Shell Oil Tuesday announced its designs on the retail gas andpower marketplace and said its Shell Energy Services willparticipate in the unbundling of Georgia’s Atlanta Gas Lightsystem. The company plans to serve residential and commercialcustomers. Other states Shell will target for retail sales are notyet known, but Shell Energy Services President Alan M. Raymond saidthe company is interested in California’s deregulated electricitymarket as well as competitive markets in the Northeast. “We will beapplying to become marketers in those states where the deregulationallows us to function, and then we’ll be setting up shop to appealto those customers.”

While Shell says it’s the country’s leading gasoline marketer,Raymond said Shell Energy Services will not – at least initially -be using gas stations as sites to market natural gas and power.Indeed, the retail gasoline business is a separate entity, a jointventure of Shell, Texaco and Saudi Aramco. Shell Energy Services iswholly owned by Shell Oil. “It is envisioned at some juncture inthe future we might be interested in offering some servicesassociated with our business at the corner gas station if it makessense.” Raymond said.

Clearly, though, the widely known Shell name will be anadvantage when the company’s gas and power marketers go aftercustomers.

Shell Energy Services currently is building the infrastructureof information technology and billing capabilities required toserve retail customers. Raymond conceded Enron, for instance, maybe further ahead in developing that infrastructure, “but I believewe have a reputation that can compete with them.” Unlike Enron,which is seeking to establish a national brand, Shell already hasone. Shell advertising plans haven’t been nailed down yet, butefforts will be focused on markets where Shell Energy Services isseeking to compete rather than nationwide.

It’s Shell’s preference that LDCs exit the merchant function aspart of unbundling, said Phyllis Bourque, Shell Energy Servicesvice president of operations. However, an LDC’s decision to retainthe merchant function will not preclude Shell participation in itsunbundling. “I think our decision to participate is going to bemade on the basis that the rules are set up in such a way that theyallow us to compete on a level playing field.”

Natural gas consultant Ben Schlesinger of Benjamin Schlesingerand Associates said Shell’s entry into retail is a positive stepfor deregulation. “This is an area that’s clearly slow to getunderway. This kind of move addresses the concerns that we’ve heardsome states express over rather small companies or inexperiencedcompanies or insubstantial players seeking to market for quickgain. When we see companies like Shell coming into the market, thatclearly alleviates those types of concerns. I think it’s a realpositive step, one of several that we’re going to see over the nextyear.”

Shell’s presence in the wholesale gas and power markets has beenestablished by Coral Energy, one of North America’s largest energymarketers. Questioned about a year ago as to why Shell had chosento name its marketing arm Coral instead of using the well-knownShell name, Coral CEO Murry Gerber said the company was consideringwhether to enter the retail market and was saving the Shell brandidentification for that eventuality. Coral will continue to be thecompany’s wholesale marketer. Shell also said it will enter thepower generation market through affiliate Tejas Gas.

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