After failing to locate a purchaser for Canadian-based energy trader Engage Energy, Duke Energy confirmed last week that it has decided to close down the division and consolidate some of its operations. The Canadian natural gas and power marketing operation was a division of Westcoast Energy, which Duke purchased in March (see NGI, March 11).

Duke Energy said it was attempting to sell Engage because of “functional and geographic” overlap. “At that time we announced we would be seeking a buyer for Engage due to the fact that there were redundancies in Duke Energy’s trading organization,” said Becky Nash, a Duke spokeswoman. “After reviewing our divestiture options, the decision was made to consolidate the Engage operations, trading positions and employees into the operations of Duke Energy.”

Nash said that she was unsure whether there had been any acquisition interest in Engage from other companies. The marketing and trading business has been tarnished in recent months by Enron’s bankruptcy and revelations about its market manipulation in California and disclosures that other mega-marketers engaged in round-trip trading and other practices allegedly designed to deceive investors and competitors (see Daily GPI, Dec. 3, 2001; May 27; June 3).

As of February, Engage Energy had 116 employees in Alberta, 35 in the United States, nine in Ontario and two in British Columbia. Before the acquisition, the company had five regional offices located throughout North America. Engage purchased natural gas from all major producing basins in North America and it traded electricity within all NERC regions.

Nash added that Duke has been meeting with employees all week to inform them of the decision. “As a part of the consolidation, some employees are going to be offered severance packages while others with critical skills are going to be offered opportunities with Duke Energy.” The consolidations are expected to occur at Duke Energy’s Calgary office.

Nash called the decision to shut down Engage “difficult,” but added that it was made with “much care.” Although details about severance packages were confidential, Nash said they would be in line with the severance received by affected Westcoast employees earlier in the year.

In late September 2001, Duke Energy bucked the downward economy trend with the announcement that it was buying Westcoast Energy in a cash and stock transaction valued at $8.5 billion, including $4 billion in debt assumption (see NGI, Sept. 24, 2001). The move greatly expanded Duke’s North American natural gas pipeline holdings.

Engage Energy offered a full spectrum of energy services, including natural gas and electricity sales and trading activities, energy management services, structured storage and transportation services, power management, and energy risk management and financial services.

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