The natural gas and power wholesale market braced for the first day of December deliveries late Friday, uncertain how much gas would flow and how much would be affected by the collapse of Enron and its EnronOnline electronic trading system, the dominant electronic energy exchange in the industry until last week. EnronOnline was up and running in an extremely limited fashion Thursday and Friday, after going dark Wednesday.

Enron posted a notice saying the system was running for “customers to transact only in order to provide a means to manage Enron credit exposure.” By late in the day Thursday, the system was showing bids and asks for financial swaps or paper basis deals at more than 100 trading points for natural gas, sources said.

The Enron/EOL situation posed a huge bidweek dilemma, according to a Gulf Coast trader. Producers who had contracted to provide Enron with either December or winter strip supplies don’t know now if they have to live up to those obligations. On the other hand, utilities, end-users and marketers who were buying gas from Enron can’t be certain that the company will be able to deliver. The upshot is that bidweek was expected to be much more active than normal with a flurry of buying and reselling activity related to previous Enron deals.

The head of a major energy trading operation amplified on the quandary faced by traders: “We’ve heard rumors of non-performance in November. But the December market starts Friday, and truthfully, we don’t know how physical obligations are going to play out. That’s because you don’t know the nature or scope of the position that any counterparty has, much less one that may be on the verge of bankruptcy or default. We’re not going to really know until Friday when things start to balance out for Dec. 1. If anybody were to not perform, then either physical molecules or megawatts would be handed back to the owner, or someone would not receive his volumes and would have to solicit and balance out with someone else. So it’s likely be a little hectic.

“It’s going to be very, very similar to what firms have gone through in the past when we’ve had hurricanes or force majeure interruptions. Unfortunately, a lot of firms out there don’t have a lot of people with that kind of experience any more.”

A source quoted the new “disclaimer” message that appeared upon EOL log-in: “EnronOnline is now available to our customers. While transactions may be available, customers entering into transactions should carefully evaluate their positions and Enron’s current credit status before transacting. By entering into a transaction, customers are agreeing that the foregoing shall supersede any inconsistent representations made by Enron in any agreements between Enron and such customer.”

The source translated the message as Enron saying, “Let the clicker beware.” Conditions of EOL’s former electronic trading agreement no longer apply because of the disclaimer, he went on, and traders using EOL now are making deals at their own economic risk.

Enron spokesman Eric Thode said EOL will be posting both physical and financial transactions for natural gas, power and metals, although not all products or types of deals may appear on the platform’s screen at any given time. “Our traders put up different products at various times,” Thode said. Enron also continues to transact via the telephone, he added, noting that “EOL has never been more than 60% of our trading.” The company plans to keep EOL running into the foreseeable future, Thode said.

In futures trading, the New York Mercantile Exchange experience new volume records Wednesday and Thursday as traders migrated away from EOL. Nymex issued a notice to members Thursday restricting trading with Enron without written authorization from an exchange clearing member.

Meanwhile, IntercontinentalExchange (ICE) reported total volumes on the ICE system have increased 65% in the last month. The company said it “continues to experience tremendous growth in the last few days of November.”

“We believe inherent credit concerns in the OTC market have spawned interest in a many-to-many trading platform as opposed to a one-to-many platform,” said Jeffrey Sprecher, ICE CEO.

There wasn’t much that could be done with the EOL trading platform late last week. A producer said he didn’t even check EOL for a while Thursday morning because he didn’t expect it to be operating. Then the Internet access process, usually very quick, took much longer than normal, he said. Upon finally getting into the system he was able to find only one physical gas deal on the screen, “and that was for December Waha baseload at $2.48 bid, no offer.” In other words, Enron was willing to buy Waha gas for next month at $2.48 but not posting any for sale.

However, a Houston-based marketer contacted subsequently reported that he had arrived at his office at 7:15 a.m. to find EOL posting some January Nymex “look-alikes,” but they disappered about an hour later. And the Waha bid also had been removed by 9:30, leaving no trading instrument on EOL at that point, he said.

In the early afternoon Thursday a large marketer confirmed that EOL had resumed posting swing swaps and paper basis transactions, “but they’re only Nymex-related at Henry Hub, and no physical gas deals are being offered.” He reported seeing some Enron-related deals for December being retraded, “but it’s not exactly a flood of volume.”

On Friday a producer reported seeing basis postings for “a large string of points” on EOL, but he and a marketer did not notice any physical gas products being offered.

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