An affiliate of Lehman Brothers will launch a natural gas trading hub in northeastern Louisiana with service beginning in late 2008, the financial broker said Friday.
According to Lehman Brothers Commodity Services (LBCS), the newly named Eagle Hub would transport natural gas from Gulf Coast and Texas fields to Northeast and Midwest markets. LBCS plans to file an application with the Federal Energy Regulatory Commission in 4Q2007 to build a 40-mile header between Perryville and Delhi, LA, which would connect 12 gas pipelines with a 2 Bcf/d capacity. The trading unit would offer real-time scheduling, wheeling, balancing, park and loan, storage and additional ancillary services.
Lehman is financing the project for an undisclosed amount of money, and it plans to commit as the anchor shipper when the hub holds an open season in October, it said.
"The Eagle Hub will allow shippers the freedom to transport gas to multiple markets at optimum prices and provide utilities, industrial consumers and marketers a broad array of reliable supplies," said Chuck Watson, Lehman's global co-chief of commodities. "LBCS is willing to anchor the investment and will commit to a large portion of the hub's capacity at the time it conducts an open season." Watson said Lehman has had "favorable discussions" with several of the pipelines it wants to interconnect, and it has created a development team for the hub.
Watson was the founder and CEO of Dynegy Inc. until his resignation in 2002 (see NGI, June 3, 2002). Dynegy's predecessor company Natural Gas Clearinghouse in 1985 set the stage for domestic gas marketing. Watson subsequently helped to launch Eagle Energy Partners in 2003 with some former Dynegy executives (see NGI, July 7, 2003). Eagle Energy was bought out by Lehman earlier this year, and Watson was tapped as co-head of the commodities business (see NGI, May 10).
Eagle Energy managed and optimized supply, transportation, transmission, load and storage portfolios on behalf of wholesale natural gas and power clients. Before it was bought out by Lehman, Eagle Energy marketed 2 Bcf/d of natural gas and 35,000 MWh/d of electricity for its clients. The company managed more than 35 Bcf of gas storage capacity. Eagle Energy did not speculate on commodity prices and attempted to balance its commodity positions to achieve small or zero net positions in the market.
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