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PG&E Finalizes UDS Deal, Aiming for Others
While it came late to the national marketing party PG&E Corp.is not sparing the horses and it has racked up some impressivegains in its ongoing effort to create a national presence, reachingthe top of the list in natural gas trading volumes and recentlysigning one of the largest agreements to supply multiple energyservices.
“We believe that a good portion of the future of customerstrategies in the energy business will be centered on an integratedservices model,” Grant Farris, PG&E’s senior vice president foralliance management said recently. Farris is heading the company’sefforts to create more energy alliances that go beyond justcommodity buying or demand-side management programs.
PG&E has one of the best illustrations of the integratedmodel in the the $2 billion, seven-year agreement signed in July 29with Ultramar Diamond Shamrock (UDS), one of the largestindependent petroleum refiners and convenience merchandisers inNorth America.The UDS alliance is probably the most balancedagreement between electric and natural gas services that PG&Ehas inked so far. “I have no doubt that we will be announcing moreof these alliances later this year,” said Farris.
Through major acquisitions in 1996, PG&E has substantialnatural gas operations in Texas, including trading, pipelines,processing and gas supplies. Like many other large industrialoperations, the San Antonio-based UDS is very energy-intensive inits operations, but not necessarily sophisticated in how to manageits extensive use of energy, Farris said. Thus, PG&E is expectedto change out processes and equipment, develop cogeneration andgenerally upgrade the UDS operations from an energy standpoint.Some of its solutions, such as developing cogeneration or changingout electric motors on petroleum pipelines, will be an opportunityfor PG&E to use its gas buying, processing, transportation andstorage operations to serve UDS. All this is expected to save UDS20% annually on its energy bill.
Farris noted that all of the holding company’s nonutilitycompanies will be involved in this alliance, meaning U.S.Generating Co., the power plant developer/owner, and PG&E GasTransmission may link up with parts of UDS’s energy operations,along with PG&E Energy Trading and PG&E Energy Services.”Wefeel one of the things we really bring is the expertise in energymanagement,” Farris said. “At the end of the day, every nickel wefind that helps them cut their costs goes right to their earnings.”
Specifically, under the alliance PG&E’s nonutility companieswill:
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