LETTER TO SHAREHOLDERS
1998* was a year in which we, and many companies in our industry, faced
serious challenges. The weather was, on average, 12% warmer than normal in our
Utility service areas. Our Exploration and Production segment experienced the
unpredictable fury of this year's tropical storms, which, although not resulting
in any physical damage for us, caused our gas production in the Gulf of Mexico
to be shut-in for 13 days. Also, the steady decline of oil and gas prices was a
significant factor in the year's earnings.
In the second quarter of 1998, we could not avoid the "ceiling test"
used under the rule prescribing the full cost method of accounting for oil and
gas exploration and production operations. As a result of falling prices, we
recorded a non-cash impairment to our oil and gas assets of $79.1 million after
tax, or $2.06 per share.** The rule requiring this write-down is, unfortunately,
a one way street, making it both arbitrary and misleading. While there is no
denying that declining prices had a negative impact on the value of our oil and
gas assets, we believe this snapshot approach to valuation overstates the
magnitude of the decline as of fiscal year-end, and ignores the routine seasonal
variability of energy prices. The rule provides only for write-downs and doesn't
allow for write-ups that may occur due to subsequent price increases. While the
requirement arguably provides a reasonable representation of our experience in
the second quarter, it does not fully reflect our experience for the year.
Our method of accounting for depletion of oil and gas properties was
changed, effective October 1, 1997, to the more widely used units of production
method. This resulted in a non-cash, non-recurring reduction of earnings per
share of 24 cents. Without these two non-cash reductions, earnings per share
were strong at $2.91 - only 3% lower than last year's record earnings. However,
with the two non-cash special items, earnings per share for 1998 were $0.61
versus $3.01 for 1997.
The total market value of Company stock rose approximately $128.7
million, to $1.8 billion, despite the volatility in the stock market this year.
The market price per share closed at $47 on September 30, 1998, 6.8% higher than
the market price per share on September 30, 1997.
Once again, your Company fulfilled its commitment to annual dividend
increases. In June, the Board of Directors raised the dividend by $0.06 (3.4%),
to $1.80 per share on an annual basis, bringing you 28 years of consecutive
increases and 96 years of uninterrupted dividend payments. As we look forward to
the future growth of your Company, we expect the Company to continue this long
history of uninterrupted dividend increases.1
- -----------------------
* All references to years in this Annual Report are to the Company's fiscal
year, which ends September 30.
** All references to earnings per share are for basic earnings per common
share.
Several exciting projects and acquisitions were completed in 1998 which
added value to your Company and, in turn, gave rise to new opportunities.1 Our
goal of increasing domestic onshore activities of the Exploration and Production
segment was achieved when we closed three acquisitions in the San Joaquin Basin
in California. Our Pipeline and Storage segment became an equal partner with
affiliates of Transcontinental Gas Pipe Line Corporation, one of the Williams
Companies, and ANR Pipeline Company, a subsidiary of The Coastal Corporation, in
the Independence Pipeline project. The International segment achieved an
identity of its own through our considerable investments in Severoceske
teplarny, a.s. and Prvni severozapadni teplarenska, a.s. which are both located
in the northern region of the Czech Republic. We reached a settlement on the
primary issues of a long-standing IRS audit, which provided a net $5.0 million
benefit to the Company. Finally, but certainly important among this year's
successes, we are pleased to report that the excellent efforts made by our
employees to contain costs lead to another two-year rate settlement in New York,
resulting in a rate reduction for our customers.
We are all very aware that current events impact your Company. The
worldwide surplus of crude oil and the warmer than normal temperatures have kept
oil and gas prices at near record low levels. The strength of your Company will
be tested in 1999 by many outside elements such as the predicted slowdown in the
world economy, continued low commodity prices, and energy industry deregulation
resulting in consumer choice of energy providers. Given the opportunities we
enjoyed in 1998 to further your Company's historic strengths and to enhance our
strong foundation, we are confident your Company will meet these challenges,
grow from them and present an even stronger Company that will see us into the
new millennium.1
EXPLORATION AND PRODUCTION
The Exploration and Production segment experienced a pre-tax operating
loss this year of $93.3 million, down $136 million from the prior year due to
the non-cash impairment. Excluding this impairment, the segment had pre-tax
operating income of $35.7 million, down $7 million from the previous year.
