It is without question that Order 636 and 636-4 if implemented in their present form, will impact not only Appalachian production, but also natural gas production throughout the United States. The Federal Energy Regulatory Commission is committed to opening the pipeline system in order to allow the marketplace to send signals to the producing sector of the gas industry. In most instances, with the deregulation of gas, together with the opening of the pipeline system by Order 636 and 636-A, the marketplace should determine and set the price of gas.
In the past, Appalachian production has been unique for two reasons:
The majority of the production from Appalachian wells is from "tight reservoirs" or Devonian shales. As a result, production on a per-well basis usually averages less than 20 thousand cubic feet of gas a day, but the reserves are relatively long-lived, with an average life of fifteen to twenty years for a well. Because of the life and deliverability of these wells, most of the major interstate pipelines in Appalachia-more particularly Columbia Gas Transmission, Equitrans, Consolidated Gas Transmission, and National Fuel Gas-have viewed Appalachian production as base load for system supply to their affiliated and nonaffiliated local distribution companies. Additionally, during the summer months shutins were frequently encountered in Appalachia, with many producers accusing the pipeline of using Appalachian wells as a de facto storage field. Appalachian production usually demanded a higher wellhead price than production from the Gulf Coast and Southwest. The proximity to most of the natural gas markets in the Northeast usually allowed Appalachian production to obtain a fifty-cent to seventycent premium for its production. This advantage was especially true when bottlenecks existed on the long lines from the traditional producing regions to the Northeast resulting in gas not flowing into some of