An industry group chaired by leaders of the Committee of Chief Risk Officers Tuesday set up a task force to improve voluntary industry reporting of natural gas price information to publications that publish price indexes, and to establish better communications with FERC to ward off mandatory price reporting threatened by the Commission.
The action on a task force came after price publishers (including Natural Gas Intelligence) told the group meeting in Washington that almost all of those actually doing most of the fixed price trades in the market were participating in the surveys and only about six companies that do major trading have refused to cooperate.
Both NGI and Platts have reported significant increases in reporting during the February bidweek, which they attributed to the increasing pressure from the Federal Energy Regulatory Commission.
Both publishers had 32 Tier 1 locations (points with volumes of 100,000 MMBtu/d or more reported) in February, up from 26 Tier 1’s in January.
Both publishers said they had volumes reported for February of about 12 Bcf/d (Platts had 12 Bcf/d, NGI had 11.8 Bcf/d). That compares to an average for NGI of 8.7 Bcf/d for the period from July 2003 through January 2004, and 9-10 Bcf/d for Platts in December and January.
NGI’s number of transactions reported was up 30% in February from an average of 1,375 transactions in the previous three months to 1,792 in February. Foster said Platts’ number of transactions was up 23% from January.
Dexter Steis, NGI executive publisher, told the group that after making significant progress from the low point in November 2002, participation plateaued during the fall, then shot up in February. He ascribed part of the lower numbers in December and January to the extra long holiday weekend during both bidweeks, which led to more trades being indexed as traders took off for the holidays.
Particularly since FERC required companies to publicly respond as to whether they participate in the price surveys in RM03-10 (see Daily GPI, Jan. 16), NGI has seen a marked increase in participation. In addition to those currently reporting, three other major companies, Williams, El Paso and Reliant, have said they will return to the surveys in the first quarter.
“We believe Natural Gas Intelligence is capturing about 75-80% of the conforming fixed price bidweek market,” said Ellen Beswick, NGI editor/publisher. “With the nine companies outstanding, the three that have said they will resume reporting, and the six hold-outs, we believe we would capture 90-95% of that market. The rest of the trades are scattered over a hundred or more companies, including some growing regional marketers which we are pursuing.
“At this point we believe we are getting a fairly complete market picture; The other six major companies and the regional marketers would be nice to have reporting, particularly at certain locations, but they’re not absolutely essential to the market,” Beswick said. She noted, however, that FERC appears to think otherwise and is continuing to threaten the industry with mandatory reporting.
Most of the industry and its major customers, including all of their trade associations are supporting the current system,”it would really be a travesty if six companies force the whole industry into a mandatory reporting format and all that that implies.” Beswick noted that companies proposing a data hub have pointed to the virtues of having all transactions, complete with counterparties in one location so that regulators or the Congress could delve into the database whenever they wanted to for analysis and investigation.
Beswick and Larry Foster, Platts editorial director for natural gas, agreed the six companies that have told FERC they are not participating in the price surveys that the publishers would most like to have cooperating are Entergy-Koch Energy Trading, Sequent Energy, Oneok Marketing & Trading, Avista, Enserco and Western Gas Resources.
Beswick noted the pressure has been on in recent weeks as FERC staff have increasingly been getting the word out they are leaning toward a mandatory reporting system.
The CCRO task force at the meeting set its list of goals, including:
The debate during the four-hour meeting was off-the-record.
It was pointed out that from the little data that FERC has, it is hard to determine what the percentage of cooperation is with the current surveys. It was suggested that FERC’s next survey of companies attempt to establish the universe of volumes and transactions eligible to be included in price surveys.
Industry sources say that getting past the surface issue of price reporting will allow industry and government to see and address the real underlying issue of the status of the current market and the reduced volumes of fixed price trades.
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