy
''
~aIVeston-Tiixiis.
K~I~~t~_~emp. i..
~~%'~~-piia;:;:Edi;;burg.: :
.. ........... ..........
Bry navilie-Harlingen-San Ben'lto ' .. .
Station
...
. . . . . . . . . ............
CorSicana'
.. .
...
'"
........ ..... ..... .... .
Dallas
...........................
......... .. .... .......
Laredo
e
LUbbock .. ... .... .. ........... ... ..........
Odessa
San Angelo ' .. ...
San Antonio : .. .... .
~~:~~an-Denisori''''.
-1~
1:~~~:m
2~H~~:~gg
22~:m:g~~
1~:g~g~~
•
............ ..........
....... . ....................
.. .. . ... ..................... .. ....
.... ............. ...........................
...... :. . . . . . . . . . . . ........ .. ..
!~
19
~01·019607·967630
~~
~
_~
~
~
.
!~
~~
~~
~g
_
-11
4
10.440.730
822.205
38.274.083
15
24
0
4.127.129
3.117.694
2.898.772
Wlchlta .Fiiil.s.......
.............. ................ .....
j~~ .· ~n
~g:~~~
3'm : :g~
3.~6~:~g~
~~~: ~~g
1
295.199
38.587
37
18
n
22
9
33
42
27
30
39
23
32
2~
1~
3~· m·~g~
_~
~~
7
0
9
33
~
~;~:~~~
~~
~~
2
30
7
3
-1
~:m:m
~;
~~
14
- 9
4
2.596.231
2.020.370
5.297.929
4.945.102
~~~~~~~~.(~~~~S-ArkanSaS) : : : : : : : : : : :
iotal_
11:~~~:gg~
14%
16
18
4
~g)
;;.~
~~: 6
:g: ~
~~:g
.
35.1
20.3
880.729
~~
42.9
118.726
66.487
21 .6
30.8
~g: ~
~!:g
~~: ~
:~~
36.8
31 .0
47
1
33.3
.
~6: ~
~~:~
~6: ~
39.1
18.7
31 .0
15.8
42.7
39.8
23.3
29.5
21.6
25.8
;g
197.215
120.088
94 .851
41 .3
~~: ~
39.3
~~: ~
38.5
25.8
30.2
25.2
28.7
23.8
26.5
1~i:~6~
~~: ~
~~: ~
~~
8~~: ggg
13
39
156.277
166,426
~~: ~
32 .9
29.5
~~:~
~6: ~
~U
~~: ~
30.1
29.0
30.6
24.4
~: g~poslts ;f-;:In: :d:I-v·:I-~-:-U-·--·-._ _.. .._._..._.._..._.._,,______'.:....::..:...::..:....::....::..::.::..::.::..:..-=$~47 .: 0:.:.9:9:. 1:.:.:9.: 2: 5: .______: :.2%~-----2--%-------3-0-%-----$-1--3_4_._4_3______5_5_.2______53_.6________4.:.9:.:.___
· · · · ...
. .. ... . " ..... .. .. .. .:.. ... .. ... .. ... .
2
3. 3 7
_
.0
~ters
unty basis
CONDITION
(Tho
als. partnerships. and corporations and of states and political subdivisions
OF THE FEDERAL RESERVE BANK OF DALLAS
us
--""::"d dOllars)
BUILDING PERMITS
VALUATION (Dollar amounts In thousands)
Sept. 25,
1974
Item
loa gOld Certlfl
Olh ns to memb cate reserves
~ed er loana
er banks .
U Seral agen" ' . .
iotal
rn,;~n~bllgatlons· ':.
Mem
nlng as securities .
~
bank r sets
. . . . ........ ...... , ......
01
eserv eserve deposits
~n~te~ In. a~tu.al
Sept. 26,
1973
554,472
133,417
0
176,368
3.525,418
3.835.203
1.683.109
~
Aug. 21 ,
1974
626,103
110.434
0
154,205
3.507.199
3.771.838
1.799.455
458,903
180,117
0
65,755
3.138.328
3.384.200
1.561.785
2.559.090
2.347.569
2.576.235
VALUE OF
(Million
CONSTRUCTION CONTRACTS
~rs)
January-August
~I"E
Area and type
S SOUi
AilliES,HWESTERN
Aug.
1974
July
1974
June
1974
930
1.061
1,538
tlai ·buiiiiiii ·······
440
398
dentlal b I g .........
369
349
ding co u Idlng ...
321
665
A
Sill
nstructlon
211
272
504
TES
eSlde
8,480
8.416
9.295
~onres~lal bUilding " ....
3.546
3.060
3.350
onbulld entlal bulldln '"
1
Ing constru g ......
3.246
3.698
2.989
r':' Arr~on
etlan ....
2.110
2.247
1.945
~OAe"lse a. LOUIsiana
SOGE: O~t I
. New Mexico. Oklahoma. and Texas
ACE ' a Is may no t
. 1'. W. DOdg · a~d to totals because of rounding .
e. cGraw-HIlI . Inc.
