A “flight to quality” last year by producers seeking stable, creditworthy counterparties and new relationships with experienced and long-standing utilities following Enron’s collapse, catapulted the natural gas sales volumes of upstart Houston-based marketer Sequent Energy Management 300% in December (see Daily GPI, Dec. 17, 2001). The wholesale marketing and asset optimization arm of AGL Resources said that its volumes have averaged 3 Bcf/d in its first full year of operation.

Sequent’s business increased dramatically by another 25% in January as trading volumes topped 2.5 Bcf/d. To keep up with the growth surge, the company by February had nearly doubled the space on its trading floor and increased its information systems capabilities to serve more than 120 vetted counterparties and 15 major pipelines with which it does business (see Daily GPI, Feb. 26).

The company said that during February and March of 2002, its daily physical gas volumes traded were 2.9 Bcf and 2.7 Bcf, respectively, increasing to 3.1 Bcf for the opening days of April.

Established by Atlanta-based AGL Resources on March 20, 2001, Sequent opened its trading floor last July on downtown Houston’s “Energy Row” at 1000 Louisiana Street (see Daily GPI, Aug. 23, 2001). The company’s goal is to provide a growth engine for its parent company as it builds a more liquid and transparent energy market in the southeastern United States.

“We are delighted to have been able to build such strong relationships in the natural gas business in such a short period of time,” said Richard J. Duszynski, Sequent’s CEO. “We set out to build Sequent’s business around long-term relationships based on trust. To do that, we created a business environment that would attract to our new company some of the industry’s most aggressive, connected and smart energy professionals. Obviously, our clients and trading partners have responded positively.”

As part of its day-to-day business, Sequent manages assets for AGL’s utility subsidiaries, including Virginia Natural Gas, Chattanooga Gas, and Atlanta Gas Light Co., providing Sequent opportunities in the Southeastern United States. In addition, the company said it plans to offer asset management services to other third parties.

Duszynski said Sequent’s timing of entry into the market and its ability to attract first-rate employees were major factors in its success. He added that the company met all performance objectives in its first six months, including staffing, creation of an active trading floor and full development of an information systems infrastructure.

He said that after the Enron collapse, producers and other customers eagerly sought out more stable counterparties. “Sequent can provide such a business relationship because of its ownership by AGL Resources, which has more than 150 years experience in the natural gas industry and a long history of financial stability,” he said.

“We set out to create a ‘kinder gentler’ type of natural gas wholesale trading and asset optimization company. As it turned out, our timing could not have been better. When opportunity knocked, we were ready.”

Earlier this week, AGL reported that Sequent contributed $5.8 million in earnings before interest and taxes (EBIT) for the first quarter (see Daily GPI, May 1). AGL said that Sequent ‘s contribution for 2002 was derived primarily from the results of its asset management operations for Virginia Natural Gas, Chattanooga Gas Co. and AGLC.

Sequent’s focus is on asset management and the wholesale trading, marketing, gathering and transportation of natural gas.

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