At the beginning of the year when oil and gas prices were up, it was
nearly impossible to obtain offshore drilling rigs at reasonable prices. Thus,
we chose to defer drilling many of our planned wells. We took advantage of this
lull in our drilling program to arrange three acquisitions of properties in the
San Joaquin Basin in Southern California. We believe these properties will
significantly enhance this segment's long-term growth potential.1 These
acquisitions cost approximately $268 million, including assumed debt of $64.7
million, and contributed substantially - approximately 436 Bcf equivalent - to
our total reserve base, which now stands at 725 Bcf equivalent. The mix of our
reserves also changed, where nearly 55% is now oil and 45% is natural gas
compared to 32% oil and 68% gas at September 30, 1997.
In March, we acquired from The Whittier Trust Company and others
properties in the Midway-Sunset and Lost Hills Fields, which added approximately
40 million barrels of proved oil reserves. In May, we completed a tender offer
for HarCor Energy, Inc., an oil and gas company with properties located
primarily on the west side of the San Joaquin Basin, which produce natural gas
and higher gravity oil. Finally, in June, we acquired from Bakersfield Energy
Resources, Inc. the remaining interests in those oil and gas assets located in
the Lost Hills Field. In addition to the properties, we also acquired a gas
processing plant and associated pipelines. As part of our West Coast
reorganization plan, Barry L. McMahan was elected Vice President of Seneca
Resources Corporation and is responsible for all West Coast operations.
As oil and gas prices declined during the year we had some good news in
the form of dramatically reduced prices for drilling rigs and other services
associated with well completion. During the fourth quarter, we initiated
development drilling on the California properties and resumed an active
exploration program. To date, 35 development wells were successfully drilled on
the California properties, with additional wells underway.1
Total production volumes increased to 52.2 Bcf equivalent this year
from 50.0 Bcf equivalent last year. Oil production increased to 2.6 million
barrels from 1.9 million barrels the year before, primarily due to increased oil
production late in the year from the newly-acquired California properties.
However, natural gas production levels went down from 38.6 Bcf to 36.5 Bcf
because of decreased rig availability and tropical storms, as noted above.
Should oil and gas prices improve, and if rig rates remain affordable,
we expect to increase total production next year by approximately 46% to 76 Bcf
equivalent and maintain a production ratio of 65% gas and 35% oil.1 In this
regard, 82 exploration and development wells are planned for 1999.1 We
anticipate most of the gas production increase for next year will be in the
offshore area.1 In fact, late in the fourth quarter we successfully completed
two additional development wells in the Gulf at Vermilion Block 309, raising the
number of successful wells in that Block to six. All wells in this Block should
be on line by the end of January 1999, and production from these wells is
expected to be near 60 MMcf per day.1 In addition, we look for California
production to increase approximately 15% for next year.1
Lower commodity prices do present other opportunities for us. A number
of quality properties are for sale at competitive prices and many companies are
looking for merger opportunities. We have further emphasized our business
development efforts and will evaluate these opportunities as they arise.1 As
part of this effort, Emmett Wassell was named to the newly created position of
Vice President of Business Development of Seneca Resources Corporation,
responsible for acquisitions and divestitures.
PIPELINE AND STORAGE
The Pipeline and Storage segment's 1998 pre-tax operating income
decreased by $2 million to $71.5 million. Lower revenue from unbundled pipeline
sales and open access transportation was the major cause of this decrease.