!>jonr
!>jon
U~liE
1974
1973r
8.299
3.156
3.208
1,935
64.653
25.912
23.003
15.738
8.022
3.844
2.774
1.405
68.802
33.093
21.463
14.247
Percent change
Aug. 1974
from
NUMBER
Area
Aug.
1974
ARIZONA
463
Tucson ......
LOUISIANA
Monroe62
West Monroe ....
Shreveport... .... 934
TE XAS
81
Abilene ... ... .......
615
Amarillo .
511
Austin .. ......... ·· ..
126
Beaumont .....
111
Brownsville
Corpus Christi .' 199
1.341
Dallas ........
23
Denison ......
372
EI Paso,...... .
351
Fort Worth .....
59
Galveston .
1.952
Houston .....
26
Laredo ....
157
LubbOck .. .....
73
Midland ............
113
Odessa .....
73
Port Arthur ........
62
San Angelo ......
San Antonio ...... 3.412
27
Sherman ........
46
Texarkana .. .. ....
188
Waco ... ... ..........
72
Wichita Fails .
Total 26 cities ... 11,449
July
1974
Aug .
1973
8 months.
1974 from
1973
8 mos.
1974
Aug .
1974
8 mos.
1974
4.190
$4.045
$61 .451
519
5.902
4.286
3.668
15.031
74 .690
99
- 79
166
- 31
- 27
29
628
3.343
3.844
1.499
877
1.970
11,423
180
4.124
2.980
439
16.514
290
1.282
594
856
544
557
14.341
239
528
1.741
613
1.088
6.904
9.963
1.075
3.088
2.617
16.368
77
8,158
7.072
911
67,132
704
10.204
944
1.339
176
629
7,439
165
429
7.193
815
11 .507
43.723
167.292
33 .312
20,472
43.734
240.560
1.263
126.033
106,456
29,325
466.692
7.857
104.563
25.102
14.601
1.654
10.322
142.072
3.968
6.095
31.026
10.182
- 68
11
- 28
- 83
199
- 64
- 37
18
- 51
14
78
43
- 84
- 55
- 73
- 24
- 31
33
- 56
- 45
- 53
242
- 44
58
131
- 64
- 68
- 43
43
- 41
24
- 65
- 39
142
15
- 10
165
240
88
- 57
- 58
- 70
- 53
- 74
106
- 93
- 40
18
- 15
45
- 9
18
6
- 34
0
26
334
- 5
- 45
110
146
38
-64
39
- 16
- 4
30
15
- 59
80.017
-$166.489 $1 .798.983
- 61 % - 68%
- 24% - 28%
- 50%
1%
LABOR FORCE, EMPLOYMENT, AN D UNEMPLOYMENT
DAILY AVERAGE PRODUCTION OF CRUDE OIL
(Thousand barrels)
Five Southwestern States'
Percent change Irom
Aug.
1974
Area
FOUR SOUTHWESTERN
STATES .
Louisiana ...
New Mexico ..
Oklahoma
Texas ..
Gulf Coast .
West Texas .
East Texas (proper) ...
Panhandle
Rest of slate ....
UNITED STATES .
July
1974
Aug.
1973r
July
1974
6,313 .1
1,964.9
271.7
479.6
3,596.9
712.8
1,887.7
234.0
61.0
701 .4
8,913.9
6,288.6
1,943.1
272.1
483.2
3,590.0
705 .0
1,885.3
236 .1
61.8
701 .8
8,880.9
6,579,2
2,263 .4
267.7
502.5
3,545.6
693.4
1,842.5
204.5
59.2
746.0
9,160.9
.4%
1.1
.2
-.8
.2
1.1
.1
- .9
-1.3
-.1
.4%
-
(Seasonally adjusted)
Aug .
1973
-4.1%
- 13.2
1.5
-4.6
1.5
2.8
2.5
14.4
3.0
-6.0
-2.7%
r- Revlsed
SOURCES : American Petroleum Institute
U.S. Bureau of Mines
Federal Reserve Bank of Dallas
Percent change
Thousands of persons
Aug.
1974p
July
1974
Aug.
1973r
8,547.4
422.6
4.7%
8,511.5
424.5
4.8%
8,304 .2
396.9
4.6%
7,441 .9
1,278.6
714 .6
564.0
6,163.3
245.8
494 .2
7,431 .8
1,284.0
720.3
563.6
6,147.8
245 .1
494 .6
7,209.6
1,262.6
706.8
555.9
5,946.9
238.9
493 .2
505.3
1,793.1
414.2
1,239.3
1,471.4
Item
502.1
1,789.5
412.0
1,236.6
1,468.0
Aug . 197~
July
1974
AUg·
1973
0::%
- .4
2.9
6.5
'.1
497.2
1,723.6
393.7
1,172.6
1,427.7
----------------------------------------------~--~
8,701 .1
8,970.0
8,936.0
Civilian labor force
Tolal employment ........
