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Integrys Closes Deal With Sequent Energy Management

Integrys Energy Services Inc. recently closed the first transaction in the two-part sale of its wholesale natural gas marketing business, parent Integrys Energy Group Inc. said last Monday. The deal involved the sale of substantially all of Energy Services' wholesale gas marketing business to Sequent Energy Management LP.

Integrys Energy Group announced the deal in October but did not disclose the name of the buyer (see NGI, Nov. 2).

The transaction, which was approved by the Federal Energy Regulatory Commission, does not include or directly affect the retail gas and electric marketing business operated by Integrys Energy Services. The sale to Sequent is expected to reduce Integrys collateral support requirements by $290 million, Integrys Energy Group said.

The second part of the transaction includes 11.5 Bcf of storage contracts. Between now and April 2011 Integrys Energy Services will provide Sequent with fee-based services related to approximately 8 Bcf of the 11.5 Bcf total of retained contracts, the company said. The remaining 3.5 Bcf of the retained storage is to be divested, with completion expected in the first quarter.

At the completion of the provision of the fee-based services to Sequent in April 2011, Energy Services anticipates selling the remaining 8 Bcf of the storage contracts, which will result in an expected reduction in collateral support requirements by an additional $150 million, the company said.

Other terms and conditions of the deal were not disclosed. Integrys Energy Group said the transactions are consistent with its goal of reducing capital investment and collateral support requirements for Integrys Energy Services.

Last summer Integrys sold nearly all of the gas and power customer contracts of Integrys Energy Services of Canada Corp. to the Canadian trading arm of Shell Energy North America LP. At the time of that sale the company said the Integrys Energy Group's collateral requirements would be reduced by an estimated $300 million (See NGI, July 20).

At about the same time Minneapolis-based U.S. Energy Services acquired the energy management business of the Integrys marketing arm (see NGI, July 27). That purchase included energy consulting and information services for facility and corporate customers in the areas of risk management, strategic sourcing, utility data management and demand-side energy management. With more than $1.5 billion of annual energy spending under management, U.S. Energy Services lays claim to the title of one of the nation's largest energy management firms.

Houston-based Sequent, a subsidiary of Atlanta-based AGL Resources, was ranked 14th in NGI's survey of Top North American Gas Marketers for 3Q2009. An AGL spokesman confirmed the deal but declined to provide any information on the integration of the Integrys business with Sequent.

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