Liquidity

In response to the sharp decline in market liquidity due to credit issues and heavy collateral requirements, the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission (CFTC) will for the first time hold a joint agency conference to address potential solutions.

Aquila Inc. on Tuesday completed the sale its natural gas storage assets in the United Kingdom to an undisclosed energy trader based there for US$34.9 million, bringing its already announced asset sales that are closed or pending to $911 million total.

Dynegy Inc. has let go of another asset in its bid to ensure liquidity, selling Hornsea Ltd. natural gas storage facility in the United Kingdom to SSE Energy Supply Ltd. for about $200 million (130 million pounds). The Hornsea facility was one of several assets purchased last year from BG Storage Ltd. for a total of $600 million, and had been considered a key part of its European growth plan just before the energy marketplace fell apart (see Daily GPI, Nov. 29, 2001).

The Williams Companies continues to plan asset sales to strengthen its liquidity and improve its balance sheet. The company announced Tuesday that it is considering selling its ownership interest in an olefins production plant in Geismar, LA, and an associated ethylene pipeline system in Louisiana, as well as a Baltic refinery. Terms of a potential petrochemical asset sale have not been developed, but Williams said it has received unsolicited expressions of interest.

TradeSpark LP signed an agreement last week with Virtual Markets Assurance Corp. (VMAC) to offer VMAC’s unique (patent pending) credit transfer and netting system to energy marketers on its trading platform to work around creditworthiness problems and enable trading of illiquid commodities such as electricity and physical natural gas.

TradeSpark LP signed an agreement Tuesday with Virtual Markets Assurance Corp. (VMAC) to offer VMAC’s unique (patent pending) credit transfer and netting system to energy marketers on its trading platform to work around creditworthiness problems and enable trading of illiquid commodities such as electricity and physical natural gas.

Established Wall Street firms with extensive liquidity, risk management experience and financial sophistication are eyeing a move into the faltering energy trading business, in which consolidation is looming, according to a former interstate pipeline credit risk analyst, now with Deloitte Touche in Chicago.

Anxious Houston-based employees Friday were waiting for formal news that their employer, Enron Corp., had filed for bankruptcy, expected to be the largest in U.S. history, and waited to learn whether layoffs will begin in the United States as they have in Europe. Across the country, others kept an eye on whether Enron would file a lawsuit against its short-term merger partner Dynegy Corp. for backing out of the transaction last week. Meanwhile, companies that had once dealt with the former trend-setting energy trader began tallying their own expected losses should Enron go under, and in Washington, DC, legislators announced they would begin investigating exactly who knew what when.

In an effort to encourage retail stock ownership and improveshare liquidity, the KN Energy board of directors announcedWednesday shareholders of record at the close of business Dec. 15will receive a three-for-two stock split and a 7.1% increase inquarterly dividends. The stock will be distributed and the increasewill be paid concurrently on Dec. 31.