As the natural gas industry evolves, we are proceeding with two
fundamental strategies:
o Capitalize on the opportunities which naturally result from our
excellent location between Canada and the energy-hungry East Coast
markets.1
o Expand our presence into new geographic areas through acquisitions
and joint ventures.1
In 1998, we continued to develop, with our partners, the Independence
Pipeline project, an interstate natural gas pipeline from Defiance, Ohio to our
hub in Leidy, Pennsylvania.1 The pipeline will provide a critical path for about
900,000 Dth/day of gas from the Chicago area to the energy-demanding East Coast
markets.1 Although this gas will primarily serve electric generation loads, it
is enough to serve 900,000 residential customers on an average heating day.1
This project is currently planned to be in service by late 2000.1
The Independence Pipeline should also help us capitalize on
opportunities for new or alternative uses of natural gas in the power generation
market through its use of gas-fired turbines.1 This market is expected to
generate areas of significant growth for our industry.1 As a result of
deregulation and unbundling in the electric industry, many electric companies
shied away from putting new units on line in recent years to avoid overcapacity
and stranded costs. However, these companies now seek to reverse that trend and
will look to increase the demand for and use of gas-fired turbines, thereby
creating an additional market for natural gas.1
Growth in demand for natural gas is also expected to result from the
shutdown of uneconomic nuclear power plants.1 If these plants are replaced by
gas-fired combined cycle units, industry reports predict an additional demand of
1.5 Tcf/year, with approximately 1.2 Tcf /year in the New England, New York,
Pennsylvania and New Jersey areas.1 The Independence Pipeline will be
well-situated, both geographically and from a competitive cost standpoint, to
meet this increased demand.1
We also anticipate increased demand for natural gas to result from the
shutdown of coal-fired plants due to more stringent emission controls and costs.
If these plants are also replaced by gas-fired combined cycle units, industry
reports predict additional increased demand will range from 2.2 Tcf/year to 7.6
Tcf/year.1 As gas-fired units replace coal plants, emission of nitrogen oxide
(which contributes to ozone depletion), sulfur dioxide (which causes acid rain)
and carbon dioxide (which contributes to global warming) should be reduced
significantly.1
Underground gas storage has long been a critical and integral part of
meeting seasonal demands for natural gas. As the demand continues to increase,
we stand ready to develop a number of depleted gas fields, which we control, to
provide additional storage capacity to meet these needs.1
Moreover, given the success with our first horizontal storage well,
from which we experienced a dramatic increase in deliverability, we are testing
our other storage fields, in both New York and Pennsylvania, to determine if
they are suitable for this new technology. Increasing the quantity of gas which
can be withdrawn from storage in a day should provide new sources of revenue by
enabling us to meet multiple markets' peak gas demand requirements.1 Also,
applying our successful horizontal storage well technology to our other storage
fields should enable us to build on our strategic location between Canadian
supply sources and the East Coast market area.1
The Pipeline and Storage segment is a major contributor to your
Company's net operating income, consistently providing a sound foundation for
growth. As the pipeline industry evolves, we have the necessary components to
satisfy the needs of both existing and emerging energy markets.1
UTILITY
The Utility segment's 1998 pre-tax operating income increased by $0.6
million to $124.5 million. However, $6.0 million of revenues related to the IRS
audits was entirely offset by interest expense also related to the IRS audits;
thus, excluding this $6.0 million of revenue, pre-tax operating income decreased
$5.4 million to $118.5 million.
New York: At the expiration of the Utility's two-year rate settlement, we
entered into a new two-year rate plan, commencing October 1, 1998. This plan
provides for a $7.2 million rate reduction for our New York customers while
preserving the 12% return on equity threshold for the 50/50 sharing of excess
earnings with customers. Further, the new plan establishes a fund where $7.2
million of 1999 revenues will be set aside to help pay for future
transition-related expenses incurred as the Company moves toward a competitive
restructuring of its rates and services.1 We were able to negotiate this
favorable rate plan primarily because of the Utility's ongoing cost control
efforts.
