NGI The Weekly Gas Market Report / NGI All News Access

PG&E Finalizes UDS Deal, Aiming for Others

PG&E Finalizes UDS Deal, Aiming for Others

While it came late to the national marketing party PG&ampE Corp. is not sparing the horses and it has racked up some impressive gains in its ongoing effort to create a national presence, reaching the top of the list in natural gas trading volumes and recently signing one of the largest agreements to supply multiple energy services.

"We believe that a good portion of the future of customer strategies in the energy business will be centered on an integrated services model," Grant Farris, PG&ampE's senior vice president for alliance management said recently. Farris is heading the company's efforts to create more energy alliances that go beyond just commodity buying or demand-side management programs.

PG&ampE has one of the best illustrations of the integrated model in the the $2 billion, seven-year agreement signed in July 29 with Ultramar Diamond Shamrock (UDS), one of the largest independent petroleum refiners and convenience merchandisers in North America. The UDS alliance is probably the most balanced agreement between electric and natural gas services that PG&ampE has inked so far. "I have no doubt that we will be announcing more of these alliances later this year," said Farris.

Through major acquisitions in 1996, PG&ampE has substantial natural gas operations in Texas, including trading, pipelines, processing and gas supplies. Like many other large industrial operations, the San Antonio-based UDS is very energy-intensive in its operations, but not necessarily sophisticated in how to manage its extensive use of energy, Farris said. Thus, PG&ampE is expected to change out processes and equipment, develop cogeneration and generally upgrade the UDS operations from an energy standpoint. Some of its solutions, such as developing cogeneration or changing out electric motors on petroleum pipelines, will be an opportunity for PG&ampE to use its gas buying, processing, transportation and storage operations to serve UDS. All this is expected to save UDS 20% annually on its energy bill.

Farris noted that all of the holding company's nonutility companies will be involved in this alliance, meaning U.S. Generating Co., the power plant developer/owner, and PG&ampE Gas Transmission may link up with parts of UDS's energy operations, along with PG&ampE Energy Trading and PG&ampE Energy Services. "We feel one of the things we really bring is the expertise in energy management," Farris said. "At the end of the day, every nickel we find that helps them cut their costs goes right to their earnings."

Specifically, under the alliance PG&ampE's nonutility companies will:

Copyright ©2018 Natural Gas Intelligence - All Rights Reserved.
ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus