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BP, Sempra Lead Gas Marketing Survey Once Again

BP, Sempra Lead Gas Marketing Survey Once Again

Make it eight quarters in a row for BP plc to reign as the top North American natural gas marketer. The London-based oil major once again surpassed competition in NGI's 3Q2004 wholesale gas marketing survey, a lead that hasn't changed since BP overtook Mirant, which held the top spot in 3Q2002.

BP reported trading 23.9 Bcf/d for the quarter, substantially higher than the 19.9 Bcf/d reported in 3Q2003. However, the producer's volumes were sequentially lower than the second quarter, when it reported 24.5 Bcf/d. Still, the mega-producer blew away the rest of the top five.

San Diego-based Sempra rolled into second place once again, reporting 13.5 Bcf/d for the quarter, up slightly compared with 13.2 Bcf/d a year ago, while ConocoPhillips reported 10.5 Bcf/d in wholesale marketing volumes, nearly 25% higher than the 8.7 Bcf/d reported in 3Q2003.

Rounding out the top five were Coral, Shell Oil & Gas Co.'s marketing arm, up slightly at 9.3 Bcf/d from 9.2 Bcf/d, and Merrill Lynch, formerly Entergy-Koch LP, which reported 5.4 Bcf/d in gas volumes. Merrill Lynch completed the purchase of the marketing arm at the beginning of November (see NGI, Nov. 8).

Calgary-based Nexen Inc. also proved to be a worthy contender, reporting 5.1 Bcf/d in the quarter, up from 3.2 Bcf/d in 3Q2003.

There were few changes in the survey from the past few quarters, as the energy merchant sector recovers and settles into a routine. However, the sale of the profitable Entergy-Koch trading unit to Merrill Lynch may be a harbinger of things to come.

Merrill Lynch CFO Ahmass Fakahany said the banking institution's move into energy trading is a "missing piece of the puzzle" in what the financial company can offer to its customers. "It's important to be in it and participate in that asset class," he said, and if Merrill Lynch had been able to stay in the game before leaving and then re-emerging this year, "we would have benefited from that."

Merrill Lynch formed and then sold its energy trading unit to Allegheny Energy Inc. in 2001 for $490 million after huge losses. The sale led to a contentious legal battle between the two companies (see NGI, Dec. 1, 2003).

Banks, as well as hedge, pension and other funds, are expanding their existing trading and marketing operations in energy and commodity derivatives. And many are recruiting talent to bolster operations overseas and in the United States.

Among those that may move into the energy merchant sector is Barclays Capital, a unit of British-based Barclays plc, which is said to be eyeing U.S. gas and power markets. The company began trading in U.S. derivative markets last May, and plans to move into physical power and gas sales in the United States by early 2005.

Others likely to grow their merchant business, either by buying units from ailing companies or entering into partnerships, include Credit Suisse First Boston, which saw a joint trading venture with TXU Corp. collapse earlier this year after failing to come to terms on an "economic arrangement that met each side's strategic objectives" (see NGI, Oct. 4).

Former merchant heavyweights on the mend may be a force in the future as well. El Paso Corp. announced in November that it would transform its merchant energy business with a new name and focus: marketing gas produced by the company's exploration and production (E&P) business and by other producers (see NGI, Nov. 15).

El Paso Merchant Energy LP, a perennial top 10 gas marketer in NGI's quarterly survey, has been renamed El Paso Marketing LP, and is expected to "provide a key service" for the company's production business, said Lisa Stewart, president of El Paso's E&P unit and nonregulated operations.

Company 3Q04 3Q03 Change
BP 23.90 19.90 20%
Sempra 13.50 13.20 2%
ConocoPhillips 10.50 8.70 21%
Coral 9.30 9.20 1%
Merrill Lynch * 5.40 5.80 -7%
Nexen 5.10 3.20 59%
Cinergy 4.20 4.00 5%
ChevronTexaco 4.00 3.68 9%
Tenaska 3.60 3.50 3%
EnCana 3.10 2.60 19%
ExxonMobil 2.80 3.10 -10%
Oneok 2.60 2.40 8%
Devon 2.39 2.53 -6%
Williams 2.20 2.40 -8%
Sequent 2.10 1.50 NA
Anadarko 1.80 1.80 0%
Enserco 1.75 1.21 45%
Burlington 1.70 1.70 0%
Amerada Hess 1.40 1.60 -13%
Western Gas 1.10 1.30 -15%
Total 102.44 93.32 10%

* Formerly Entergy-Koch.

Source: Quarterly financial reports with the Securities and Exchange Commission, or if necessary, statements signed by company officials and provided to NGI.

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