The New York Public Service Commission (PSC) recently issued a "vision
statement" contemplating that local distribution companies would exit the
merchant function over a three-to-seven year period. The PSC's proposal for the
future of the gas industry in New York envisions that the Utility, as system
operator, will retain the assets necessary to perform that function. These and
other restructuring matters will be addressed in global settlement proceedings
with each utility in New York. We will continue to work with the PSC and its
Staff to more fully develop the PSC's restructuring objectives. However, we
believe existing laws require gas utilities to maintain a certain, although
possibly reduced, level of their traditional merchant service, including the
requirement to serve as the retail customers' supplier of last resort.1
Pennsylvania: The Utility continues to avoid the need for a general rate
increase through cost reductions and productivity advances and does not
currently plan to file for any general rate increase in 1999.1
In 1998, we participated in an industry collaborative whose goal was to
draft restructuring legislation that would ultimately bring energy provider
choice to all of Pennsylvania's retail gas customers. While we gained valuable
experience and insight into potential legislative reform, we determined that the
legislation being considered by the collaborative was not in the best interests
of our customers or our shareholders. It was too complex and required far more
changes in laws and regulations than was truly needed.
However, we capitalized on that collaborative experience, as well as
our experience garnered through the Company's Energy Select program. That pilot
program allowed our customers in the greater Sharon area the opportunity to buy
natural gas from a merchant other than the Utility. In late October 1998, we
filed a proposal with the Pennsylvania Public Utility Commission to offer direct
access to competitive markets for all customers on our system. This customer
choice program requires no new legislation.1
Recently, restructuring legislation was proposed in a significantly
scaled-down version from the original gas restructuring bill. This draft
proposal supports our view that sweeping changes to the current law are
unnecessary. While we are evaluating this bill and its impact on our operations,
we continue to pursue approval of our customer choice filing.1 To recognize his
increased level of responsibility in Pennsylvania, Carl M. Carlotti was named
Vice President of National Fuel Gas Distribution Corporation, responsible for
the Pennsylvania division.
As part of the industry's evolution, customer choice of gas suppliers
is building momentum and should expand as customer awareness increases and as
marketers pursue customers.1 No matter who the consumers buy their gas from, we
will continue to deliver that gas in a cost efficient manner and profit from
providing that service.1 To that end, we recently announced an early retirement
offer to our employees. This will have a cost of approximately $5.5 million to
be recorded in the first quarter of fiscal 1999; however, we expect to see some
benefit to earnings in 1999, with the full value realized in fiscal 2000.1
INTERNATIONAL
For the year, the International segment had pre-tax operating income of
$2.1 million - up $5.1 million over the loss recognized last year. We continue
our focus on eastern Central Europe - and the Czech Republic in particular - for
further international expansion.1 Given the region's abundance of central steam
plants and the prospects of increased electric energy usage, we expect more
opportunities to use our expertise in both retail heating service as well as
electric power generation.1
Our total investment in the Czech Republic now stands at $125 million,
with $240 million in total assets. We increased our total ownership interest in
Severoceske teplarny, a.s. (SCT) to 82.7%. We also acquired an 86.2% ownership
interest in Prvni severozapadni teplarenska, a.s. (PSZT), a wholesale power and
district heating company located in the northern Bohemia region of the Czech
Republic. PSZT derives its revenues from the sale of both electric energy and
thermal energy produced from its generation facilities located in Komorany. PSZT
also purchases thermal energy for resale to residential, commercial and
industrial customers.