Total unemploymenl..
Unemployment rate ..
Total nonagricu ltural wage
and salary employment ...
Manufacluring ..
Durable .
Nondurable
Nonmanufacturing .
Mining ..........
Construction
Transporlatlon and
public ulilltles ...
Trade ..
Finance , . ................ . .......
Service ............
Government .
'-.1
3.2
1.3
1.1
1.5
3.6
2.9
.1
-.4
- .8
.1
.3
.3
.2
-.1
.6
!:~
.2
5.2
.5
5.7
.2
.2% _ _3.1%
_
--------------------------------------1. Arizona , Louisiana, New Mexico, Oklahoma, and Texas
2. Aclual change
p-Prellmlnary
r-Revlsed
NOTE : Details may not add to totals because of rounding .
SOURCES : State employment agencies
Federal Reserve Bank of Dallas (seasonal adjustment)
CROP PRODUCTION
(Thousand bushels)
FIVE SOUTHWESTERN STATES '
TEXAS
Crop
Cotton'
Corn ........ ::: ......
Winter wheat
Oat. ...................
Barley .. ...
Rye ....
Rice' ....................
Sorghum grain .
Flaxseed .
Hay' ..
Peanuts ~ ... "
Irish potatoes' .. ....
Sweet potatoes' .
Pecans' ..
Soybeans .... ...
1974,
estimated
Sept. 1
3,206
69,750
52,800
8,100
1,350
200
24,772
295,000
374
3,912
454 ,500
2,863
788
35,000
6,500
1973
4,699
60,800
98,600
26,650
3,510
648
20,530
417,000
80
5,808
471 ,225
3,778
855
20,000
8,500
INDUSTRIAL PRODUCTION
1972
1974,
estimated
Sept. 1
1973
1972
4,277
39 ,560
44 ,000
9,720
1,980
630
22,122
319,780
165
3,899r
480,455
3,182
813
75,000
5,460
5,229
81 ,634
209 ,013
11 ,892
12,710
965
47,776
343 ,817
374
9,522
722 ,640
6,251
3,938
52,500
51,145
6,446
73 ,118
280,442
34,948
21 ,645
1,981
41 ,924
478,164
80
12,964
743,867
6,880
3,825
96,500
51,800
6,140
52,795
150,115
16,149
19,334
1,890
42 ,089
378 ,218
165
9,734r
743 ,566
6,665
4,113
99 ,300
47,371
r- Revlsed
1. Arizona, Louisiana, New Mexico, Oklahoma, and Texas
2. Thousand bales
3. Thousand hundredweight
4. Thousand tons
5. Thousand pounds
SOURCE: U.S. Department of Agriculture
Harvests were delayed by moderate to heavy rains over much of the
District. Most directly affected was
the cotton crop. Rain reduced the
fiber quality of cotton ready for
harvest, and low temperatures curtailed growth in West Texas,
Lack of moisture in the spring
and early summer has held average
crop yields far below 1973 levels,
But the rain in September provided
(Seasonally adjusted Indexes, 1967
Area and type of Index
TEXAS
Total Industrial production .
Manufacturing .....
Durable ........
Nondurable
Mining
Ulilities ..
UNITED STATES
Total Industrial production .
Manufacturing ...
Durable .........
Nondurable .
Mining
................. " ....
Utilities ..
D
100)
Aug .
1974p
July
1974
June
1974
140.9
147.5
162.8
136.5
119.3
162.5
141 .3
147.9
161 .8
137.9
118.4
167.8
140.8r
147.5r
162.2
136.9r
118.6r
162.4r
125.2
125.0
120.8
131 .2
108.1
152.5
125.7
125.8
122.4
130.7
110.3
151 .5
----
AUg·
1973
125.8r
125.9r
122.4r
130.9r
110.6r
.--:.;--138.3
144.0
159.0
133.2
120. 6
153.2
126.5
126.1'
122.6r
130.9r
111 .5r
154.8
150 . 5r~
p-Prellmlnary
r-Revlsed
SOURCES : Board of Governors of th e Federal Reserve Syslem
Federal Reserve Bank of Dallas
excellent conditions for seeding
small grain crops,
The index of prices received by
Texas farmers and ranchers rose 3
percent in the month ended August
15. The index was, nevertheless,
off 13 percent from a year earlier,
Prices for livestock and livestock
products advanced 7 percent but
lagged the record level of the corresponding period last year by 35 per-
,
.'
onti!l'
cent, WIth feed gram prIces c up
uing to rise, the crop index: was
21 percent from a year beforeitbiS
In the first seven months 0 nd
year, cash receipts from fari:b e
ranch marketings in states 0 erDistrict totaled $5,9 billion 6
/
cent higher than a year ear Ie ' t to
Crop receipts jumped 29 perce~iPts
$2.3 billion, while livestock re~ceflt'
totaled $3.6 billion, down 5 pe
r
@FedFRASER