NGI The Weekly Gas Market Report
The faces in the top half of NGI’s ranking of the top 20 gasmarketers haven’t changed much but their volumes certainly have, insome cases showing substantial growth. And while only one companyjoined the top-10 for the first time in 1998, nearly every one ofthe biggest players saw its position change in the ranking.
First the news that really isn’t: Enron is still No. 1. The BigE further solidified its place at the top by growing volumes 10% or1.05 Bcf/d in 1998. Enron is a solid 1.53 Bcf/d ahead of No. 2Aquila Energy, which rocketed up to second place from fifth lastyear on the strength of 41% growth in volumes, a full 2.8 Bcf/dincrease. PG&E sits at third for another year despite volumegrowth of 30%. And Duke Energy climbed to No. 4 following 15%growth in volume.
While Aquila rode the escalator up to No. 2, Dynegy was headingthe opposite direction from the No. 2 spot it held last year.Dynegy slid in the ranking all the way down to No. 5. But that’snot due to any shrinkage in volume. The company saw modest growthof 2.5% or 0.2 Bcf/d. That’s apparently OK with Dynegy CEO ChuckWatson who last week in a conference call touted the virtue ofstrong margins over big volumes (see related Dynegy story thisissue).
“It’s time that people recognize that financial performance isat least as important as overall volumes,” Watson said. “Dynegy’smargins consistently lead the industry and we expect that trend tocontinue.” Dynegy’s unit margins on natural gas sales went fromabout three cents in fourth quarter 1997 to nearly five cents/Mcfin 4Q 1998. The margin for all of 1998 was about five centscompared to four cents in 1997.
(NGI would like to take Watson’s advice and pay more attentionto margins when ranking marketers. To that end, marketers will beinvited to share information on margins – standardized forcomparison – for another ranking.)
Continuing down the list, Coral Energy climbed one notch to No.6, and Engage Energy fell three to No. 7. TransCanada edged up twoslots to No. 8. (Amoco was ranked No. 8 last year. The company, nowBP Amoco, declined to provide 1998 gas volumes.) Southern Co.breezed in from No. 13 on the wings of 26% volume growth to perch,at least for now, at No. 9. Southern was the lone new entrant intothe top-10. At No. 10 is Koch Energy, which dropped from No. 9. At5.15 Bcf/d, Koch sold about 46% as much gas as first-place Enron.Koch was the only company among the top-10 to see a decrease involumes from 1997, not a good sign if it wishes to remain among thetop-10.
Clearly, it takes big volumes to be at the top. And formarketers who wished to retain their positions or move up it tookbig volume increases. For those on the second half of the list whowould join the bigger players, some climbing is in order. HoustonIndustries Wholesale Energy (Reliant Energy Wholesale Group as oflast week) was almost a half Bcf/d short of the No. 10 slot.Enserch Energy, at No. 20, had about 27% of Enron’s volume. KNEnergy, at No. 15, had huge volume growth – 200% – thanks to thecompany’s January 1998 acquisition of MidCon Corp. Overall, the top20 North American gas marketers grew volumes by 17% to 117.32Bcf/d, or nearly twice the average daily gas consumption of theU.S.
All but eight of the top 20 gas marketers also appear among thetop 20 power marketers. The eight companies appearing in the gasranking but not in power are Coral Energy, TransCanada, KochEnergy, Columbia Energy, KN Energy, Texaco Natural Gas, SonatMarketing, and Enserch Energy. These companies either don’t havepower marketing operations or didn’t sell enough electricity tomake the ranking.
“There’s no sign that the gas industry is suffering from a lackof attention from marketing companies,” said Benjamin Schlesingerof Benjamin Schlesinger and Associates. “I think what we’re seeingis a broadening of marketing company interests rather than apulling back from natural gas. There’s still much happening in thenatural gas sphere.”
Joe Fisher, Houston
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