File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
____________________________________________
FORM U-1
APPLICATION-DECLARATION
under
the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________
National Fuel Gas Company National Fuel Gas Supply
10 Lafayette Square Corporation
Buffalo, New York 14203 10 Lafayette Square
Buffalo, New York 14203
(Names of companies filing this statement
and addresses of principal executive offices)
_____________________________________________
NATIONAL FUEL GAS COMPANY
(Name of top registered holding company)
_____________________________________________
Philip C. Ackerman William T. Baker, Jr., Esq.
Senior Vice President Robert J. Reger, Jr., Esq.
National Fuel Gas Company Reid & Priest LLP
10 Lafayette Square 40 West 57th Street
Buffalo, New York 14203 New York, New York 10019
(Names and addresses of agents for service)
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Item 1. Description of Proposed Transactions.
1.1 Introduction. National Fuel Gas Company ("National"), a public-
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utility holding company registered under the Public Utility Holding Company
Act of 1935, as amended (the "1935 Act" or "Act"), and National Fuel Gas
Supply Corporation ("Supply"), a wholly-owned subsidiary of National, seek
authority to participate in a joint venture ("Joint Venture") with
one or more subsidiaries of Tennessee Gas Pipeline Company ("Tennessee"),
a non-affiliate, to develop, construct, finance, own and operate (i)
natural gas gathering facilities commencing at locations offshore to
gather gas produced in the Green Canyon, Ewing Bank, Mississippi Canyon,
Ship Shoal and South Timbalier areas located in the Outer Continental
Shelf and terminating onshore in Louisiana ("Gathering Facilities")
and (ii) natural gas processing facilities to be located at or near the
terminus of the Gathering Facilities ("Processing Facilities"), and to
engage in certain related transactions (collectively, the "Project").
The aggregate cost of the Project is estimated to be approximately
$200 million, including development, construction and related costs
until commercial operation, currently scheduled to begin in the fourth
calendar quarter of 1997. The cost of the Project will be shared by
National and its affiliates, on the one hand, and Tennessee and its
affiliates, on the other hand, as more fully described below in this
Item 1.
1.2 Background. National, through its subsidiaries, is engaged in
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all phases of the natural gas business: exploration, production,
purchasing, gathering, transmission, storage, distribution and marketing.
<PAGE>
For the twelve months ended August 31, 1996, National had operating
revenues of approximately $1.2 billion. As of August 31, 1996, National
had consolidated assets of approximately $2.1 billion.
As part of its business strategy, National is systematically seeking
new ventures that will build upon the core competency of the National
system as a provider of energy and energy services.
1.3 Proposed Activities. The Joint Venture will build, own and
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operate Gathering Facilities which will consist of a 24 inch wide and
approximately 145 mile long offshore pipeline to gather natural gas
from the Green Canyon, Ewing Bank, Mississippi Canyon, Ship Shoal,
Grand Isle and South Timbalier areas of the Outer Continental Shelf.
The Joint Venture will also build Processing Facilities consisting of
a natural gas processing plant at the terminal end of the pipeline in
LaFourche Parish, La., that can process 300 million cubic feet of gas
per day ("MMcf/d").
With a capacity of approximately 515 MMcf/d, the Gathering Faciliies
will be able to access 3.4 trillion cubic feet of estimated reserves and
will provide access to five onshore pipelines in South Louisiana,
including Tennessee Gas Pipeline, Columbia Gulf, Koch Gateway, Louisiana
Intrastate and Bridgeline. The Project has been under development for
more than a year. It is anticipated that the addition of Supply and/or
an affiliate as a partner will enhance the resources available to the
Project as it nears the final stages of development. At the same time,
the Project will represent a natural extension of National's existing
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<PAGE>
gathering business in a growing area of the Gulf Coast.
It is contemplated that Project activities would be conducted through
one or more special purpose entities (collectively, the "Special Purpose
Entities").<fn1> Interests in the Special Purpose Entities would be held
50% by a direct or indirect subsidiary of National (the "Affiliate"), and
50% by an affiliate of Tennessee (the "Tennessee Affiliate").<fn2>
1.4 Financing of the Project. [This section contains confidential
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information which has been omitted, but filed separately with the
Securities and Exchange Commission.]
