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Pipeline Capacity Market More than Doubles

The volume of natural gas pipeline capacity changing hands among the 20 leading trading companies during 2012 was up 123% over the 2011 level, exceeding 14.8 Bcf/d and marking the third consecutive annual increase, Capacity Center said last week.

Additionally, the number of entities buying released pipeline capacity increased to more than 500, a nearly 300% jump from 2011 (see NGI, Oct. 17, 2011). More than 24.5 Bcf/d was traded by 523 entities through September. This represents a nearly 35% increase from the 18.2 Bcf/d traded over the same period in 2011. While total traded capacity in 2012 approached 28 Bcf/d, Capacity Center excluded from its rankings the nearly 5 Bcf/d that was traded between unregulated affiliates.

For a fourth consecutive year, Tenaska Energy charted as the No. 1 capacity trading company by increasing its daily equivalent traded to just shy of 3.5 Bcf/d in 2012, up from 2.5 Bcf/d in 2011. The top five are rounded out by Sequent Energy Management, rising one spot to No. 2; BP, falling one spot to No. 3; Amerada Hess, rising from No. 5 to No. 4; and Atmos Energy regulated, previously unranked and moving into the No. 5 spot.

No. 1 Tenaska traded 25% more volume than second-place Sequent. Taken together, the two firms accounted for just over 25% of all daily equivalent traded capacity and roughly 6% of the more than 31,000 trades occurring in the first nine months of the year.

"In 2012, we saw two key capacity trading trends. First, we saw the continuing growth in capacity trading volume levels on a year-over-year basis," said Capacity Center President Greg Lander. "The second trend indicates a reduction in the concentration of capacity trading activity by the Top 20 trading firms. In 2012, 60% of all non-affiliate deals were traded by the Top 20, a decrease from the 66% traded by the Top 20 last year. However, the top five have succeeded in further concentrating their share of the capacity trading market with 63% of the deal flow among the Top 20 traders, up from 56% in 2011."

"Interestingly the grouping of trading firms numbered 11 through 20 was tight, with just over 110,000 Dth of annualized daily equivalent separating number 11 from number 20."

Several new players cracked the 2012 top 20, including No. 5, Atmos Energy (regulated), which appears to be acquiring capacity in the corporate parent and then releasing it down to certain of its state by state local distribution companies, according to Capacity Center.

Other additions to the latest top 20 include NextEra Energy, No. 9 in 2012 and up from No. 36 in 2011; CenterPoint Energy non-regulated, No. 11 in 2012 and up from No. 68 in 2011; Iberdrola non-regulated, No. 13 in 2012 and up from No. 39 in 2011; Texla Energy Management, No. 16 in 2012 and up from No. 28 in 2011; and Gavilon, No. 17 in 2012 and up from No. 21 in 2011. Firms dropping out of the Top 20 included EDF, Atmos Energy nonregulated, Repsol, National Energy & Trade and Societe Generale.

The Top 20 Capacity Trader rankings were developed utilizing Capacity Center's database of all the capacity release deals done on every interstate pipeline during the period Jan. 1 through Sept. 30. Ranking data excluded volumes done due to acquisitions and between related non-regulated affiliates.

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