This Texas natural-gas tycoon opposes decontrol
L. Frank Pitts looks very much the part of an independent Texas tycoon who wants the government to take its hands off free enterprise. Meticulously groomed in a white silk suit, he sits behind a desk adorned with a hardhat and miniature oil derrick. A poster nearby decries ''politically motivated low prices'' for energy.
The owner of Pitts Oil Company has been pushing the government to stop controlling natural-gas prices for years. But now that Mr. Pitts has studied the Reagan administration's decontrol plan, he has turned all his efforts to fighting it.
While others in the industry applaud the administration, Pitts and other ''independents'' believe they will be among the losers if the proposed legislation becomes law.
Small companies such as Pitts's firm specialize in drilling gas that now sells at premium prices set by current regulation. The Natural Gas Policy Act of 1978 encourages new drilling by granting higher prices for gas from new wells, deep wells, or from ''tight sands'' formations. The law also keeps ''old gas'' (from wells drilled before 1977) at very low prices. Old gas sells at the wellhead for less than half the price of new gas.
The Reagan-backed decontrol plan would gradually lift all controls on all gas. But it would not help independents like Pitts very much because most old gas is controlled by the 20 biggest oil companies. Pitts says that of his company's 450 gas wells, ''less than 15 percent'' of them are ''old.''
Far more important, to him, are the 80-some contracts he has for selling his new gas. Bills now being considered in the Senate and the House would allow buyers to back out of such contracts.
''I believe all gas should be deregulated,'' Pitts says - but not if it means meddling with existing contracts. ''It's detrimental to the industry and the country (for) Congress to allow, on a wholesale basis, the abrogation of contracts.''
The longtime warrior for decontrol traveled to Washington last April and told a House energy subcommittee, ''You vote for a bill to deregulate gas that will increase the price by . . . $30 billion or more in the next six years to mainly major oil companies, and let your opponent tell your constituents you voted for that.''
His stand shocked many in the independent-gas industry, for which he has been a respected spokesman and publicist. But he has gathered a rump group of independent producers who agree with him.
The proposed Senate decontrol bill will ''severely reduce independents' ability to sustain exploration,'' wrote a group of 54 Louisiana gas producers to its congressman.
But Pitts has failed to persuade the Independent Petroleum Association of America, which supports the Reagan position. ''There is not going to be decontrol legislation written exactly to please producers,'' says Bill Anderson, spokesman for the trade group.
Moreover, he points out that about half of the gas owned by independents is old gas. If the current decontrol effort fails, ''something worse is going to be moved forward,'' he says.