In 1999, we propose to merge SCT and PSZT in order to achieve operating
and management efficiencies.1 This proposed merger of SCT and PSZT would create
the third largest heating company in the Czech Republic and the third largest
private producer of electricity for sale to the grid.1
Our investments in the International segment are an important part of
our strategy to further increase your Company's earnings and shareholder value
and provide a solid base to expand in eastern Central Europe.1 Over the next few
years, we intend to exploit the co-generation prospects associated with our
steam plants in the Czech Republic and use our facilities and personnel there to
explore further opportunities, both within the Czech Republic and beyond its
borders in Poland, Hungary and eastern Germany.1
OTHER NONREGULATED ACTIVITIES
Our Other Nonregulated activities continue to grow and improve.1 As a
group, they showed pre-tax operating income of $5.3 million, up $3.1 million
from last year. Most of the increase came from our timber holdings and related
sawmills. These holdings continue to increase in value due to biological growth
and the steady demand for quality hardwoods.1
National Fuel Resources, Inc. (NFR) continues its dramatic growth in
energy marketing, increasing its customer base, broadening its services and
building a foundation for capturing more and more customers who will choose
their energy supplier in a competitive marketplace.1 As a result of its
marketing initiatives and the continued expansion of its sales team, NFR serves
approximately 5,400 residential and commercial customers under long-term gas
supply agreements. We are particularly proud of the efforts made during the year
to secure two significant agreements, which provide geographic diversity to our
customer base and demonstrate our competitiveness outside National Fuel's
historic franchise area. In February, NFR secured a gas supply contract with the
State of New Jersey to service various state owned and operated facilities,
making NFR one of that state's largest retail suppliers of natural gas. In July,
NFR began supplying energy to the University of Rochester for its central
heating plant, eighteen campus buildings and Highland Hospital. Under this
two-year agreement, NFR will supply approximately 3 Bcf of natural gas for
heating and other process needs.1
NFR also participates in various natural gas and electric energy pilot
programs, selling natural gas to residential customers in Pennsylvania as part
of the Utility's Energy Select program and in Massachusetts as part of the
Pioneer Valley Customer Choice program. Other electric projects for NFR include
the state-wide pilot for food processors and farmers, and New York State
Electric & Gas Corporation's Customer Advantage program for its electric
customers in Lockport, New York. NFR successfully pursued this market, securing
a contract to serve all of the Niagara County facilities in the pilot area.
We are excited about the challenges and changes offered by the
ever-changing gas and electric industry. As other companies have exited the
market, or encountered heavy losses, NFR has remained a stable and profitable
player, positioned to capitalize on regulatory changes that will occur in the
future.1
INVESTING PLANS
Because of our continued emphasis on expanding your Company's value as
a diversified energy company, and in particular, capitalizing on the successes
of the Exploration and Production segment, about one-half of our $204.4 million
capital budget for 1999 is aimed at exploiting that segment's growth potential.1
There is $92 million targeted for our Exploration and Production segment, but
this number is expected to fluctuate, depending on oil and gas prices and on
drilling costs.1
We have allocated $35.6 million of the 1999 capital budget to our
International segment, to be used primarily for retrofitting our facilities in
the Czech Republic to comply with their environmental regulations.1 The $27
million allocated to our Pipeline and Storage segment largely covers the
reconditioning of storage wells and the replacement of storage and transmission
lines.1 Utility capital expenditures are projected at $48.9 million and will be
used mostly to maintain our system and to replace main and service lines.1 This
is a marked decrease from recent levels of Utility expenditures, and it also
reflects the cumulative effect of replacing our steel pipe with plastic. The
remaining amount is planned for the Other Nonregulated segment.1 As always,
these numbers do not include any amounts for acquisitions or investments.
Finally, we would like to thank all of our employees, including those
who retired this year, for their years of commitment and contribution to your
Company. We gratefully express our appreciation for their dedication in helping
us continue to grow the value of your Company. Their efforts have provided your
Company with a solid foundation, upon which to plan our future growth and take
advantage of the exciting opportunities which that future will inevitably bring.
/s/
Bernard J. Kennedy
Chairman of the Board, President and Chief Executive Officer
/s/
Philip C. Ackerman
Senior Vice President
December 10, 1998
1 This document contains "forward looking statements" as defined by the Private
Securities Litigation Reform Act of 1995. Forward looking statements, including
those designated by a "1," should be read with the cautionary statements
included in this Annual Report on Form 10-K at Item 7, under the heading "Safe
Harbor for Forward-Looking Statements."
