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Morgan Stanley Strengthens Houston-Based Energy Trading Unit

Morgan Stanley, which beefed up its energy trading portfolio last December with the purchase of El Paso Marketing LP (EPM), is moving one of its top investment bankers to Houston from New York to strengthen its global energy group headquartered there, the company said last week.

Thomas Langford, co-head of Morgan Stanley's energy investment banking unit in New York, will move to Houston to become head of investment banking for the southwest region. Langford, who will keep his title, last year advised Unocal Corp. in the takeover battle between China's CNOOC and Chevron Corp. He also worked on the $35 billion merger of Houston-based producers ConocoPhillips and Burlington Resources last year. Langford would take over from Michael Dee, a 25-year veteran who is expected to remain at the investment banking firm with different responsibilities.

"The decision to relocate one of our most senior energy investment bankers to Houston demonstrates our commitment to our regional client base," Morgan Stanley said in a statement.

Morgan Stanley also is said to have hired Peter Bowden, a former corporate lawyer for Andrews Kurth in Houston, and Ryan Moss, a UBS energy executive, to join Langford. Moss specializes in master limited partnerships and midstream energy.

Last December, EPM sold most of its remaining wholesale power portfolio to Morgan Stanley for o$442 million (see NGI, Dec. 26, 2005). The assets included all of El Paso's power positions other than its Cordova tolling arrangement and some positions in the PJM power pool. As part of the sale, EPM agreed to allow Morgan Stanley to completely offset some long-dated power positions in the remaining PJM power portfolio.

Also last year, Cheniere LNG Trading & Marketing Inc. and Morgan Stanley Capital Group Inc. agreed to work cooperatively in negotiating with global suppliers to deliver supplies through Cheniere's four proposed liquefied natural gas import terminals in Louisiana and Texas (see NGI, Oct. 24, 2005).

A market research study last week noted that investments are rising in energy trading information technology. Energy Insights, an IDC company, predicted a moderate compound annual growth rate of 6.57% for the global energy trading and risk management (ETRM) software market, currently valued at more than $570 million.

"After the fallout from Enron and the misreporting of gas prices, the energy industry retreated from heavy spending activity," said Jill Feblowitz, Energy Insights' program director of Energy Wholesale Strategies."Now, trading volumes have rebounded and we're seeing a major uptick in investment in ETRM across the board."

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