The two major electronic natural gas trading systems havestarted a price war, slashing transaction fees to zero at multiplelocations for the month of September. In late August, Altra EnergyTechnologies announced a “Streamline Inventory Reduction Sale,”reducing prices to $0.001/MMBtu at all its major Louisiana andTexas locations and dropping fees to zero at all of its othertrading points. Soon after, QuickTrade countered by dropping feesto $0.001/MMBtu from $0.025 for day trades at major Louisiana anTexas points and Chicago, and cutting costs to zero for day tradesat the Columbia Gas pool and the Henry Hub.

“We’ve reacted in a limited way to Streamline’s across the boardreductions. They called it an inventory reduction sale, but I’dclassify it as a going out of business sale,” said QuickTrade’sJeff Taylor. “It appears to be a rather desperate measure on theirbehalf,” he added, claiming QuickTrade handles about double thevolume of Streamline. “They can’t maintain these low fees and stayin business.”

“Nothing could be further from the truth,” said Altra PresidentRusty Braziel. “Our volumes have been very good. They’ve been greatfor the last three months, especially the last three weeks,” hesaid disputing QuickTrade’s claim about doubling Streamline’svolumes.

Taylor said QuickTrade hasn’t noticed any reduction in volume ortransactions since Streamline slashed its rates. Prior to the pricewar, QuickTrade said it had record volumes, with 113 Bcf traded inAugust, and a single day record of 13.4 Bcf on Aug. 20. On average,Taylor said the system handles about 5 Bcf and 200 trades daily atits 140 locations.

“I would question that,” said Braziel. “If you include what wedo on an average daily basis with what our partner does in Canada,it’s going to be 4 or 5 Bcf/d. I know we’ve done a record day of 10Bcf.

“It’s a competitive marketplace and we plan to win this game,”said Braziel. “Our objective is to encourage as much tradingthrough our system as we can. The pricing actions that we’ve takenare a short-term thing, a promotional thing and a competitiveissue. That’s probably about as far as I need go with talking aboutprices.”

David Hanson, QuickTrade’s vice president of marketing, said,”We have seen an upward trend in trading activity throughout theyear and we believe it is indicative of the growing acceptance ofelectronic commerce as a convenient tool for busy traders.” Pointswith the greatest liquidity on QuickTrade include Chicago, Tco IPPand Alberta. Quicktrade has handled $1.2 billion in transactions sofar this year.

Rocco Canonica

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