1.5 Financing by National System for Project. [This section
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contains confidential information which has been omitted, but filed
separately with the Securities and Exchange Commission.]
1.6 Management of the Project and Affiliate Transactions. The
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Special Purpose Entities shall be managed by the Affiliate and Tennessee
Affiliate with voting rights commensurate to their individual ownership
interests. The Affiliate will have the right to nominate no more than two
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1. The Special Purpose Entities, which will be formed for the sole purpose
of engaging in Project activities, may be structured as special-purpose
subsidiary or associate companies, partnerships, limited liability
companies, joint ventures or other entities depending upon the legal and
regulatory requirements of the particular activity.
In the event that the Project is unable to proceed under the ownership
structure described in this filing, Supply may proceed on the project on
its own.
2. It is contemplated that the Affiliate will be a new corporation, either
formed by National or purchased from Tennessee.
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<PAGE>
persons to provide support to the Special Purpose Entities to develop the
Project from commercial, engineering, design and construction standpoints.
In the future, Seneca Resources Corporation, a wholly-owned subsidiary
of National currently engaged in the exploration for, and the development
and purchase of, natural gas and oil reserves in the Gulf Coast of Texas
and Louisiana, in California and in the Appalachian region of the United
States, and other National system companies as well as Supply may
contract to become a shipper on the Project.
The Affiliate or the Special Purpose Entities may contract with
associate companies in the National system which are not public-utility
companies for goods or services. Contracts for services or goods from
associate non-utility companies may be priced either at cost or at market-
based rates.
Pursuant to rule 16, Tennessee and all of its affiliates as well as
the Special Purpose Entities will be exempt from all obligations, duties
or liabilities imposed upon them by the Act as subsidiary companies or
affiliates of a registered holding company. The transactions proposed
herein are conditioned on the applicability of such exemption.
National specifically undertakes that it will not seek recovery
through higher rates to National system utility company customers to
compensate it for any possible loss that it might sustain by reason of the
proposed Project, or for any inadequate returns on such investment.
Item 2. Fees, Commissions and Expenses.
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<PAGE>
The fees and expenses to be incurred by Applicants in connection with
the transactions proposed are estimated not to exceed $13,000, including
the SEC's $2,000 filing fee.
Item 3. Applicable Statutory Provisions.
3.1 Authorization requested. National and Supply seek authority to
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participate in a joint venture and related transactions with affiliates to
develop, construct, finance, own and operate the Project.
3.2 General provisions. The proposal herein is subject to sections
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6(a), 7, 9(a), 10, 11, 12(b) and 13 and rules 16, 45, 52, 54, 87, 90 and 91
thereunder. If, however, the Securities and Exchange Commission
("Commission") considers the proposed transactions to require any
authorization, approval or exemption, under any section of the Act or rule
or regulation other than those cited hereinabove, such authorization,
approval or exemption is hereby requested.
3.3 Analysis of Section 11 Issues. National's proposed acquisition,
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through the Affiliate, of an interest in the Project constitutes the
acquisition by a registered holding company of an interest in an "other
business" under sections 9(a)(1) and 10 of the Act and the Gas Related
Activities Act of 1990 ("GRAA"). The GRAA was intended to permit
registered gas holding companies to compete on an equal footing with other
gas companies in the development of new gas markets. To that end, the GRAA
provides that the acquisition by a gas registered company "of any interest
in any natural gas company or any company organized to participate in
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<PAGE>
activities involving the transportation or storage of natural gas, shall be
deemed, for purposes of section 11(b)(1) of the Act, to be reasonably
incidental or economically necessary or appropriate to the operations of
[the system's] gas utility companies."<fn3> The proposed gathering
activities in this matter are thus deemed to satisfy the requirements of
section 11(b)(1) pursuant to section 2(a) of the GRAA.