APPENDIX TO EXHIBIT 13 - This appendix contains a narrative description of image
and graphic information as contained in the Letter to Shareholders included in
the paper copy of the Company's combined Annual Report to Shareholders/Form
10-K.
1.) Image - Picture of Bernard J. Kennedy, Chairman of the Board, President
and Chief Executive Officer, with Philip C. Ackerman, Senior Vice
President.
2.) Graph - Annual Dividend Rate at Year End
Bar graph showing the annual dividend rate per share at year-end (in
dollars per common share) for 1988 through 1998, as follows:
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
$1.26 $1.34 $1.42 $1.46 $1.50 $1.54 $1.58 $1.62 $1.68 $1.74 $1.80
3.) Graph - Return on Average Common Equity
Bar graph showing return on average common equity for 1994 through
1998, as follows (1994 and 1998 show actual return and return excluding
special items):
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
11.3% 9.6% 12.6% 13.0% 11.9%*
10.8%* 2.6%
*Excludes special items for impairment of oil and gas producing assets
in 1998 and for cumulative effect of changes in accounting in 1998 and
1994.
4.) Graph
Bar graph showing oil and gas proved developed and undeveloped reserves
(in billion cubic feet (Bcf) equivalent), at September 30, 1994 through
1998, as follows:
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Oil 105.0 137.2 154.5 107.9 399.5
Gas 247.4 221.5 207.1 232.4 325.1
----- ----- ----- ----- -----
352.4 358.7 361.6 340.3 724.6
5.) Graph
Bar graph showing oil and gas production (in billion cubic feet (Bcf)
equivalent), for the years 1994 through 1998, as follows:
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Oil 6.2 4.5 10.4 11.4 15.7
Gas 23.3 20.9 38.8 38.6 36.5
---- ---- ---- ---- ----
29.5 25.4 49.2 50.0 52.2
6.) Graphs - Oil and Gas Prices
Two bar graphs showing weighted average oil and gas prices after
hedging (in dollars) for the years 1994 through 1998, as follows:
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Oil (per bbl) $14.86 $15.86 $18.01 $17.95 $13.03
Gas (per Mcf) $2.26 $2.01 $2.11 $2.18 $2.27
Images 7 - 11 are contained on a page devoted to the Exploration & Production
segment as follows:
7.) Image - Picture of an offshore drilling rig located offshore Louisiana,
with the following caption: Vermilion Block #309, located offshore
Louisiana, is Seneca Resources' largest production endeavor. Production
from its six wells is expected to be at a rate of 60 MMcf per day.1
8.) Image - Drilling rig with the following caption: Drilling rigs like the
one pictured are used in Seneca Resources' San Joaquin exploration
program.
9.) Graph - 1998 Exploration and Production Capital and Acquisition
Expenditures
Pie graph showing the following pie slices for the total $391.2 million
(which includes $64.7 million of assumed debt) of 1998 Exploration and
Production Capital and Acquisition Expenditures: Whittier 36%; HarCor
25%; BER 8%; Offshore 25%; Onshore and Other 6%.
10.) Image - Picture of gas processing plant with the following caption: In
addition to oil and gas assets located in the San Joaquin Basin,
California, Seneca Resources acquired the Belridge gas processing plant
in June 1998. This plant has the capacity to remove and separate
natural gas liquids from 22 MMcf of gas per day.
11.) Image - Pumping unit with the following caption: This pumping unit
typifies the preferred method of lifting crude oil to the surface in
Seneca's California operations.
Images 12 - 13 are contained on a page devoted to the Pipeline & Storage segment
as follows:
12.) Image - Picture of Concord Station Compressor engine with the following
caption: The Concord Station Compressor engines have been altered to
accommodate a wider range of operating conditions and handle additional
throughput from the Niagara Expansion. Pictured: (center) Concord
employee Michael P. Yasurek surveys the installation of a master rod
and crossbar.
