Williams Rocked by Scandal Story
Hi John,
Do you think some evil hedge fund manager managed to get this story planted over the weekend?
nytimes.com
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A Collision on Risks of Energy Trading
By NEELA BANERJEE
ones Murphy might not have noticed what his colleagues at the Williams Companies were doing if they had not been gloating.
Mr. Murphy, previously a Wall Street executive, had recently been hired as the director of emerging products at Williams's headquarters in Tulsa, Okla., to help manage its trading risks. He was on the company's trading floor when he heard a commotion at the desk of Blake Herndon, director of risk management.
"I went over to ask what was going on," Mr. Murphy recalled of that day in December 2000. "Blake laughed and said they were going to corner the market for natural gas and run it up for December closing, which means delivery in January."
Williams is the second-largest owner of natural gas pipelines in the country, and Mr. Murphy, who is no longer with the company, says he thinks that an examination of trading records would show that the company succeeded in driving up natural gas prices in California.
Executives at Williams dismissed the allegation as impossible. Mr. Herndon said: "It is comical to think that anyone could corner the gas market in California.
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Methinks Mr. Herndon doth protest too much. <gg> Someone cornered the California NG market in December, 2000 when prices spiked to $50/mcf. That much is clear.
Hey, maybe it wasn't Williams, maybe it was these guys:
riskcenter.com
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June 3: Decision To Reallocate Capacity On El Paso’s Pipeline Expected To Create Controversy
Location: Los Angeles
Author: Singh Balwinder, RiskCenter Correspondent
Date: Monday, June 3, 2002
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In a decision expected to provoke protests from congressional lawmakers, federal energy regulators have ordered negotiations to reallocate capacity on El Paso Corp's pipeline system that delivers natural gas into California.
The Federal Energy Regulatory Commission found "unjust and unreasonable" 10- year old capacity-allocation contracts that allow customers east of California a right to obtain ever-increasing supplies of gas from El Paso 's system.
The so-called full-requirements contracts deprive California customers the opportunity to obtain their full allotment of firm natural-gas capacity under contracts with El Paso. The decade-old system for allocating capacity on El Paso's system proved unworkable over time as rapid population growth in Arizona, New Mexico and other desert southwest states resulted in so much capacity being allocated under the full requirement contracts that El Paso was failing to meet its contractual arrangement with its California customers.
FERC's order calls for replacing the full requirements' contracts with so- called contract-demand agreements. The order directs negotiations to set the terms of the new contract demands-allocation amounts. El Paso was directed to report back by Aug. 1 whether or not the negotiations produced any agreements. If there is no agreement on the new capacity allocations, FERC will determine the appropriate contract demand levels.
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El Paso Treasurer commits suicide over the weekend:
biz.yahoo.com
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This merchant energy fling that the mad marketers have been perpetrating for a decade seems to be coming to an end. The logic of greed just wasn't enough to make cornering markets possible over time. The heroes of this industry, like Ken Lay and Lou Pai are the real winners. Got theirs and got out. Leaving an industry in shambles.
-Ray |