The GRAA further provides that the acquisition by a gas registered
holding company "of any interest in any company organized to participate in
activities (other than those of a natural gas company or involving the
transportation or storage of natural gas) related to the supply of natural
gas, including exploration, development, production, marketing,
manufacture, or other similar activities related to the supply of natural
or manufactured gas shall be deemed, for purposes of section 11(b)(1) of
the Act, to be reasonably incidental or economically necessary or
appropriate to the operation of such gas utility companies, if --
(1) the Commission determines, after notice and an opportunity
for a hearing in which the company proposing the acquisition shall
have the burden of proving, that such acquisition is in the interest
of consumers of each gas utility company of such registered company or
consumers of any other subsidiary of such registered company, and
(2) the Commission determines that such acquisition will not be
detrimental to the interest of consumers of any such gas utility
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3. Section 2(a) of the GRAA. For purposes of the GRAA, "natural gas
company" means an individual or corporation engaged in the transportation
of natural gas in interstate commerce or for the sale in interstate
commerce of natural gas for resale.
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<PAGE>
company or other subsidiary as to the proper functioning of the
registered holding company system.<fn4>
The Commission has recognized that, for purposes of section 2(b) of the
GRAA, the term "consumers" is not limited to traditional utility consumers
but refers instead to customers of any system company. See National Fuel
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Gas Co., Holding Co. Act Release No. 26181 (Dec. 6, 1994). As a practical
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matter, benefits will inure in the first instance to the customers of the
Special Purpose Entities. The experience gained from the Project will also
contribute to the strength of the system as a whole. In addition, the
proposed activities will encourage optimal use of system resources,
allowing such resources to be deployed over larger market areas, and
permitting greater utilization of system personnel. Further, the
legislative history indicates that:
Technical advances and expertise may also be developed through
these activities that may benefit customers. Finally, there may
exist assets that are either surplus to the needs of the system
or that have developed in the normal course of system operations.
Use of these assets to maximize their value is recognized as a
benefit to customers only so long as the proposed activity does
not create a detriment to system customers.
In this matter, investors and not consumers will bear the risks that may be
associated with these new ventures. Accordingly, the standards of section
2(b) are satisfied.
Item 4. Regulatory Approval.
No Federal regulatory authority, other than the Commission, has
jurisdiction over the proposed transactions. There is pending before the
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4. Section 2(b) of the GRAA.
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<PAGE>
Federal Energy Regulatory Commission a Petition for Declaratory Order
(Docket No. CP96-577-000) with respect to the non-jurisdictional status of
the Project.
In addition, various federal and state regulatory approvals are
necessary with respect to construction projects resulting from these
transactions.
Item 5. Procedure.
It is presently expected that definitive documents forming the joint
venture for the Project will be entered into on or before January 1, 1997.
Applicants respectfully request, therefore, that the Commission issue an
order approving the proposed transactions on or before December 31, 1996.
In the event Commission approval is not obtained by that date, the
applicants would use rule 16 to enter into the definitive documents.
Applicants respectfully request that the Commission's order herein be
entered pursuant to the provisions of rule 23. If a hearing is ordered,
Applicants waive a recommended decision by a Hearing Officer, or any other
responsible officer of the Commission, agree that the Division of
Investment Management may assist in the preparation of the Commission
decision and request that there be no waiting period between the issuance
of the Commission's order and the date on which it becomes effective.
It is also requested that rule 24 Certificates of Notification be
filed within 45 days after the end of each quarterly calendar period to
report to the Commission with respect to transactions authorized pursuant
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<PAGE>
to this filing. Such certificates shall contain a balance sheet of the
Affiliate as of the end of such period, and a statement of income and
expenses of the Affiliate for the period.
The Rule 24 certificates will also contain a summary of services or
goods provided by associate companies of National to the Affiliate or the
Special Purpose Entities. This summary will detail the services or goods
provided, identify the company providing the same, the total full-time
equivalent employees involved in such service activities during the
reporting period, the charge for such service or goods and the method of
calculating such charge (cost or market).
It is also requested by Applicants that they be permitted to file
rule 24 Certificates of Notification on a similar quarterly calendar period
basis in File Nos. 70-8729, 70-8541 and 70-8251. These rule 24
Certificates, as appropriate, would report short-term loans and long-term
loans incurred by the Affiliate relating to the Project and credit support
mechanisms entered into on behalf of the Affiliate or the Special Purpose
Entities or by the Affiliate on behalf of the Special Purpose Entities.
