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PG&E GT-T Reorganizes Business Operations

September 14, 1998
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PG&E GT-T Reorganizes Business Operations

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

"The big reason we're doing this is to make money," said Lynn Bourdon, senior vice president of commercial operations for PG&ampE GT-Texas. "We're trying to improve our performance. We're also trying to respond to things like the Texas Railroad Commission code of conduct and to ensure that our organization and our posture and our performance in the marketplace satisfies the criteria as set forth in the code. It makes us more customer-focused and helps us improve products and services."

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

The restructuring is designed to create a "better level of service" in each one of the business segments, said Bourdon, but it's also expected to improve efficiency.

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

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

"This [reorganization] is not a precursor to getting rid of any of our assets. We have gained the confidence of our board in the position these gas assets have for our national energy policy," Bourdon said, adding the reorganization instead may set the company in line to make some acquisitions and further build on its Texas assets. He said the liquids market is expected to improve gradually through the rest of 1998.

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

Rocco Canonica

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