The numerous energy transaction Internet sites are likely toconsolidate leaving somewhere between one and six viable sites,executives of three of the leading sites told a GasMart/Power 2000audience in Denver last week.

“There is an urgent need to respond quickly to captureearly-mover advantages,” Bruce Thompson, Coral Energy’s senior vicepresident of financial products and services, said. His company is”completely committed” to Coralconnect, the Shell affiliate’s bidfor the electronic market.

“We agree on the inevitability of electronic exchanges,”Thompson said, acknowledging earlier remarks by representatives ofAltra Energy Technologies and Houstonstreet.com. Coral sees the”disintermediation” of the club of the phone-based wholesale energytrader is inevitable” because of the pressure on margins and coststhat can be saved through electronic transactions.

From watching the technology takeover of financial markets,energy companies have learned how aggressive outsiders or”motivated attackers” can be, and most of Coral’s counterpartseither are considering or already developing online systems tocontinue to serve their customers. Thompson said market”incumbents” such as Coral have the advantage of already moving alarge volume of gas, which provides ready-made liquidity on theirsystems.

Thompson, along with Frank Getman, president ofHoustonstreet.com and David Hansen, vice president special projectsfor Altra, agreed that eventually the systems might be linked sincesome electronic platforms might provide more liquidity in differentregional markets. Systems such as Coralconnect could provide theirown customized services for their customers, including serving as agateway to other exchanges.

Getman said Houstonstreet has an open technical architecture,which makes it easy to integrate to back office systems. Thecompany announced Monday it was opening a natural gas tradingplatform.

Altra’s Hansen pointed to studies that predict 90% of energytrading will eventually be done electronically. He creditedEnronOnline with raising the electronic consciousness level,thereby benefiting all systems.

Ellen Beswick, Denver

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