Item 6. Exhibits and Financial Statements
The following exhibits and financial statements are made a part of
this Application-Declaration:
(a) Exhibits
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<PAGE>
A-1 Certificate of Incorporation of the Affiliate (To
be furnished by amendment)
A-2 Bylaws of the Affiliate (To be furnished by
amendment)
A-3 Memorandum of Understanding. CONFIDENTIAL
TREATMENT REQUESTED PURSUANT TO RULE 104(b).
A-4 Forms of definitive documents relating to the
creation of the joint venture for the Project. (To
be furnished by Amendment.) CONFIDENTIAL TREATMENT
REQUESTED PURSUANT TO RULE 104(b).
F-1 Opinion of counsel (To be furnished by Amendment).
G-1 Proposed form of public notice (Designated as
Exhibit EX-99 for EDGAR purposes).
(b) Financial Statements
S-1 National Fuel Gas Company Pro Forma Consolidated
Statement of Income and Earnings Reinvested in the
Business for the twelve months ended August 31,
1996, Pro Forma Consolidated Balance Sheet at
August 31, 1996 and Pro Forma Adjusting Entries.
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE
104(b).
S-2 National Fuel Gas Company Pro Forma Statement of
Income and Earnings Reinvested in the Business for
the twelve months ended August 31, 1996, Pro Forma
Balance Sheet at August 31, 1996 and Pro Forma
Adjusting Entries. CONFIDENTIAL TREATMENT
REQUESTED PURSUANT TO RULE 104(b).
S-3 National Fuel Gas Supply Corporation Pro Forma
Statement of Income and Earnings Reinvested in the
Business for the twelve months ended August 31,
1996, Pro Forma Balance Sheet at August 31, 1996
and Pro Forma Adjusting Entries. CONFIDENTIAL
TREATMENT REQUESTED PURSUANT TO RULE 104(b).
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<PAGE>
S-4 Special Purpose Entity Pro Forma Statement of
Income and Earnings Reinvested in the Business
for the twelve months ended August 31, 1996,
Pro Forma Balance Sheet at August 31, 1996 and
Pro Forma Adjusting Entries. CONFIDENTIAL
TREATMENT REQUESTED PURSUANT TO RULE 104(b).
S-5 Notes to Financial Statements. CONFIDENTIAL
TREATMENT REQUESTED PURSUANT TO RULE 104(b).
Item 7. Information as to Environmental Effects
The proposed transactions outlined herein involve no major action
which will significantly adversely affect the quality of the environment.
No Federal agency has prepared or is preparing an environmental
impact statement with respect to the matters contemplated in this
Application-Declaration.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned companies have duly caused this
statement to be signed on their behalf by the undersigned thereunto duly
authorized.
NATIONAL FUEL GAS COMPANY
By /s/ Joseph P. Pawlowski
-----------------------------
Joseph P. Pawlowski
Treasurer
NATIONAL FUEL GAS SUPPLY
CORPORATION
By /s/ Richard Hare
-----------------------------
Richard Hare
President
DATED: November 15, 1996
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<PAGE>
EXHIBIT INDEX
Exhibit Description
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(a) Exhibits
A-3 Memorandum of Understanding.
CONFIDENTIAL TREATMENT REQUESTED
PURSUANT TO RULE 104(b).
G-1 Proposed form of public notice
(Designated as Exhibit EX-99 for
EDGAR purposes).
(b) Financial Statements
S-1 National Fuel Gas Company Pro Forma
Consolidated Statement of Income
and Earnings Reinvested in the
Business for the twelve months
ended August 31, 1996, Pro Forma
Consolidated Balance Sheet at
August 31, 1996 and Pro Forma
Adjusting Entries. CONFIDENTIAL
TREATMENT REQUESTED PURSUANT TO
RULE 104(b).
S-2 National Fuel Gas Company Pro Forma
Statement of Income and Earnings
Reinvested in the Business for the
twelve months ended August 31,
1996, Pro Forma Balance Sheet at
August 31, 1996 and Pro Forma
Adjusting Entries. CONFIDENTIAL
TREATMENT REQUESTED PURSUANT TO
RULE 104(b).
S-3 National Fuel Gas Supply
Corporation Pro Forma Statement of
Income and Earnings Reinvested in
the Business for the twelve months
ended August 31, 1996, Pro Forma
Balance Sheet at August 31, 1996
and Pro Forma Adjusting Entries.
