Growing by Inches

Many a thriving business was born of smart shopping for surplus goods after World War II. But nothing beat the big buy that created Texas Eastern Transmission Corp., whose backers (including Houston Contractors George and Herman Brown) raised $143 million in 1947 to buy the Government's war-built 2,819-mile Big Inch and Little Big Inch pipelines. Out of an original investment on their part of only $150,000 in stock, they parlayed the Texas-to-East Coast oil lines into one of the U.S.'s big four natural-gas carriers, a giant worth $581 million.

Last week Texas Eastern was off again on another big deal. It won Federal Power Commission approval to spend $35 million on converting 1,168 miles (from Baytown, Texas to Moundsville, W. Va.) of the Little Big Inch line to petroleum products, including construction of a $13 million, 230-mile additional 14-in. spur from Seymour, Ind. to Chicago. To continue its present gas deliveries to the East, Texas Eastern will spend another $61 million on loops and compressors primarily along 453 miles of its 30-in. line from Beaumont, Texas to Uniontown, Pa.

For Midwesterners, whose 500,000 bbl. a day petroleum consumption is rising 20% a year, the Chicago spur holds high promise of reversing the present pattern of costly refining in congested market areas. By becoming an independent common carrier, Texas Eastern can ship the lower-cost products of Gulf Coast refineries on a steadier basis than slow, crude-hauling Mississippi River barges, and at as much as 30-c- a barrel less.

Against this invasion the bargemen have fought long and hard--ever since Texas Eastern first asked FPC permission in 1954. But the FPC ruled that the Texas Eastern products line would benefit the public by stimulating competition, even though it might hurt the barge business. Already big Midwest refiners are seeking ways to use the proposed Chicago spur to their profit, while Sinclair, Texas and Gulf are talking about a similar products line to be constructed next year from outside Philadelphia to Cleveland. In addition, Texas Eastern got FPC permission last year to spend $74.7 million on a 422-mile line south from near Beaumont, which will soon bring in the first major imports of Mexican gas from across the border. By such hustle, Texas Eastern (gross 1956 sales: $175.2 million) upped earnings per share last year to $2.05, believes that its 1,700-mile products line, added to gas lines totaling 5,800 miles, will boost share earnings by 35-c- to 50-c-.

To help finance its entire $235 million expansion program, Texas Eastern last week issued 200,000 shares of preferred stock at $100 a share, sold them all in three days. For President Orville Carpenter, onetime Texas state auditor who supervised the purchase of the Big and Little Big Inches as the company's comptroller in 1947, the week was the second most exciting one in Texas Eastern's ten-year history. "Same as when we began.'' said he. "This puts us out in front."

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