Opinion ID: 531196
Heading Depth: 3
Heading Rank: 4

Heading: The Casinghead Gas Exception.

Text: 130 We conclude that the exception to the crediting mechanism for casinghead gas is not the product of reasoned decisionmaking. In Order No. 500-C, the Commission's sole justification for the exemption is that a pipeline's failure to take casinghead gas would likely require the producer either to shut in the oil production or flare the casinghead gas, resulting either in increased dependence upon foreign oil or in the waste of natural gas. In their applications to rehear Order No. 500-C, the Natural Gas Association, El Paso Natural Gas Co., and Natural Gas Pipeline Co. of America argued that applying credit to a pipeline's obligation to take casinghead gas will have neither of the effects that the Commission fears because the producer can simply sell into the market whatever gas is not purchased by the pipeline. Although this point, if true, would seem to be compelling, the Commission did not even address it in its Order Denying Rehearing, No. 500-E. On remand, the Commission must either justify the exemption in light of this reasoning or, if it cannot, then withdraw it. 131