CONFIDENTIAL TREATMENT REQUESTED
PURSUANT TO RULE 104(b).
S-4 Special Purpose Entity Balance
Sheet at August 31, 1996.
CONFIDENTIAL TREATMENT REQUESTED
PURSUANT TO RULE 104(b).
S-5 Notes to Financial Statements.
CONFIDENTIAL TREATMENT REQUESTED
PURSUANT TO RULE 104(b).
Exhibit EX-99
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PROPOSED FORM OF PUBLIC NOTICE
National Fuel Gas Company ("NFG"), a registered holding
company and its wholly-owned non-utility subsidiary, National
Fuel Gas Supply Corporation ("Supply"), both located at 10
Lafayette Square, Buffalo, New York 14203, have filed an
application-declaration under sections 6(a), 7, 9(a), 10, 11,
12(b) and 13 of the Act and rules 16, 45, 52, 54, 87, 90 and 91
thereunder.
Applicants seek authority to participate in a joint venture
("Joint Venture") with one or more subsidiaries of Tennessee Gas
Pipeline Company ("Tennessee"), a non-affiliate, to develop,
construct, finance, own and operate (i) natural gas gathering
facilities commencing at locations offshore to gather gas
produced in the Green Canyon, Ewing Bank, Mississippi Canyon,
Ship Shoal and South Timbalier areas located in the Outer
Continental Shelf and terminating onshore in Louisiana
("Gathering Facilities") and (ii) natural gas processing
facilities to be located at or near the terminus of the Gathering
Facilities ("Processing Facilities"), and to engage in certain
related transactions (collectively, the "Project"). The
aggregate cost of the Project is estimated to be approximately
$200 million, including development, construction and related
costs until commercial operation, currently scheduled to begin in
the fourth calendar quarter of 1997. The cost of the Project
will be shared by National and its affiliates, on the one hand,
and Tennessee and its affiliates, on the other hand.
The Joint Venture will build, own and operate Gathering
Facilities which will consist of a 24 inch wide and approximately
145 mile long offshore pipeline to gather natural gas from the
Green Canyon, Ewing Bank, Mississippi Canyon, Ship Shoal, Grand
Isle and South Timbalier areas of the Outer Continental Shelf.
The Joint Venture will also build Processing Facilities
consisting of a natural gas processing plant at the terminal end
of the pipeline in LaFourche Parish, La., that can process 300
million cubic feet of gas per day ("MMcf/d").
With a capacity of approximately 515 MMcf/d, the Gathering
Facilities will be able to access 3.4 trillion cubic feet of
estimated reserves and will provide access to five onshore
pipelines in South Louisiana, including Tennessee Gas Pipeline,
Columbia Gulf, Koch Gateway, Louisiana Intrastate and Bridgeline.
The Project has been under development for more than a year. It
is anticipated that the addition of Supply and/or an affiliate of
National as a partner will enhance the resources available to the
Project as it nears the final stages of development. At the same
time, the Project will represent a natural extension of
National's existing gathering business in a growing area of the
Gulf Coast.
<PAGE>
It is contemplated that Project activities would be
conducted through one or more special purpose entities
(collectively, the "Special Purpose Entities"). Interests in the
Special Purpose Entities would be held 50% by a direct or
indirect subsidiary of National (the "Affiliate"), and 50% by an
affiliate of Tennessee (the "Tennessee Affiliate").
The Special Purpose Entities shall be managed by the
Affiliate and Tennessee Affiliate with voting rights commensurate
to their individual ownership interests. The Affiliate will have
the right to nominate no more than two persons to provide support
to the Special Purpose Entities to develop the Project from
commercial, engineering, design and construction standpoints.
In the future, Seneca Resources Corporation, a wholly-owned
subsidiary of National currently engaged in the exploration for,
and the development and purchase of, natural gas and oil reserves
in the Gulf Coast of Texas and Louisiana, in California and in
the Appalachian region of the United States, and other National
system companies as well as Supply may contract to become a
shipper on the Project.
The Affiliate or the Special Purpose Entities may contract
with associate companies in the National system which are not
public-utility companies for goods or services. Contracts for
services or goods from associate non-utility companies may be
priced either at cost or at market-based rates.