13.) Image - Map of Northeastern to Midwestern United States with outline of
proposed Independence Pipeline Project, with the following caption: The
proposed Independence Pipeline will transport natural gas to
distribution companies, electric power producers and large-volume
industrial and commercial customers, offering access to every major
natural gas supply basin in North America, from the Gulf of Mexico, to
western Canada.
A second image of a circle containing the following sentence appears
above the image of the map: The Independence Pipeline will provide a
critical path for about 900,000 Dth/day of natural gas ... enough to
serve 900,000 residential customers.
14.) Graph - Pipeline and Storage Throughput
Bar graph showing Pipeline & Storage throughput with percentage of
total transportation throughput to affiliated and nonaffiliated
customers, for 1994 through 1998, as follows:
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Affiliated 45% 42% 41% 41% 32%
Nonaffiliated 55% 58% 59% 59% 68%
Total Sales (Bcf) 296.6 290.7 325.0 300.3 313.0
15.) Graph - Utility Operation and Maintenance Expense
Bar graph showing the Utility segment's operation and maintenance
expense (in millions of dollars) for 1994 through 1998, as follows:
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
$193 $194 $201 $187 $184
16.) Graph - Fiscal 1998 Weather
Bar graph showing fiscal 1998 percent warmer than last year and warmer
than normal for Buffalo, New York and Erie, Pennsylvania, as follows:
Percent warmer
Than Than
Last Year Normal
--------- ------
Buffalo, New York 12.9% 11.6%
Erie, Pennsylvania 15.7% 13.4%
Images 17 - 18 are contained on a page devoted to the Utility segment as
follows:
17.) Image - Picture of dispatch operations at Mineral Spring Works.
Additional images above and to the right of dispatch operations picture
are a National Fuel service van with dotted lines to an image of a
satellite and a diagram of a dispatch service area map. The following
caption is included: The dispatching of all New York customer service
orders has been centralized at Mineral Spring Works. This facility
operates 24 hours a day, 365 days a year. Pictured: (l-r): Teresa
Ortiz, Aileen Kozakiewicz, Patricia A. White and Cheryl A. Henault.
18.) Image -Picture of National Fuel employees working on computerized
mapping and work order management system with the following caption:
National Fuel recently implemented an integrated, state-of-the-art
computerized mapping and work order management system. This system will
enhance mapping productivity, as well as provide "real time" gas
facilities status. Pictured: Foreground: Erie Engineering employees
Michael J. Bolla, Linda J. Wardzinski and Mark E. Thornton.
Images 19 - 21 are contained on a page devoted to the International and the
Other Nonregulated segments as follows:
19.) Image - Picture of PSZT facility with the following caption: Horizon
Energy Development, Inc. acquired a majority interest in PSZT, a
wholesale power and district heating company located in the northern
Bohemia region of the Czech Republic. At this facility, steam turbines
produce 240 megawatts of electric generation. Additional image of a
street and buildings in Prague, Czech Republic and a map of the Czech
Republic with the general location of SCT and PSZT identified.
20.) Image - Picture of Erie Barge Canal Locks with the following caption:
National Fuel Resources is diversifying its energy selection by
offering electric generation for sale to commercial, industrial and
residential prospects in the Lockport, New York area. Symbolic of
Lockport are the Erie Barge Canal Locks.
21.) Image - Picture of building at the University of Rochester with the
following caption: National Fuel Resources has entered into a two-year
agreement with the University of Rochester to supply approximately 3
Bcf of natural gas that will be used for heating and other process
needs.
22.) Graph - NFR Number of Customers
Bar graph showing number of customers of National Fuel Resources (NFR)
for the years 1994 to 1998, as follows:
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Commercial/
Industrial 180 246 672 937 1,499
Residential Gas - - - 370 3,872
Electric - - - - 105
----- ----- ----- ----- -----
Total 180 246 672 1,307 5,476