PG&ampE Gas Transmission-Texas has announced a reorganization ofits business into four major lines: field services, transmissionand storage services, gas marketing and supply, and natural gasliquids (NGL) marketing and development.

“The big reason we’re doing this is to make money,” said LynnBourdon, senior vice president of commercial operations for PG&ampEGT-Texas. “We’re trying to improve our performance. We’re alsotrying to respond to things like the Texas Railroad Commission codeof conduct and to ensure that our organization and our posture andour performance in the marketplace satisfies the criteria as setforth in the code. It makes us more customer-focused and helps usimprove products and services.”

The code, which was introduced last year, requires thattransmission, storage and gathering companies treat similarlysituated companies similarly and do not give favored treatment totheir affiliates. As part of its effort to meet those requirements,PG&ampE GT-Texas is putting all of its marketing division inHouston and all of its transmission and storage operations in SanAntonio.

The restructuring is designed to create a “better level ofservice” in each one of the business segments, said Bourdon, butit’s also expected to improve efficiency.

A year ago, PG&ampE bought Valero Natural Gas, Teco Pipeline andEnergy Source. Since that time the company has attempted to combineall those assets and structure them into efficient operations.However, the liquids and gas markets have been somewhatuncooperative.

Low basis differentials in the gas market between Waha in WestTexas and Katy and the Houston Ship Channel in East Texas, alongwith poor liquids prices related to the fall in crude marketscombined to hinder profitability. At one point upper management atPG&ampE Corp. even suggested selling off some of its new Texasassets, but legal and tax considerations as well as a decliningmarket for midstream assets helped change that plan.

“This [reorganization] is not a precursor to getting rid of anyof our assets. We have gained the confidence of our board in theposition these gas assets have for our national energy policy,”Bourdon said, adding the reorganization instead may set the companyin line to make some acquisitions and further build on its Texasassets. He said the liquids market is expected to improve graduallythrough the rest of 1998.

PG&ampE GT-T has gas throughput of more than 3.5 Bcf/d in apipeline network of more than 8,000 miles. It also has a naturalgas liquids production capacity in excess of 100,000 b/d from nineplants and a 500-mile NGL pipeline network.

Rocco Canonica

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